Communication from the Commission to the Council and the European Parliament on European contract law
Date: 2001-09-13
Institutions: European Commission
Subjects: EU law, contract

13.9.2001

EN

Official Journal of the European Communities

C 255/1

I

(Information)

COMMISSION

Communication from the Commission to the Council and the European Parliament on European
contract law

(2001/C 255/01)

CONTENTS

1.

2.

3.

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purpose of the communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Present situation of contract law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1.

Existing legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1.1.

International instruments

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1.2. Description of the Community acquis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.2.

3.3.

4.

4.1.

4.2.

4.3.

4.4.

4.5.

5.

Implications for the internal market

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Uniform application of Community law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Options for future Community initiatives in contract law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Option I (cid:151) No Community action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Option II (cid:151) To promote the development of common contract law principles leading to more
convergence of national laws

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Option III (cid:151) To improve the quality of legislation already in place . . . . . . . . . . . . . . . . . . . . . . . . . .

Option IV (cid:151) To adopt new comprehensive legislation at Community level

. . . . . . . . . . . . . . . . . . . .

Any other options

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1.

2.

3.

1.

INTRODUCTION

Over recent years, discussion has intensified on possible
harmonisation of substantive private law,
in particular
contract law (1).

The European Parliament has adopted a number of
resolutions on the possible harmonisation of substantive
private law. In 1989 and 1994 the European Parliament
called for work to be started on the possibility of
drawing up a common European code of private law (2).
Parliament stated that harmonisation of certain sectors of
the
private law was essential
internal market. Parliament further stated that unification
of major branches of private law in the form of a
European civil code would be the most effective way of
carrying out harmonisation with a view to meeting the
Community’s legal requirements in order to achieve a
single market without frontiers.

to the completion of

a

(cid:145)that

in its

(cid:145)present

Parliament

communication

stated
law has become essential

resolution of 16 March 2000
Furthermore,
concerning the Commission’s work programme 2000,
greater
the
European
harmonisation of civil
in the
internal market(cid:146) and called on the Commission to draw
up a study in this area (3). In its reply of 25 July 2000 to
the European Parliament, the Commission stated that it
would
other
Community institutions and the general public with the
aim of launching a detailed and wide-ranging discussion,
without
the date of 2001 set by the
European Council at Tampere(cid:146). The Commission also
stated that
the importance of secondary
legislation for the development of the internal market
this
and future commercial and technological
communication will analyse this legislation, in force or in
preparation, at Community level in the relevant areas of
civil law in order to identify and assess any gaps, as well
as the academic work which has been or is being carried
out(cid:146).

losing sight of

(cid:145)in view of

trends,

the

to

4.

Indeed the conclusions of the European Council held in
(cid:145)as regards substantive
Tampere requested, in point 39,
law an overall study on the need to approximate Member
State’s legislation in civil matters in order to eliminate
obstacles to the good functioning of civil proceedings(cid:146) (4).
A consultative document has been announced in the

I and II,

(1) Ole Lando and Hugh Beale (eds), Principles of European contract law
parts
(Kluwer Law International, 2000); Academy of
European Private Lawyers, European contract code (cid:151) preliminary draft,
(Universita Di Pavia, 2001) hereafter referred to as (cid:145)the Pavia
Group(cid:146);
code(cid:146). A
comprehensive discussion, including a detailed bibliography, of the
issues concerning civil law in Europe can be found in Hartkamp,
Hesselink, Hondius, Joustra, Perron (eds), Towards a European civil
code (Kluwer Law International, 1998).

(cid:145)Study Group for

a European civil

the

(2) OJ C 158, 26.6.1989, p. 400 (resolution A2-157/89); OJ C 205,

25.7.1994, p. 518 (resolution A3-0329/94).

(3) OJ C 377, 29.12.2000, p. 323 (resolution B5-0228, 0229,

0230/2000, p. 326 at point 28).

(4) Presidency conclusions, Tampere European Council 15 and 16

October 1999, SI(1999) 800.

Commission’s (cid:145)scoreboard for the evaluation of progress
in the establishment of an area of freedom, security and
justice(cid:146) (5). The Tampere European Council dealt with
issues concerning judicial civil cooperation on the basis
of Title IV of
regard this
communication can be considered as a first step towards
the implementation of the Tampere conclusions.

the EC Treaty.

In this

communication

this communication was also included in the
Finally,
Commission
and
financial services (6) within the policy area of ensuring
coherence in the legislative framework for
financial
services.

e-commerce

on

Leading representatives of the academic world have had
detailed discussions on harmonising certain sectors of
contract law. Two drafts of a contract code (7) and of
general principles of contract law (8) have recently been
published. This academic work continues, and includes
work on other issues not included in the two published
drafts, such as contracts in the specific areas of financial
services, insurance contracts, building contracts, factoring
and leasing as well as some areas of the law of property.
In particular, the academic work is focusing on areas that
have a particular significance for securing rights across
the European borders (9).

5.

6.

(5) COM(2000) 167 of 24 March 2000, last updated in May 2001, see

COM(2001) 278 final of 23 May 2001

(6) COM(2001) 66 final of 7 February 2001, p. 11.
(7) The Pavia Group has recently published its European contract code ﬂ
preliminary draft, (Universita Di Pavia, 2001) based on the work of
the Academy of European Private Lawyers. This code contains a
body of rules and solutions based on the laws of members of the
European Community and Switzerland and covers the areas of
contractual formation, content and form, contractual interpretation
and effect, execution and non-execution of a contract, cessation
and extinction, other contractual anomalies and remedies.

(8) The Commission on European contract law (which has received a
major part of its subsidies from the European Commission) has
published Principles of European contract law parts I and II, edited by
Ole Lando and Hugh Beale (Kluwer Law International, 2000).
These common principles
the European
Community concern the issues of formation, validity, interpretation
and contents of contracts, the authority of an agent to bind his
principal, performance, non-performance and remedies. The book
provides
includes
rules
commentary and comparative analysis for each rule.

the countries of

proposals

common

text

and

for

for

(9) Another important ongoing academic exercise in this area is the
Study Group on a European civil code consisting of academic
experts of the 15 Member States and some candidate countries.
Their work concerns areas like sales/services/long-term contracts,
securities, extracontractual obligations or transfer of property on
movable goods and includes a comparative research with the final
objective of a fully formulated and commented draft on the areas
concerned.

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7.

8.

9.

The aim of the academic work carried out varies from
the establishment of a binding code to principles similar
to (cid:145)restatements(cid:146)
that can be used to provide reliable
comparative information on the European legal situation
in these areas.

The approximation of certain specific areas of contract
law at Community level has covered an increasing
number of issues. In the area of consumer law no fewer
than seven Directives dealing with contractual
issues
were adopted in the period from 1985 to 1999 (1).
Other areas also show increased harmonisation (2).

sectoral harmonisation has

This
concerned specific
contracts or specific marketing techniques. Directives
have been adopted where
a particular need for
harmonisation has been identified.

2.

PURPOSE OF THE COMMUNICATION

10. The European Commission is interested at this stage of
the discussion in gathering information on the need for

(1) Directive 1999/44/EC of

the European Parliament and of

the
the sale of
Council of 25 May 1999 on certain aspects of
consumer goods and associated guarantees (OJ L 171, 7.7.1999, p.
12). Council Directive 93/13/EEC of 5 April 1993 on unfair terms
in consumer contracts (OJ L 95, 21.4.1993, p. 29). Council
Directive 90/314/EEC of 13 June 1990 on package travel, package
holidays and package tours (OJ L 158, 23.6.1990, p. 59). Council
Directive 85/577/EEC of 20 December 1985 to protect
the
consumer in respect of contracts negotiated away from business
premises
(OJ L 372, 31.12.1985, p. 31). Council Directive
87/102/EEC of 22 December 1986 for the approximation of the
laws, regulations and administrative provisions of
the Member
States concerning consumer credit (OJ L 42, 12.2.1987, p. 48) as
modified by Directive 90/88/EEC (OJ L 61, 10.3.1990, p. 14) and
Directive 98/7/EC (OJ L 101, 1.4.198, p. 17). Directive 97/7/EC of
the European Parliament and of the Council of 20 May 1997 on
the protection of consumers in respect of distance contracts (OJ L
the European
144, 4.6.1997, p. 19). Directive 94/47/EC of
Parliament and the Council of 26 October 1994 on the protection
of purchasers in respect of certain aspects of contracts relating to
the purchase of
to use immovable properties on a
the right
timeshare basis (OJ L 280, 29.10.1994, p. 83).

the laws of

the Member States

the European Parliament and of

(2) Council Directive 86/653/EEC of 18 December 1986 on the
coordination of
relating to
self-employed commercial agents (OJ L 382, 31.12.1986, p. 17),
Directive 2000/31/EC of
the
Council of 8 June 2000 on certain legal aspects of information
society services, in particular electronic commerce, in the internal
market (OJ L 171, 17.7.2000, p. 1), Directive 2000/35/EC of the
European Parliament and of
the Council of 29 June 2000 on
combating late payment in commercial transactions (OJ L 200,
8.8.2000, p. 35), Council Directive 85/374/EEC of 25 of July 1985
on the approximation of the laws, regulations and administrative
provisions of the Member States concerning liability for defective
products (OJ L 210, 7.8.1985, p. 29) as modified by Directive
1999/34/EC (OJ L 141, 4.6.1999, p. 20), Directive 97/5/EC of the
European Parliament and the Council of 27 January 1997 on
cross-border credit transfers (OJ L 43, 14.2.1997, p. 25) should be
noted as examples.

law,

farther-reaching Community action in the
area of
the
to the extent
in particular
contract
that
case-by-case approach might not be able to solve all the
problems which might arise. This does not preclude the
right of initiative of the Commission to make proposals
in the future for specific actions on contract law aspects
if a specific need for this exists, in particular on-going
initiatives launched or to be launched in the framework
of the internal market policy.

11. The purpose of

this communication is

interested parties. Part C examines

therefore to
broaden the debate by encouraging contributions from
consumers, businesses, professional organisations, public
administrations and institutions, the academic world and
all
the current
situation of contract law, the reasons for its importance
in cross-border negotiations and problems of uniform
application of Community law. Part D presents a general
framework for future Community policy in the area of
contract law.

12. Contract law encompasses several areas of law. These are
linked to Member States’ different cultural and legal
traditions, but most Member States’
legal regimes for
contract law have similar concepts and rules. Contract
law regulating
law constitutes the principal body of
cross-border
Community
transactions
legislation regulating contract law already exists, although
this legislation has taken a sector-by-sector approach.

some

and

rules

financial

formation of

services (3). General

13. The areas concerned by this communication include
contracts of sale and all kinds of service contracts,
on
including
performance, non-performance and remedies are an
indispensable basis for these contracts and are therefore
also covered. Additionally, rules on general issues such as
the
and its validity and
contract
interpretation are also essential. Furthermore, because of
the economic context, rules on credit securities regarding
movable goods as well as the law of unjust enrichment
may also be relevant. Finally,
law
linked to contracts and to its other features relevant to
into
should
the
consideration in so far as they are already part of existing
Community law.

internal market

the aspects of

taken

also

tort

be

a

14.

regulation given the complexity of

In certain areas of private law, contracts are only one of
the tools of
the
relationship between the parties concerned. These areas,
such as employment law and family law, give rise to
particular
this
are
communication.

covered

issues

and

not

by

(3) COM(2001) 66 final of 7 February 2001, p. 11.

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15. The Commission intends to focus the attention of this
firstly on possible
communication on two areas:
problems resulting from divergences of national contract
law, and secondly on options for the future of contract
law in the Community. This will enable the Commission
to define its future policy in this area and to propose any
necessary measures.

3.

PRESENT SITUATION OF CONTRACT LAW

3.1.

Existing legislation

3.1.1.

International instruments

Goods (the CISG), adopted by all Member States except
the United Kingdom, Portugal and Ireland.

19. The CISG establishes uniform rules for the international
sale of goods, which apply to sales contracts unless the
parties state otherwise. Some areas are excluded from the
scope of
the Convention, such as the sale of goods
bought for personal, family or household use and the
sale of stocks, shares, investment securities or negotiable
instruments.

20. The Convention includes provisions dealing with the
formation of a contract (offer and acceptance of offer),
and the rights and obligations of the seller and the buyer.
The Convention does not govern the validity of
the
contract or of its provisions, nor does it cover the effect
which the contract may have on the property in the
goods sold. The Convention also does not address the
seller’s liability beyond the contract.

16.

International remedies offer solutions to certain potential
problems related to differences in national contract law.
The first remedy is the application of uniform private
international rules to determine which law is applicable
to the contract. The most important of these rules is the
1980 Rome Convention (1), ratified by all Member States.

21.

17. The rules of the Rome Convention apply to contractual
obligations in any situation involving a choice between
the laws of different countries (2). Under
the Rome
Convention parties may agree on which national law to
apply. However,
the Convention places limits on this
choice of applicable law and determines which law is
applicable if no choice is made. Furthermore, the rules
do not apply to areas mentioned in Article 1 of the
Convention (such as questions relating to the status or
legal
to insurance
contracts which cover risks situated in the territories of
the Member States of the European Community).

capacity of natural persons or

18. The second remedy is the establishment of harmonisation
of substantive law rules at an international level. Here the
most relevant
is the 1980 United Nations
Convention on Contracts for the International Sale of

instrument

(1) 1980 Rome Convention on the Law Applicable to Contractual
Obligations (consolidated version) (OJ C 27, 26.1.1998, p. 34).
(2) Alongside the Convention there is also the Brussels Convention of
27 September 1968 on Jurisdiction and the Enforcement of
Judgments
in Civil and Commercial Matters, as amended by
Conventions on the accession of the new Member States to that
Convention. This determines which forum is competent to deal
with a
except Denmark this
Convention is to be replaced as from 1 March 2002 by Council
Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction
and the recognition and enforcement of judgments in civil and
commercial matters (OJ L 12, 16.1.2001, p. 1).

all Member States

case. For

3.1.2. Description of the Community acquis

Several Community acts include provisions harmonising
private law. Certain directives
specify rules on the
conclusion of a contract, on the form and the content of
an offer and its acceptance and on the performance of a
contract,
i.e. the obligations of the contracting parties.
Several directives also specify in detail the content of the
information to be provided by the parties at different
stages, in particular before concluding a contract. Certain
directives cover rights and obligations of the contracting
parties regarding the execution of a contract, including
poor execution and non-execution.

22. A description of

and

non-binding

the most relevant Community acts
regarding contract law is given in Annex I. Annex II lists
instruments
binding
relating to substantial private law issues. Annex III is a
structured presentation of the acquis illustrating the extent
to which legislation at Community level as well as the
CISG has already dealt with issues of contract law of
areas concerned by this communication.

international

3.2.

Implications for the internal market

23. The Commission would like to find out if the coexistence
of national contract laws in the Member States directly or
indirectly obstructs
internal
market, and if so to what extent. If such obstacles do
exist, the European institutions may be called on to take
appropriate action.

functioning of

the

the

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24. The EC Treaty has given the European institutions
powers to facilitate the establishment and functioning of
the internal market, in particular the free movement of
goods, persons, services and capital. This has allowed the
significantly
European
including
impediments
manufacturers,
and
consumers, to operate throughout the Community and
beyond.

Community
for
service providers,

actors,
intermediaries

economic

reduce

to

25. Technical developments, such as the possibilities offered
by the Internet for electronic commerce, have made it
easier for economic actors to conclude transactions over
long distances. The introduction of
the euro as the
common currency of 12 of the Member States is also an
important
trade.
in facilitating
However, in spite of the major successes achieved thus
far, certain problems still remain. Markets are not as
efficient as they could and indeed should be,
to the
detriment of all parties involved.

cross-border

factor

26. The exchange of goods and services, be it through sales,
leasing or barter is governed by a contract. Problems in
relation to agreeing, interpreting and applying contracts
in cross-border trade may therefore affect the functioning
of the internal market. Do existing contract law rules
the current and future needs of businesses and
meet
consumers in the internal market, or is Community
action required?

of

freedom.

contractual

27. Generally, national contract law regimes lay down the
principle
Accordingly,
contracting parties are free to agree their own contract
terms. However, each contract is governed by the laws
and court decisions of a particular State. Some of these
national rules are not mandatory and contracting parties
may decide either
to apply these rules or to agree
different terms instead. Other national rules, however, are
mandatory,
in particular where there is an important
disparity between the positions of the contracting parties,
such as contracts with tenants or consumers.

29. Although not required by national laws, certain clauses in
contracts may result from common practice in a given
Member State, especially if
such practice has been
formalised in standard contracts. It may be hard to agree
a contract containing terms and conditions different from
those generally applied in a particular Member State.
There may be important economic or even legal reasons
why it is hard or even impossible for a party to agree to
the terms and conditions in a standard contract that is
generally used in the other party’s Member State. Yet, for
it may be hard for the latter party to
similar reasons,
accept the type of terms which are common practice in
the first party’s Member State.

30.

improving the functioning of

For consumers and SMEs in particular, not knowing
other contract law regimes may be a disincentive against
undertaking cross-border transactions. This has been part
of the rationale for some existing Community acts aimed
at
the internal market.
Suppliers of goods and services may even therefore
regard offering their goods and services to consumers in
other countries as economically unviable and refrain
from doing so.
the
provisions covering subcontracting and supply contracts
in the different Member States (1).
are quite different
it
These
for
subcontractors, mostly SMEs,
cross-border
to make
agreements.

differences may make

In the field of

subcontracting,

difficult

31. Moreover, disparate national law rules may lead to higher
transaction costs, especially information and possible
litigation costs for enterprises in general and SMEs and
consumers in particular. Contracting parties could be
forced to obtain information and legal advice on the
interpretation and application of an unfamiliar foreign
law.
the applicable law has been chosen in the
contract, this applies to the contracting party whose law
has not been chosen. It applies to a minor extent also to
contracts where the parties have agreed standard contract
terms in the cases where these terms do not cover all
possible problems.

If

28. Normally these different national regimes do not create
any problems for cross-border transactions, as parties can
decide which law will govern their contract. By choosing
one national law, they accept all the mandatory rules of
that law, as well as those non-mandatory rules which
they do not replace by different terms. However, conflicts
may arise between mandatory rules of the laws in one
country with contradictory mandatory rules of another
national law. These conflicts between different mandatory
rules may have a negative impact on cross-border
transactions.

32. These higher transaction costs may furthermore be a
competitive disadvantage,
for example in a situation
where a foreign supplier is competing with a supplier
established in the same country as the potential client.

(1) Provisions range from a specific subcontracting law in Italy and a
law on payment conditions to subcontractors in France, to civil
code provisions on contractual relations in most Member States
(e.g.
in Germany subcontracting falls under a 1976 law on the
general terms of business and under a few articles of the civil
code).

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33. The Commission is seeking contributions on how far
issues described above create problems for the internal
market, and what other issues relating to contract law
also obstruct the functioning of the internal market.

law and national measures
in a non-uniform way.
Abstract terms may represent a legal concept for which
there are different rules in each national body of law (3).

3.3. Uniform application of Community law

34. The

legislator must

European Community

ensure
consistency in the drafting of Community legislation as
well as in its implementation and application in the
Member States. The measures adopted by the European
consistent with each other,
Community must be
interpreted in the same manner and produce the same
effects in all Member States. The Court of Justice of the
European Communities (the ECJ) has stated that (cid:145)the need
for uniform application of Community law and the
principle of equality require that the terms of a provision
of Community law which makes no express reference to
the law of
the purpose of
determining its meaning and scope must normally be
and uniform interpretation
given an autonomous
throughout the Community(cid:146) (1).

the Member States

for

35.

combined

unforeseen

could lead to inconsistencies

In the area of contract law the European legislator has
taken a (cid:145)piecemeal(cid:146) approach to harmonisation. This
market
approach
with
in the
developments,
application of Community law. For example, under
certain circumstances (2) it is possible to apply both the
doorstep selling Directive and the timeshare Directive.
Both Directives give the consumer a right of withdrawal;
however the time period during which the consumer can
exercise this right is different. Although such cases of
conflicts between rules are exceptional, the Commission
would welcome information on problems resulting from
possible inconsistencies between Community rules.

36. Using abstract terms in Community law can also cause
problems for implementing and applying Community

for

(1) Case C-357/98 The Queen v Secretary of State

the Home
Department ex parte: Nana Yaa Konadu Yiadom [2000] ECR-9265, at
paragraph 26. See also Case C-287/98 Luxemburg v Linster [2000]
ECR-6917, at paragraph 43; Case C-387/97 Commission v Greece
[2000] ECR-5047; Case C-327/82 Ekro v Produktschap voor Vee en
Vlees [1984] ECR I-107, at paragraph 11. The principle of uniform
application also applies in the area of private law see Case
C-373/97 Dionisios Diamantis v Elliniko Dimosio (Greek State),
Organismos Ikonomikis Anasinkrotisis Epikhiriseon AE (OAE) [2000]
ECR I-1705, at paragraph 34; Case C-441/93 Pafitis and Others v
TKE and Others [1996] ECR I-1347, at paragraphs 68 to 70..

(2) See Case Cﬂ423/97, Travel-Vac S.L. and Manuel JosØ Antelm Sanch(cid:237)s

[1999] ECR I-2195..

37.

In general, differences between provisions in directives
can be explained by differences in the problems which
those directives seek to solve. One cannot,
therefore,
require that a term used to solve one problem is
interpreted and applied in precisely the same manner in a
different context. However, differences
in terms and
concepts that cannot be explained by differences in the
problems being addressed should be eliminated.

38.

concepts of

to implement Community directives

In addition, domestic legislation adopted by Member
to
refers
States
domestic
terms. These
these
concepts vary significantly from one Member State to
another (4). The absence of a uniform understanding in
Community law of general terms and concepts at least in
specific or linked areas) may lead to different results in
commercial and legal practice in different Member
States (5).

abstract

(3) These matters have recently been examined by a European
Parliament study, drafted by a team of high ranking independent
legal experts.
It states with regard to the example of the term
(cid:145)damage(cid:146) that (cid:145)The European laws governing liability do not yet
have even a reasonably uniform idea of what damage is or how it
can be defined, which naturally threatens to frustrate any efforts to
develop European directives in this field(cid:146); European Parliament, DG
for Research: (cid:145)Study of the systems of private law in the EU with
regard to discrimination and the creation of a European civil code(cid:146)
(PE 168.511, p. 56). Some Directives (Article 9 of Directive
85/374/EEC, Article 17 of Directive 86/653/EEC) contain differing
definitions of
is
intended solely for the purpose of each respective Directive. Other
Directives (Article 5 of Directive 90/314/EEC) use the term without
defining it.

the term (cid:145)damage(cid:146). Each definition, however,

(4) This problem is highlighted by a case pending with the Court of
Justice (C-168/00, Simone Leitner/TUI Deutschland GmbH & Co. KG).
On the basis of a package travel contract concluded under Austrian
law with a German tour operator,
seeks
compensation for (cid:145)moral damages(cid:146) (unrecoverable holiday spent in
hospital). Austrian law does not grant compensation for this kind
of damage, but the laws of Germany and some other Member
States do. The complainant points to Article 5 of the package
travel Directive,
this Article establishes a specific
saying that
concept of (cid:145)damage(cid:146) that includes (cid:145)moral damage(cid:146).

complainant

the

(5) The Commission has emphasised for example in its report on the
application of the commercial agents Directive (COM(1996) 364
final of 23 July 1996)
the system of
compensation for damage foreseen in the Directive concerning the
situation produces completely different practical
same factual
results
in France and the UK due to different methods of
calculation for the quantum of compensation.

the application of

that

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39. This kind of problem does not only apply to horizontal
questions concerning general terms of contract law as
mentioned above. It is also relevant to specific economic
sectors (1).

40. The Commission is reflecting whether, in order to avoid
the kind of problems described above,
the necessary
consistency could be ensured through the continuation of
the existing approach or should be improved through
other means. The Commission is therefore interested in
receiving information on practical problems relating to
contract
law resulting from the way that Community
rules are applied and implemented in the Member States.

4.

OPTIONS FOR FUTURE COMMUNITY INITIATIVES IN
CONTRACT LAW

41. Responses to this document may show that there are
impediments to the functioning of the internal market
for cross-border transactions. If these problems cannot be
solved satisfactorily through a case-by-case approach, a
horizontal measure
comprehensive
providing
harmonisation of contract law rules could be envisaged
at Community level. However, there are of course limits
to the power of
the Commission and the other
Community institutions to intervene in this area.

for

42. Any measure must be in accordance with the principles
of subsidiarity and proportionality, as described in Article
5 of the EC Treaty and the Protocol on subsidiarity and
proportionality. As the European Parliament pointed out
in its resolutions on the better lawmaking reports (2), the
subsidiarity principle is a binding legal standard that does
not rule out the legitimate exercise of the Community’s
competencies. The need to achieve balanced application
of this principle has been highlighted by a number of
Member States (3) and the European institutions.

43. The principle of subsidiarity serves as a guide as to how
at
the Community powers
Community level. Subsidiarity is a dynamic concept and
should be applied in the light of the objectives set out in
the Treaty. It allows Community action within the limits
of its powers to be expanded where circumstances so

exercised

to be

are

require, and conversely, to be restricted or discontinued
where it is no longer justified (4). There should be clear
benefits to taking action at Community level instead of
national level. Where the intention is to have an impact
throughout the Community, Community-level action is
undoubtedly the best way of ensuring homogeneous
treatment within national
and stimulating
effective cooperation between the Member States.

systems

44. Moreover, legislation should be effective and should not
impose any excessive constraints on national, regional or
local authorities or on the private sector, including civil
society. The principle of proportionality, which is one of
the general principles of Community law, requires that
measures adopted by Community institutions do not
exceed the limits of what is appropriate and necessary in
order to attain the objectives legitimately pursued by the
legislation in question; when there is a choice between
several appropriate measures recourse must be had to the
least onerous, and the disadvantages caused must not be
disproportionate to the aims pursued (5). Clearly,
the
propose whatever
Commission
measures are necessary to supplement Member States’
efforts
The
Commission follows two criteria designed to guarantee
that fixed objectives are complied with in both political
the ability of national and regional
and legal
authorities, and of civil society, to act to achieve the
objectives laid down in a Community provision, and the
compatibility or conformity of
these objectives with
national or sectoral practices (6).

duty-bound

objectives.

Treaty’s

achieve

terms:

the

to

to

is

45.

by

way

civil

proposals

legislative

consulting the private

sector,
levels on the expediency,

Preparing
of
communications and green and white papers is one way
society and
of
institutions at all
level and
content of
legislative instruments in order to achieve
these objectives. Additionally, the Commission will seek
to identify areas of intervention by involving both civil
society and business with a view to producing legislative
instruments
This
communication and possible further documents are
intended to determine whether Community action is
needed and if so in which areas.

geared

needs.

users’

real

to

(1) The problem referred to here also exists outside the contract law
area. Thus in its report on the regulation of European securities
markets, the Committee of Wise Men led by Alexandre Lamfalussy
pointed to problems resulting from the use in certain Directives in
the financial area of ambiguous notions, which allowed Member
States to apply these Directives in a disparate manner. Final report,
Brussels, 15 February 2001, Annex 5 (initial report of 9 November
2000).

(2) COM(2000) 772 final of 30 November 2000, p. 3.
(3) COM(2000) 772 final of 30 November 2000, p. 3.

(4) See Protocol on the application of the principles of subsidiarity and

proportionality (OJ C 340, 10.11.1997, p. 105).

(5) Case C-331/88 Fedesa [1990] ECR-4023 at paragraph 13; Joined
Cases C-133/93, C-300/93 and C-362/93 Crispoltoni
[1994]
ECR-4863 at paragraph 41; Case C-157/96 The Queen v Ministry of
Agriculture, Fisheries and Food, Commissioners of Customs & Excise, ex
parte: National Farmers’ Union [1998] ECR-2236 at paragraph 60.

(6) COM(2000) 772 final of 30 November 2000, pp. 8 and 9.

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46. There are a number of options that can be considered
fully solve the
four

should the case-by-case approach not
problem. This communication briefly examines
possible scenarios:

I.

no Community action;

II.

to promote the development of common contract
law principles
leading to more convergence of
national laws;

III.

to improve the quality of
place;

legislation already in

IV.

to
adopt
Community level.

new comprehensive

legislation

at

47. There are other options beyond these, and these options
could also be combined. These options may cover the
field of contract law or other fields within private law.
Each option could be used for specific economic sectors
or apply horizontally. The binding character of a
measure would depend on the area to which the measure
applied and all
the interests at stake. However, as a
matter of principle, all options should allow contracting
parties the freedom they need to conclude the contract
terms best suited to their specific needs.

48. Another approach, which is not discussed here as it goes
beyond the level of a European initiative, could be the
negotiation of an international
treaty in the area of
contract law. This would be comparable to the CISG but
with a broader scope than purely the sale of goods.
the CISG could also be
However,
integrated into options II and IV which would increase
their acceptance in commercial and legal practice.

the provisions of

4.1. Option I (cid:151) no Community action

49.

In many cases the market creates problems of public
it also develops its own solutions. The
concern, but
effectiveness of
in responding to different
social values and to public opinion should not be
underestimated. As a result of competitive behaviour,
many of the problems created by the market may be
solved automatically by the pressure exercised by the

the market

interest groups involved (consumers, NGOs, enterprises).
coincidence of
Public
self-interest and public interest.

can enhance

authorities

this

50. Different

and

States

incentives by Member

trade
associations, for example offering assistance and advice
on cross-border transactions can efficiently channel the
market in a specific direction (for example speed up the
use of new technologies or encourage new types of
commercial practices). These could compensate for the
economic and psychological risks of cross-border trade
activity, whether
real.
Different services from economic operators can efficiently
transactions
overcome problems of cross-border
that
have been identified. For example,
trade associations
could offer assistance or advice to SMEs (1).

these risks are perceived or

51. Economic developments,

solutions

in particular

to look for

the increasing
integration of markets into a genuine internal market,
for national policymakers and
also create incentives
legislators
to problems with
contracts involving parties in other Member States. This
could result in a certain degree of (cid:145)soft harmonisation(cid:146),
not driven by binding Community rules, but coming
about as a result of economic developments. This could
solve some of the problems for intra-Community trade,
provided that there is a genuine and fair free choice of
full, correct and freely
law for contracting parties,
and
existing rules
the
information about
available
practices and fair and affordable alternative dispute
resolution mechanisms.

4.2. Option II (cid:151) to promote the development of
common contract law principles leading to
more convergence of national laws

52.

In order
to achieve more convergence of national
contract laws, one solution would be for the Commission

(1) Below are two examples of national/industry associations’ initiatives
that aim at providing a solution for cross-border contractual
problems through voluntary agreements on cross-border model
contracts:
(cid:151) in 1999 a group of six German industry federations,

the
so-called working group of the components supply industry,
agreed on a set of minimum clauses for cross-border contracts.
However, this model applies to cross-border contracts ruled
exclusively by German law (the contracting parties must agree
to rule the cross-border contract in question under German
law) and includes provisions on prices, confidentiality, moulds,
equipment,
liability,
product damage, etc.

industrial property rights, guarantee,

(cid:151) also Orgalime (European group of the mechanical, electrical,
issued a model
for
to foster cross-border

electronic and metal-working industries)
international
inter-enterprise cooperation.

(cid:145)consortium agreement(cid:146)

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to promote comparative law research and cooperation
between, among others, academics and legal practitioners
(including judges and experts). This cooperation could
aim to find common principles in relevant areas of
law. The existing work in this area
national contract
including the results of
could be used and developed,
academic studies and conclusions drawn in international
academic forums. The framework for this research and
cooperation could be a kind of partnership, in which the
Community
the
Commission, could play a coordination role. In the field
of
some common solutions,
principles or even sets of rules could be defined.

and more particularly

transnational contracts,

institutions,

53. The outcome of

these discussions could vary from
to the drafting of guidelines or
common principles
specific codes of conduct for certain types of contracts.
The common principles could be useful for contracting
parties at the drafting stage of new contracts, as well as
for the execution of contracts. They could also be useful
for national courts and arbitrators who have to decide
legal
issues, especially concerning cross-border cases,
which are not fully covered by binding national rules or
where no legislative rules exist at all. The courts or
the principles they were
arbitrators would know that
applying represented the solution common to all
the
national contract law systems in the Community. At the
same time common principles could help national courts
which have to apply foreign law to have a basic
the underlying general principles of
understanding of
law. The guidelines could be followed as much as
possible by Member States or the Community when
issuing new legislation or adapting old legislation in the
area of contract national law.

54. The application of common principles could even lead to
the creation of customary law provided that there is a
long and continued application and a commonly shared
conviction. This might influence or even change existing
commercial practice in the Member States that could
create impediments to the full functioning of the internal
market.

the area of European contract
for this
it is clear that the common
option to be meaningful,
principles should be defined in such a way as to meet all
legitimate requirements.

law. However,

56. Another solution could concern standard contracts.

spare parties

In
order to facilitate economic transactions a large number
of standard contracts are in use in all Member States.
Such standard contracts
the need to
negotiate the contract-terms for every single transaction.
They also provide a degree of certainty to parties and
obtain almost semi-regulatory status. It is precisely for
this reason that it is often difficult to agree a contract
with a party in another Member State which does not
comply with the standard contract terms that the other
party is used to. Parties from different Member States
terms which are in
may indeed be used to different
standard use in their respective States. These problems
could be solved, in conformity with Community law, if
standard contracts were developed for use throughout
the Community. The Commission could promote the
development of such standard contracts by interested
parties.

4.3. Option III (cid:151) to improve the quality of

legislation already in place

57. The Lisbon European Council has asked the Commission,
the Council and the Member States (cid:145)to set out by 2001 a
strategy for further coordinated action to simplify the
the
regulatory environment(cid:146). Answering this
Commission has given an initial response through an
to the Stockholm European Council (1)
interim report
which takes stock of
the
Commission’s initial
thoughts on putting the Lisbon
mandate into practice.

the situation and sets out

request,

55. Once those common principles or guidelines were
established and agreed on by all interested parties in the
Member States, broad dissemination should be ensured
among those who would be supposed to apply them.
This would ensure coherent and uniform application of
the common principles or guidelines. These common
principles or guidelines could however only be applied
indeed done
on a
If
continuously by a sufficiently large number of
legal
practitioners
and national
legislators, this would bring about greater convergence in

voluntary basis.

as Community

this were

as well

58.

to

build

intends

legislation already in place
Improving the quality of
first modernising existing instruments. The
implies
Commission
already
undertaken on consolidating, codifying and recasting (2)
existing instruments centred on transparency and clarity.
Quality of drafting could also be reviewed; presentation
and terminology could become more coherent. Apart
from those changes regarding the presentation of legal
texts, efforts should moreover be focused systematically

action

on

(1) Interim report from the Commission to the Stockholm European
(cid:145)Improving and simplifying the regulatory environment(cid:146),

Council
COM(2001) 130 of 7 March 2001.

(2) See interim report, COM(2001) 130 of 7 March 2001, p. 10.

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on simplifying and clarifying the content of existing
legislation (1). Finally, the Commission will evaluate the
effects of Community legislation and will amend existing
acts if necessary (2).

59. Where

subject

could be

appropriate, directives

to
simplification of their provisions. In fact, for several years
now,
the Community has been pursuing a policy of
simplifying Community legislation. The SLIM initiative (3)
(simpler legislation for the internal market) remains one
the ongoing
of
simplification work. Simplification exercises (4) could be
used to improve the quality,
reduce the volume of
existing regulatory instruments, and, at the same time
remedy possible inconsistencies or even contradictions
between legal instruments.

examples of

the most

ambitious

for

legislation,

internal market

(1) See interim report, COM(2001) 130 of 7 March 2001, p. 10.
(2) See interim report, COM(2001) 130 of 7 March 2001, p. 9.
(3) The SLIM (simpler legislation for the internal market) pilot project:
this project was introduced in 1996 as an initiative for improving
the quality of
counteracting
superfluous legislation and for limiting the costs associated with
implementation. SLIM attempts to focus attention on specific issues
and is not meant to advocate deregulation. The work is extremely
targeted,
time, and
in order to be run in a limited period of
focused on making precise recommendations.
The European institutions have agreed that simplification ought not
to encroach on the acquis communautaire. In essence, simplification
is to be prevented from acting as a passkey to calling in question
again harmonisation reached in sectors like health protection,
worker and consumer protection, environmental policy and free
trade. Simplification, this is the idea, should become a resource for
completing the internal market, not for dismantling it.

(4) (cid:151) BEST (business environment simplification task force): in 1997
the Commission also set up the business
environment
simplification task force (BEST). This task force submitted a
report containing 19 recommendations in 1998. These focused
on the business environments in the Member States in a wide
variety of fields.

(cid:151) The action plan for the single market: the action plan was
launched in 1997, listing four strategic objectives: making the
rules more effective, dealing with market distortions, removing
barriers to market integration, and finally ensuring an internal
market that benefits all citizens of the Union.

(cid:151) The (cid:145)state of the art(cid:146) on simplification in the (cid:145)better lawmaking(cid:146)
reports: each year, since 1995, the Commission publishes a
report on (cid:145)better lawmaking(cid:146) in which it also reports on the
contribution it has made to simplifying EU rules.

(cid:151) The Interinstitutional Agreement on drafting quality:

this
Agreement was published in March 1999, following on from
the Treaty of Amsterdam and is binding on the Commission,
the Council and the European Parliament.

of

legal

existing

60. Moreover, a further improvement would be to adapt the
instruments where
substance
necessary (5) before adopting new ones. For instance, the
scope of application of various directives should be
extended if necessary and if appropriate
to those
transactions which have many similar
contracts or
features to those covered by the Directive but, for various
reasons, were not included in the scope of application of
the Directive at the moment of its adoption. This would
ensure greater coherence within a well-defined sector of
activities or type of transactions (6). Along the same lines,
reasons why different solutions are given to similar
problems in the context of different directives should be
re-examined.

4.4. Option IV (cid:151) to adopt new comprehensive

legislation at Community level

61. Another option would be an overall

text comprising
provisions on general questions of contract law as well as
specific
choice of
instrument and the binding nature of the measures need
to be discussed.

this option,

contracts.

For

the

62. The choice of

instrument depends on a number of
factors, including the degree of harmonisation envisaged.

flexibility to adapt

63. A directive would, on one hand, give Member States a
the respective
certain degree of
provisions of the implementation law to their specific
national economic and legal situation. On the other
hand, it may allow differences in implementation which
could constitute obstacles
the
internal market.

to the functioning of

(5) The abovementioned (cid:145)Study of the systems of private law in the EU
with regard to discrimination and the creation of a European civil
code(cid:146), launched by the European Parliament states in general terms
that (cid:145)The existing rules enshrined in the agreements and directives
need to be systematically gone over with a fine tooth comb,
incorporated into national
law where necessary, supplemented in
content and refined in form. They must be coordinated and
dovetailed with each other, cleansed of all redundant regulation,
inconsistency and terminological
they can
ultimately be fitted into a systematically coherent structure, into the
(cid:145)overall picture(cid:146) of a codified system(cid:146).

insularity,

so that

(6) A limited scope of application is typical for many directives (e.g.:
Directives 85/577/EEC on doorstep selling: not covered are
insurance contracts, contracts on real estate, construction, 97/7/EC
on distance contracts: not covered are contracts on real estate,
construction, 94/47/EC on time-sharing contracts: covered are only
three years, Directive
contracts with a minimum term of
2000/35/EC on
commercial
transactions: transactions with consumers are not covered).

combating

payment

late

in

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64. A regulation would give the Member States less flexibility
for its integration into the national legal systems, but on
the other hand it would ensure more transparent and
uniform conditions
in the
internal market.

economic operators

for

65. A recommendation could only be envisaged if a purely

optional model is chosen.

68. Each applicable set of rules could distinguish between

mandatory and non-mandatory rules.

69. A combination of the abovementioned second and third
options could, for instance, be envisaged in areas of law
like consumer protection where, besides a general and
automatically applicable set of fall-back provisions, some
mandatory provisions which cannot be waived by the
contracting parties still apply.

66. Concerning the binding nature of the measures to be
proposed, the following approaches, which can also be
combined, are:

4.5. Any other options

parties.

(a) a purely optional model which has to be chosen by
the
a
recommendation (1) or a regulation (2) which applied
when the parties agree that their contract was to be
governed by it;

example

would

An

be

(b) a set of

rules which would apply unless

their
application were excluded within the contract. This
kind of legislation already exists in the context of the
late payments Directive (3) or in the CISG (4). This
approach would create fall-back provisions where the
contracting parties are
to agree on other
solutions by way of contract, i.e. the application of a
coexisting national law or contract-specific solutions.
It would ensure
contracting parties keep
complete contractual freedom to define the content
of the contract. At the same time it would represent
a (cid:145)safety net(cid:146) which would only apply if no specific
contractual provisions were in place;

that

free

70. As indicated above, the list of options is not exhaustive
but only indicative. Therefore, the Commission welcomes
any other suggestions for efficient and effective solutions
to the problems identified.

5.

CONCLUSIONS

71. The purpose of

the

institutions of

this communication is to initiate an
and detailed debate with the
open, wide-ranging
European
participation of
including
Community as well as of the general public,
businesses, consumer associations, academics and legal
practitioners. In the light of the feedback received, the
Commission will, within its right of initiative, decide on
further measures.

the

(c) a set of rules whose application cannot be excluded

by the contract.

72.

67. The third approach would replace existing national law,
law. The
law or

while the first would co-exist with national
second approach could coexist with national
replace it.

(1) See for example Article 1:101(2) of the Principles of European

contract law (see footnote 1, p. 2).

(2) An example could be the Council Regulation on the Statute for a
European Company on which the Council adopted a political
orientation on 20 December 2000 (Council document 14.886-00,
1 February 2001).

(3) Article 3(1)(b) of Directive 2000/35/EC provides for specific criteria
for defining the date as of which interest shall become payable, if
the date or period for payment is not fixed in the contract (30 days
following the date of receipt by the debtor of the invoice or 30
days after the date of receipt of the goods or services). Article
3(1)(d) provides for a (cid:145)statutory interest rate(cid:146) to be paid, unless
otherwise specified in the contract.

(4) See Article 6 CISG.

In particular the Commission would like to have views
on problems for the functioning of the internal market
resulting from the coexistence of different national
contract laws. To be the most useful, such information
should be as specific as possible. Ideally, it should include
concrete examples of cases in which differences between
the Member States have made
the contract
intra-Community trade more onerous or even impossible
for manufacturers,
or
consumers. This may include cases in which sellers,
businesses or
incurred substantial
additional costs as a result of differing legal requirements
in Member States.

consumers have

providers,

laws of

traders

service

73. Moreover, the Commission is keen to receive feedback
on which of the possible options explained in part D (or
other possible solutions) would be the most appropriate
in order to solve the problems identified in the present
communication.

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All parties wishing to contribute to the debate are
requested to send their contribution by 15 October
2001. These contributions should be sent if possible in
electronic form to European-Contract-Law@cec.eu.int, or
otherwise in writing to the European Commission, rue
de la Loi 200, B-1040 Brussels. Each contribution
European
should

(cid:145)Communication

be marked

on

the

Commission

contract law(cid:146). In order to stimulate a real debate on the
this
issue,
communication on the Commission’s Europa website
under http://europa.eu.int/comm/off/green/index_en.htm.
Incoming contributions will be published on the same
website if senders request.

published

has

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ANNEX I

IMPORTANT COMMUNITY ACQUIS IN THE AREA OF PRIVATE LAW

General remarks

The purpose of the following non-exhaustive presentation is to describe the acquis communautaire that is relevant to
private law, in particular to contract law. The objectives of some directives are clearly aimed towards the harmonisation
of national contractual rules. Other directives have a more indirect effect on these rules.

1.

CONSUMER CONTRACT LAW

General comments

This section shows that among the lacunas relating to Community directives concerning contract law there is an
absence of any reference to the formation of a contract and the sanctions that will apply in the case of non-adherence
to obligations in the directives concerning pre-contractual information.

1.1.

Sale of consumer goods and associated guarantees

Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the
sale of consumer goods and associated guarantees

Objective

To ensure consumer protection and strengthen consumer confidence in cross-border shopping by laying down a
common set of minimum rules valid no matter where the goods are purchased.

Content

Directive 1999/44/EC harmonises the notion of
the
consumers’ rights in the case where the consumer buys a defective product and the conditions under which the
consumer can exercise these rights. Consumer goods are defined, with exceptions, as any tangible movable item (Article
1(2)(b)). These must be in conformity with the contract of sale (Article 2(1)). Article 2(2) contains presumptions when
consumer goods are deemed to be in conformity with the contract.

lack of conformity of consumer goods with the contract,

The seller is liable to the consumer for any lack of conformity that exists when the goods are delivered to the
consumer that become apparent within a period of two years (Article 5(1)), unless at the moment of conclusion of the
contract of sale the consumer knew or could not reasonably be unaware of the lack of conformity (Article 2(3)). Any
lack of conformity becoming apparent within six months of delivery will be presumed to have existed at the time of
delivery, unless proof to the contrary is furnished or this presumption is incompatible with the nature of the goods or
the nature of the lack of conformity (Article 5(3)).

Upon a lack of conformity notified to the seller, the consumer is entitled to ask for the goods to be repaired or
replaced free of charge within a reasonable period and without considerable inconvenience to the consumer (Article
3(2)). If repair or replacement is impossible or disproportionate, or if the seller has not remedied the lack of conformity
within a reasonable period of time or without major inconvenience to the consumer, the consumer may ask for an
appropriate reduction to be made to the price (Article 3(5)). Alternatively, where the lack of conformity is not minor,
the consumer may request that the contract be rescinded (Article 3(6)).

When the final seller is liable to the consumer because of a lack of conformity, the final seller will be entitled to pursue
remedies against the person responsible, under the terms of national law. The lack of conformity, however, must result
from an act of commission or omission by the producer, a previous seller in the same chain of contracts or any other
intermediary (Article 4).

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Any guarantee (1) will be binding as per the terms set down in the guarantee, written contract or the associated
advertising (Article 6(1)). Further, the guarantee must feature in a written document, freely available for consultation
before purchase showing in particular the duration and territorial scope of the guarantee, and the name and address of
the guarantor (Article 6(2) and (3)). Where such a guarantee is offered and it does not conform to the provisions
contained in the Directive the consumer may still require the guarantee to be honoured (Article 6(5)). Contractual terms
or agreements waiving or restricting the rights resulting from the Directive are not binding on the consumer (Article
7(1)).

1.2.

Unfair terms in consumer contracts

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts

Objective

To eliminate unfair terms from contracts drawn up between a professional and a consumer.

Content

Directive 93/13/EEC applies to non-mandatory, non-negotiated contractual terms incorporated in contracts drawn up
between a professional and a consumer (Article 1). A non-negotiated term is unfair when it establishes a significant
imbalance, to the consumer’s detriment, between the rights and obligations of the contracting parties (a list of unfair
terms is annexed to the Directive) (Article 3). An allegedly unfair contractual term is assessed in the light of the nature
of the goods or services covered by the contract, the circumstances in which the contract is drawn up and other terms
in the contract or in another contract to which it relates (Article 4). Where there is doubt as to the meaning of a term,
the interpretation most favourable to the customer will prevail (Article 5). In all cases, such contractual terms found to
be unfair will not bind the consumer (Article 6).

1.3.

Package travel, package holidays and package tours

Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours

Objective

To approximate the laws, regulations and administrative provisions of the Member States concerning package travel,
package holidays and package tours sold or offered for sale in the territory of the Community.

Content

Directive 90/314/EEC applies to the sale of a pre-arranged combination of transport, accommodation and or other
tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the
package. For the Directive to be applicable it is necessary that two or more of these elements are sold or offered for
sale at an inclusive price and the service covers a period of more than 24 hours or includes overnight accommodation.

Any brochure made available to the consumer must indicate clearly and accurately the price, destination, itinerary and
the means of transport used, type of accommodation, meal plan, passport and visa requirements, health formalities,
timetable for payment and the deadline for informing the consumer in the event of cancellation (Article 3). Information
contained in the brochure becomes part of the contract (Article 3). Further, before conclusion of a contract the
organiser is required to provide, in writing, certain information regarding passports, visas (periods for obtaining them)
and health formalities (Article 4).

The organiser of the package must supply in writing the times and places of intermediate stops, details of the place to
be occupied by the traveller, the name address and telephone number of the organiser’s local representative or, failing
that, an emergency telephone number. There are additional details that must be provided where the journey is to
involve the transport of a minor as well as information on optional contracts covering insurance or assistance (Article
4(1)). The consumer may transfer his/her booking to another person (Article 4(3)).

(1) Any additional undertaking given by a seller or producer over and above the legal rules governing the sale of consumer goods

offered by the seller or producer.

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The price stipulated in the contract may only be changed if this is expressly provided for in the contract and variations
transportation costs, taxes or fees chargeable(Article 4(4)).
in price may only reflect changes in exchange rates,
Significant alterations to the contract entitle the consumer to withdraw from the contract without penalty and, should
the consumer withdraw, he is entitled to reimbursement of the sums paid (Article 4(6)). The organiser is responsible for
the failure to perform or the improper performance of the contract and, where appropriate, the consumer is entitled to
compensation for the non-performance of the contract (Article 4(7)).

Member States shall take the necessary steps to ensure that the organiser and/or retailer party to the contract is liable to
the consumer for the proper performance of the obligations arising from the contract. The organiser and/or retailer
is/are liable for any damage arising from failure to perform or improper performance provided that failure to perform
or improper performance is attributable to their fault or that of another supplier of services. The quantum of damage
may be limited in accordance with the international conventions. Where damage results that is not of the nature of
personal injury, a reasonable contractual limitation can be placed on the quantum of compensation for this damage
(Article 5).

The consumer must communicate any failure in the performance of a contract which he perceives on the spot to the
supplier of the services concerned and to the organiser and/or retailer in writing or any other appropriate form at the
earliest opportunity. This obligation must clearly and explicitly stated in the contract (Article 5). In cases of complaint,
the organiser and/or retailer or his local representative, if there is one, must make prompt efforts to find appropriate
solutions (Article 6).

1.4.

Contracts negotiated away from business premises

Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts
negotiated away from business premises

Objective

To protect consumers against dishonest business practices in connection with contracts negotiated away from business
premises.

Content

Directive 85/577/EEC applies to contracts, involving a payment of over EUR 60 (Article 3), entered into between a
trader and a consumer during an excursion organised by the trader away from his business premises. The Directive is
also applicable to contracts entered into during a visit by a trader to a consumer’s home or place of work. Provided the
visit does not take place at the express wish of the consumer or, where the consumer requested the visit, the consumer
could not have known the extent of the trader’s commercial activities the Directive is applicable. Finally, the Directive
also applies to contracts in respect of which the consumer makes a contractual or non-contractual offer to receive a
visit from or take part in an excursion organised by a trader (Article 1). The trader is required to inform consumers in
writing about their right to cancel the contract (Article 4). Once informed, consumers have seven days within which to
exercise this right of cancellation (Article 5).

1.5.

Consumer credit

Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and
administrative provisions of the Member States concerning consumer credit as modified by Directives
90/88/EEC and 98/7/EC

Objective

To harmonise the rules governing consumer credit while ensuring a high level of consumer protection.

Content

Directive 87/102/EEC applies to credit agreements whereby a creditor grants a consumer credit in the form of a
delayed payment, a loan or a similar financial arrangement (Article 1). Credit agreements are to be made in writing
incorporating the essential terms of the contract including a statement of the annual percentage rate of charge and the
conditions under which this may be amended (Article 4).

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When credit is advanced on a current account other than on credit card accounts, the consumer has only to be
informed of certain matters in writing at or before the time the agreement is concluded. In particular, the consumer
must be informed of the credit limit (if there is one), the annual rate of interest and charges applicable and any changes
thereof and the procedure for terminating the agreement (Article 6). Where there is a consumer credit agreement
granted for the acquisition of goods with a right of repossession granted to the creditor, Member States must lay down
the conditions under which the goods may be repossessed and ensure there is no unjustified enrichment (Article 7).

Under a consumer agreement, where a consumer has discharged his or her obligations before the due date, the
consumer is entitled to an equitable reduction in the cost of the credit (Article 8). Consumer rights are to remain
unaffected by any assignation to a third party (Article 9). The Member State must also ensure further consumer
safeguards. These safeguards include protection if the consumer uses bills of exchange, promissory notes and cheques
for making payments or giving securities (Article 10). Also, under certain conditions, there is a right of redress against
the grantor of credit when the consumer has purchased goods or services under a credit agreement from a person
other than the creditor and the goods or service are not supplied or are not in conformity with the contract. This right
is in particular available only if the consumer has sought redress against the supplier but failed to obtain satisfaction
(Article 11).

1.6.

Distance contracts

Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of
consumers in respect of distance contracts

Objective

To approximate the laws, regulations and administrative provisions of the Member States concerning distance contracts
between consumers and suppliers by laying down a common set of minimum rules.

Content

Directive 97/7/EC applies to any contract ((cid:145)distance contract(cid:146)) concerning goods or services concluded between a
supplier and a consumer under an organised distance sales or service-provision scheme run by the supplier. For
Directive 97/7/EC to be applicable, the supplier, for the purpose of the contract, must make exclusive use of one or
more means of distance communication up to and including the moment at which the contract is concluded (Article
2(1)).

Prior to the conclusion of a distance contract,
the consumer must be provided with clear and comprehensible
information, complying with the principles of good faith in commercial transactions. In particular, this information
must state: the identity and, possibly, the address of the supplier; the characteristics of the goods or services and their
price; delivery costs;
the right of
withdrawal; the period for which the offer or the price remains valid and the minimum duration of the contract, where
applicable, the cost of using the means of distance communication. Where dealings are by telephone, the identity of the
caller and commercial purpose of the call must be made clear at the beginning (Article 4).

the arrangements for payment and delivery or performance;

the existence of

The consumer must receive written confirmation or confirmation in another durable medium (electronic mail) at the
time of performance of the contract. The following information must also be given in writing: arrangements for the
exercise of the right of withdrawal; the place to which consumer complaints are to be addressed; information relating
to after-sales service; conditions under which the contract may be rescinded (Article 5).

The consumer has the right of withdrawal with regard to most distance contracts. Where the supplier has met his
obligations relating to the provision of information, the consumer has at least seven working days to cancel the
contract without penalty. Where the supplier has failed to meet his obligations concerning information, this period is
extended to three months (Article 6(1)). The supplier is obliged to repay the amounts paid by the consumer within 30
days after the exercise of the right of withdrawal (Article 6(2)).

In principle, the supplier has 30 days in which to perform the contract (Article 7(1)). Where the supplier fails to
perform his side of the contract, the consumer must be informed and any sums paid refunded (Article 7(2)). In some
cases it is possible to supply substitute goods and services. Member States shall ensure that appropriate measures exist
to allow a consumer to request cancellation of a payment where fraudulent use has been made of his payment card in
connection with distance contracts covered by Directive 97/7/EC. In the event of fraudulent use of a payment card, the
consumer is to be credited with the sums paid or have them returned (Article 8).

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Where unsolicited goods are supplied, the consumer’s failure to reply does not constitute consent (Article 9). The use of
an automatic calling machine or fax machine by a supplier to communicate with a consumer requires the prior consent
of the consumer. Other means of distance communication that allow individual communication may be used only
where there is no clear objection from the consumer (Article 10).

Public bodies, consumer and professional organisations may take action before the courts or competent administrative
bodies in the event of disputes. (Article 11).

1.7.

Timeshare immovable property

Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis

Objective

To approximate laws, regulations and administrative provisions of the Member States on the protection of persons who
purchase the right to use immovable property on a timeshare basis.

Content

Directive 94/47/EC covers aspects relating to information on the constituent parts of the contract relating to the right
to use immovable property on a timeshare basis and the procedures for cancelling and withdrawing from such
contracts (Article 1). On request, the vendor is required to supply a document containing a general description of the
property. Also certain minimum items referred to in the Annex to the Directive (identity and domicile of the parties
concerned, number of the building permit, etc.), along with details of how to obtain further information, should this be
required, is to be supplied in the same document. This information forms an integral part of the contract (Article 3).

The purchaser has a right of withdrawal. This may be done within 10 days of signing the contract without giving any
reason with the effect of the cancellation of the contract (Article 5(1)). Only those expenses incurred as a result of the
conclusion of and withdrawal
from the contract are liable to be repaid (Article 5(3)). The purchaser’s right of
cancellation may be exercised within three months of signing the contract if the information required by the Directive
is not included. In this eventuality the purchaser is not required to make any repayment (Article 5(1)). Any clauses
incorporated into the contract that are contrary to the rights of the purchaser and/or the responsibilities of the vendor
under the Directive will not be binding on the purchaser (Article 8).

1.8.

Distance-marketing of consumer financial services

Proposal for a directive concerning the distance-marketing of consumer financial services, and amending
Council Directives 90/619/EEC, 97/7/EC and 98/27/EC (1)

Objective

To establish a harmonised and appropriate legal framework for distance contracts, pertaining to financial services while
ensuring an appropriate level of consumer protection.

Content

This proposal for a directive aims to establish common rules to govern the conditions under which distance contracts
for financial services are concluded. The proposal covers contracts for retail financial services negotiated at a distance
by any means that does not require the simultaneous physical presence of the parties to the contract.

By the proposal there is a duty to provide information to the consumer prior to the conclusion of the contract. The
supplier is required to transmit a draft contract to the consumer, in writing or other durable form, provided that the
consumer gives his consent to the transmission. The draft contract is to include all the contractual terms and
conditions, together with a summary of them.

(1) As at 5 December 2000, this proposal was awaiting a Council Common Position following a first reading in the European

Parliament where modifications were made to the original proposal.

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The proposal refers to the entitlement to a reflection period for the consumer prior to the conclusion of a contract and
the right of withdrawal with some exemptions, together with the obligation of payment for services rendered provided
these are rendered before the consumer exercises the right of withdrawal.

Payments made by electronic means can be cancelled if fraudulent use is made of such means and limits are placed on
certain means of distance communication.

2.

SYSTEMS OF PAYMENT

2.1.

Late payments in commercial transactions

Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late
payment in commercial transactions

Objective

To combat late payments made as remuneration in commercial transactions within the European Union, whether the
delays in payment are between enterprises or between the public sector and an enterprise.

Content

Directive 2000/35/EC contains a wide range of measures to combat late payments in commercial transactions within
the European Union. The Directive applies to all payments made as remuneration for commercial transactions (Article
1). These measures apply to all delays in payment between enterprises and between the public sector and enterprises
(Article 2(1)).

In addition the Directive lays down a legal framework to discourage late payments. In particular, Member States shall
ensure that interest shall become payable from the day following the date or the end of the period for payment set
down in the contract. If the date or period for payment is not fixed in the contract, interest shall become payable
automatically, without the necessity of a reminder, 30 days following the date of receipt by the debtor of the invoice or
an equivalent request for payment. Where there is a procedure of acceptance or verification by which conformity of
the goods or services with the contract is to be ascertained, interest shall become payable 30 days after the date of the
procedure. If the debtor receives an invoice or an equivalent request for payment earlier or on the date on which such
acceptance or verification takes place, time runs from the later date. The interest rate charged for late payments shall be
that applied by the European Central Bank plus a margin of seven percent at least (Article 3).

Member States shall also provide in conformity with the applicable national provisions that the seller retains title to
goods until they are fully paid, if a retention of title clause has been expressly agreed between the buyer and the seller
before the delivery of the goods (Article 4). Member States are also to provide that, where the debt is not in dispute, an
enforceable title can be obtained irrespective of the amount of the debt, usually within 90 calendar days of the lodging
of the creditor’s action or application at the court or other competent authority (Article 5).

2.2.

Cross-border credit transfers

Directive 97/5/EC of the European Parliament and of the Council of 27 January 1997 on cross-border credit
transfers

Objective

To establish minimum information and performance requirements for cross-border credit transfers up to EUR 50 000,
effected in the currencies of the Member States and in euro within the European Union and the European Economic
Area and carried out on the initiative of an originator. The overriding purpose of Directive 97/5/EC is to enable funds
to be transferred from one part of the Community to another rapidly, reliably and inexpensively. Debit transfers and
payments by cheque are not within the scope of Directive 97/5/EC.

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Content

(1) O b l i g a t i o n o f t r a n s p a r e n c y v i s - (cid:224) - v i s t h e c u s t o m e r ( A r t i c l e s . 3 a n d 4 )

Before carrying out a cross-border credit transfer, institutions must provide general information on the arrangement of
such a transfer. In particular, the execution time, the method of calculating any commission fees and charges payable
by the customer to the institution, the value date applied by the institution, details of complaint and redress procedures,
the reference exchange rates used.

After a cross-border credit transfer has been carried out, institutions must provide information consisting of a reference
enabling the customer to identify the transfer, the actual (original) amount of the transfer, the amount of any charges
or commissions payable by the customer and the value date applied by the institution.

If the originator has specified that the transfer charges are to be completely borne by the beneficiary or that the charges
shall be shared with the beneficiary, the latter must be informed of this by his own institution.

(2) M i n i m u m s t a n d a r d s f o r t h e t r a n s f e r

In cases of cross-border credit transfers with stated specifications, the institution must, at the customer’s request, either
give an undertaking concerning the time needed for carrying out the transfer and the commission fees and charges, or
refrain from accepting to carry out the transfer (Article 5).

The transfer must be effected within the agreed time limit. If this agreed time limit is not complied with, rules
providing for compensation have been included in the Directive. No compensation is to be paid if the beneficiary’s
institution can establish that the delay is attributable to the originator or to the beneficiary (Article 6).

The originator’s institution, any intermediary institution and the beneficiary’s institution, after the date of acceptance of
the cross-border credit transfer order, shall each be obliged to execute that credit transfer for the full amount thereof.
This is the case unless the originator specifies that the costs of the cross-border credit transfer are to be borne wholly
or partly by the beneficiary. Wrongful deductions by the originator’s or the beneficiary’s institution or any intermediary
institution must be refunded (Article 7).

In cases where an originator’s institution accepts a transfer order but the relevant amount is not credited to the account
of the beneficiary’s institution the money-back guarantee of up to EUR 12 500 plus interest and charges applies (Article
8).

2.3.

Settlement finality in payment and securities settlement systems

Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in
payment and securities settlement systems

Objective

To reduce the systemic risk inherent in payment and securities settlement systems and to minimise the disruption
caused by the insolvency of a participant in such a system. Directive 98/26/EC was created to deal with the legal
problems specifically linked to insolvency situations and bankruptcy (i.e. rights of foreign creditors) and to protect the
development of a single monetary policy in the European monetary union (EMU) by promoting the efficiency of
cross-border operations.

Content

Directive 98/26/EC protects (cid:145)netting(cid:146) (1) in securities settlement systems, insulates collateral given to the operators of
these systems from the effect of bankruptcy and clarifies the law applicable to dispositions of collateral evidenced by
recording in a register ((cid:145)book-entry securities(cid:146)). Settlement systems for securities are also protected by a general clause

(1) The conversion into one net claim or one net obligation of claims and obligations resulting from transfer orders which a participant
or participants either issue to, or receive from, one or more other participants with the result that only a net claim can be demanded
or a net obligation be owed (Directive 98/26/EC, Article 2(k)).

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against the insolvency of a participant in a system (Articles 1 and 2). The law governing rights and obligations arising
from participation in a securities settlement system is the law applicable to that system (Article 3(3)). The Directive also
covers collateral security provided in connection with operations of the central banks of the Member States in the
performance of their central banking functions (including national monetary policy) (Article 4).

3.

COMMERCIAL AGENTS

Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States
relating to self-employed commercial agents

Objective

Directive 86/653/EEC coordinates national laws governing the legal relationships of self-employed commercial agents
and their principals. An objective of social protection for commercial agents is pursued by the Directive, which sets
minimum levels of harmonisation in this area. The provisions of the Directive cannot be derogated from to the
detriment of a commercial agent. Agreements leading to a contract more favourable to the commercial agent are
permitted. The Directive also lays down provisions concerning the remuneration of the agent and the right to
indemnity or reparation where the agent suffers harm by the cessation of the contract.

Content

(1) S c o p e o f a p p l i c a t i o n

Directive 86/653/EEC applies to contracts for goods (and not services) made between a self-employed intermediary (the
commercial agent) and the principal. The commercial agent must have the continuing authority to negotiate the sale or
the purchase of goods on behalf of and in the name of another person (the principal) or to negotiate and conclude
such transactions on behalf of and in the name of that principal in return for payment.

Under the Directive the notion of a commercial agent has independence from the principal at its core, therefore
excluding salaried commercial intermediaries and representatives of the principal from the scope of application of the
Directive (Article 1). Certain further categories of commercial agents are also excluded from the scope of the Directive
(Article 2).

(2) O b l i g a t i o n s i m p o s e d o n p a r t i e s t o t h e c o n t r a c t ( A r t i c l e s 3 t o 5 )

Directive 86/653/EEC imposes a non-excludable obligation on a commercial agent to look after his principal’s interests
and act dutifully and in good faith. The duty includes the obligation on the agent to make proper efforts to negotiate
and, where appropriate, conclude the transactions upon which he has received instructions. The agent must also
communicate to the principal all the necessary available information and comply with the reasonable instructions given
by principals.

The principal has a reciprocal non-excludable obligation to act dutifully and in good faith. In particular, to provide the
commercial agent with necessary documentation relating to the goods concerned. Th principal must also obtain for the
commercial agent the information necessary for the performance of the agency contract, in particular notification once
the principal anticipates that the volume of commercial transactions will be significantly lower than that which could
have been normally expected.

(3) R e m u n e r a t i o n f o r t h e c o m m e r c i a l a g e n t ( A r t i c l e s 6 t o 1 2 )

In the absence of an agreement to the contrary made between the parties and without prejudice to the application of
compulsory provisions of the Member States, a commercial agent shall be entitled to the remuneration that is
customary for commercial agents in the market upon which the agent is operating. Where there is no commercial
customary practice, the commercial agent shall be entitled to reasonable remuneration taking into account all the
aspects of the transaction (Article 6).

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Where the commercial agent is remunerated wholly or in part by commission a commercial agent shall be entitled to
commission on transactions concluded during the period covered by the agency contract. The commission arrangement
envisaged under the Directive is as follows:

(1)

the agent is entrusted with a specific geographical area or group of customers or alternatively, where the agent has
an exclusive right to a specific geographical area or group of customers; and

(2)

the transaction has been entered into with a customer belonging to that area or group (Article 7).

The entitlement to a commission on commercial transactions continues after the agency contract has been terminated
(Article 8), provided the payment of the commission is equitable in the circumstances (Article 9). The commission
becomes due once the transaction has been executed and should not be paid any later than on the last day of the
month following the quarter in which it became due (Article 10).

The principal shall supply the commercial agent with a statement of the commission due within a set time period. The
agent is entitled to demand that he be provided with all information that is available to the principal that is needed to
check the amount of commission due to him (Article 12).

(4) F o r m , d u r a t i o n a n d t e r m i n a t i o n o f t h e c o n t r a c t ( A r t i c l e s 1 3 t o 2 0 )

Directive 86/653/EEC leaves open the possibility of concluding an agency contract in verbal or written form, it is left
to the Member States to determine whether an agency contract shall be valid if not evidenced in writing. Regardless of
this, each party is entitled to receive from the other, on request, a signed written document setting out the terms of the
agency contract (Article 13).

A fixed-term agency contract that continues to be performed beyond its agreed duration shall be converted into an
agency contract for an indefinite period (Article 14).

An agency contract for an indefinite term may be terminated by notice equal to one month for every year that the
contract remains in force. The parties cannot agree a shorter term than this. If the parties agree a longer term than this
then the period of notice must be the same for both parties. Member States may fix the period of notice at four to six
months, once the contract has been effective for a corresponding number of years (Article 15).

Directive 86/653/EEC also imposes an obligation on all Member States to take necessary measures to ensure the
commercial agent has a right to indemnity (Article 17(2)) or compensation (Article 17(3) and (4)) where the principal
has terminated the agency contract without justification (Article 18). This right may not be derogated from before the
agency contract expires.

Further, in contracts relating to commercial agency, a restraint-of-trade clause will only be valid if it is no more than
two years in duration and only to the extent that it is concluded in writing. The restraint-of-trade clause must also
relate to a geographical area or group of customers and geographical area entrusted to the commercial agent, and to
the kind of goods covered by his agency under the contract. The provisions in Directive 86/653/EEC do not affect the
provisions of national
trade clauses or reducing the
obligations in the parties resulting from such agreements (Article 20).

law restricting the validity or enforceability of restraint of

4.

POSTING OF WORKERS

Directive 96/71/CE of the European Parliament and of the Council of 16 December 1996 concerning the
posting of workers in the framework of the provision of services

Objective

To remove uncertainties and obstacles which may impede the freedom to provide services, by increasing legal certainty
and allowing identification of the terms and conditions of employment applicable to workers who carry out temporary
work in a Member State other than that whose law governs their employment relationship; to avoid the risks of abuse
and exploitation of posted workers.

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Content

(1) S c o p e

The Directive applies to undertakings which, in the framework of the transnational provision of services, post workers
to the territory of a Member State:

(cid:151) on their account and under their direction, under a contract concluded between the undertaking making the

posting and the party for whom the services are intended,

(cid:151) to an establishment or to an undertaking owned by the group,

(cid:151) as a temporary employment undertaking, to a user undertaking.

(2) O b l i g a t i o n s

Member States must ensure that undertakings guarantee posted workers a central core of mandatory protective rules
laid down in the Member State in which the work is carried out:

(cid:151) by law, regulation or administrative provision, and/or

(cid:151) by collective agreements or arbitration awards which have been declared universally applicable, in so far as they

concern the activities set out in the Annex to the Directive (construction).

Conditions of work and employment to be covered are:

(cid:151) maximum work periods and minimum rest periods,

(cid:151) minimum paid annual holidays,

(cid:151) minimum rates of pay, including overtime rates,

(cid:151) conditions of hiring-out of workers, in particular by temporary employment undertakings,

(cid:151) health, safety and hygiene at work,

(cid:151) protective measures with regard to the terms and conditions of employment of pregnant women or women who

have recently given birth, of children and of young people,

(cid:151) equality of treatment between men and women and other provisions of non-discrimination.

5.

LIABILITY FOR DEFECTIVE PRODUCTS

Council Directive 85/374/EEC of 25 July 1985 on the approximation of
the laws, regulations and
administrative provisions of the Member States concerning liability for defective products (as amended by
Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999).

Objective

Directive 85/374/EEC (as amended by Directive 1999/34/EC) is an internal market measure striking a balance between
thus eliminating
a high level of consumer protection and a stable legal
competition distortion due to diverging liability regimes and facilitating the free circulation of goods under common
liability rules.

liability for producers,

framework of

Content

Council Directive 85/374/EEC of 25 July 1985 sets common liability rules in the case of damages caused to individuals
by defective goods. A defective product is any movable that is lacking the safety which the public at large is entitled to
expect, taking into account the presentation of the product, the reasonably expected use of the product and the time
when the product was put into circulation (Articles 2 and 6).

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Directive 1999/34/EC extended the scope of Council Directive 85/374/EEC to primary agricultural products. Producer
liability in each Member State is limited to a threshold of no lower than EUR 70 million for death or personal injury
caused by identical items with the same defect (Article 16). The Directive does not affect the rights victims may have
under existing legislation on contractual and non-contractual liability.

The producer (or the importer) is liable to compensate the death or personal injury and damages to property caused by
the defective product, whether or not he is negligent. The victim has to prove the existence of actual damage, a defect
in the product and a causal link between both (Article 4). The Directive introduces joint and several liability where
several persons are liable for the same damage (Article 5). The producer is not liable if he proves the existence of
exonerating circumstances by which he has reduced or, where appropriate, no liability in case of
the victim’s
contributory negligence (Article 7).

The victim must file an action for damages before the end of a three-year limitation period. Under the Directive, the
producer is not liable for damage 10 years after the product has been put on the market (Article 10). Waivers of
liability are not valid.

6.

ELECTRONIC COMMERCE

6.1.

Electronic commerce services

Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of
information society services,
((cid:145)Directive on
electronic commerce(cid:146))

in particular electronic commerce,

in the internal market

Objective

Directive 2000/31/EC seeks to contribute to the proper functioning of the internal market by ensuring the free
movement of information society services between the Member States. (Article 1(1)).

Content

The Directive contains a number of specific obligations relevant concerning contract law, in particular the following.

(cid:151) Member States shall ensure that their legal systems allow contracts to be concluded by electronic means. Member
States shall in particular ensure that the legal requirements applicable to the contractual process neither create
obstacles for the use of electronic contracts nor result in such contracts being deprived of legal effectiveness and
validity on account of being made by electronic means (Article 9(1)).

(cid:151) Transparency rules applicable to the contractual process are to be respected by the service provider. These rules
provide that the service provider must clearly, comprehensively and unambiguously ensure certain information is
given to the consumer; in particular, the different technical steps to follow to conclude the contract. For example,
whether or not the concluded contract will be filed by the service provider and will be accessible, the technical
means for identifying and correcting input errors prior to the placing of the order and the languages offered for
the conclusion of the contract. Further, the service provider must also indicate any relevant codes of conduct to
which he subscribes and information on how these codes can be consulted electronically. This information must be
supplied prior to the order being placed by the recipient of the service (Article 10(1) and (2)).

(cid:151) Where the recipient of the service places his order through technological means, the service provider has to
acknowledge receipt of the recipient’s order without undue delay. Receipt takes place where the party to whom the
communication is addressed is able to access them. (Article 11(1)).

(cid:151) Member States shall ensure that the service provider makes available to the recipient of the service the technical

means allowing him to identify and correct input errors, prior to the placing of the order. (Article 11(2).

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6.2.

Electronic signatures

Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community
framework for electronic signatures

Objective

To ensure the proper functioning of the internal market in the field of electronic signatures, by creating a harmonised
and appropriate legal framework for the use of electronic signatures within the European Community.

Content

Directive 1999/93/EC enforces the recognition of electronic signatures that have previously been unrecognised, solely
by reason of their electronic form. The Directive sets criteria which forms the basis for the legal recognition of
electronic signatures by focusing on certification services (Article 1). Electronic signatures that conform to the
requirements of Directive 1999/93/EC will automatically be accorded the same status as written signatures in the law of
the Member State concerned. These signatures are then admissible as evidence in legal proceedings in the same manner
as handwritten signatures (Article 5).

7.

FINANCIAL SERVICES

General remarks

Directives concerning banking, assurance and movable valuables set down a financial and prudential regime that
regulates the conditions of establishment and the allocation of services of
institutions in the European
Community. By definition, therefore, these do not consist of private law arrangements. The sole texts that concern
aspects of private law relevant to contract law and financial services are as follows.

financial

7.1.

Banking

7.1.1.

Solvency ratios for credit institutions

Directive 96/10/EC of the European Parliament and of the Council of 21 March 1996 amending Directive
89/647/EEC as regards recognition of contractual netting by the competent authorities (solvency ratios for
credit institutions)

Objective

To contribute to the harmonisation of prudential supervision and to strengthen solvency standards among Community
credit institutions, thereby protecting depositors and investors and maintaining banking stability.

Content

The amended Directive on solvency ratios applies to credit institutions (defined in Directive 77/780/EEC). The own
its assets and
funds of each credit
off-balance-sheet business (Article 5(1)).

institution are expressed as a proportion of

the risk-adjusted value of

The risk-adjusted value of assets and off-balance-sheet business relates primarily to the credit risks associated with
counterpart default, and a distinction is made between the degrees of risk associated with particular assets and
off-balance-sheet items, and with particular categories of borrower (Article 5).

Weightings vary between low-risk items and high-risk items (Article 6). The prescribed minimum ratio is 8 % (Article
10). After January 1993, credit institutions are required to maintain at all times a ratio of at least 8 %. It is the
responsibility of the national supervisory authority to ensure this ratio is adhered to (Article 10(3)).

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7.2.

Insurance

7.2.1.

Life insurance

Council Directive 79/267/EEC of 5 March 1979 on the coordination of laws, regulations and administrative
provisions relating to the taking-up and pursuit of the business of direct life insurance (first life assurance
Directive)

Council Directive 90/619/EEC of 8 November 1990 on the coordination of laws, regulations and administrative
provisions relating to direct life assurance,
laying down provisions to facilitate the effective exercise of
freedom to provide services and amending Directive 79/267/EEC (second life assurance Directive)

Council Directive 92/96/EEC of 10 November 1992 on the coordination of
regulations and
administrative provisions relating to direct life assurance and amending Directives 79/267/EEC and 90/619/EEC
(third life assurance Directive)

laws,

Objective

To facilitate the effective exercise of the right to supply life assurance services and lay down special rules relating to
freedom to provide cross-frontier services in the life assurance field.

Content

These Directives in the field of life assurance lay down a detailed regime in the field of life insurance. This includes a
very detailed obligation to provide essential
information concerning a proposed contract for the provision of life
assurance. Some of the clauses contained in the Directives are of general application, whereas others apply only to the
provision of cross-border services. The Directives are applicable to both individual and group life assurance, but not to
the management of group pension funds.

Directive 92/96/EEC draws a distinction between those insurance contracts undertaken on the initiative of the policy
holder and a second category,
individual contracts not resulting from such initiatives. Life insurance
contracts not entered into upon the initiative of the policy holder, the second category, gain a greater degree of
protection.

including all

Contracts entered into on the initiative of the policy holder are subject to the control of the State of the establishment
of the insurer. Before entering into a life assurance contract of his own initiative in another Member State, the policy
holder must sign a statement that he is aware that the commitment is subject to the rules of supervision of the Member
State of the insurer who is to cover the commitment. The own-initiative policy holder also has a period of between 15
to 30 days within which to cancel the life assurance contract (Directive 90/619/EEC, Article 15).

A different regime applies to contracts other than those made on the initiative of the policy holder. These are subject to
the application of and the supervision by the Member State in which the service is supplied, the supervisory rules of
the Member State of commitment (risk country control). This is the case so long as the parties do not make a valid
choice of the law of another country.

There are also provisions on the choice of law that is to govern the relationship between the insurer and policy holder.
In general, the law applicable will be the law of the Member State of where the commitment was made. There are,
however, provisions to allow the freedom to choose a different contract law.

Every contract subject to European Community life insurance rules is subject only to indirect taxes on premiums
applicable in the Member State of commitment. The tax arrangements of the country of the policy holder are therefore
applied for the benefit of that country.

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7.2.2.

Insurance other than life insurance

Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative
provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and
88/357/EEC (third non-life insurance Directive)

Objective

To lay down rules for the exercise of cross-frontier non-life insurance which balances the needs of freedom of services
and consumer protection.

Content

Directive 92/49/EEC amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive) establishes
the obligation on a non-life insurer to inform a prospective party to an insurance contract of certain details. In
particular the insured must be informed of the Member State in which the head office or, where appropriate, the
branch of the insurer with which the contract is to be concluded is or is to be situated. Any document that grants
insurance cover must state the address of the head office or where appropriate the branch of the insurance undertaking
granting cover (Article 43). Directive 92/49/EEC also places an obligation on the insurer to inform the insured of the
law applicable to the contract before the conclusion of proposed insurance contract (Article 31).

7.3.

Transactions in securities

7.3.1.

Publication of listing particulars

Council Directive 80/390/EEC of 17 March 1980 coordinating the requirements for the drawing-up, scrutiny
and distribution of the listing particulars to be published for the admission of securities to official stock
exchange listing

Objective

Council Directive 80/390/EEC aims to provide actual and potential investors in securities with adequate and objective
information, by coordinating the requirements regarding the listing particulars to be published by issuers of securities.
Council Directive 80/390/EEC also coordinates the requirements for the drawing-up, scrutiny and distribution of listing
particulars to be published for the admission of securities to official stock exchange listing.

Content

Listing particulars shall contain all necessary information, on both natural and legal persons, to enable investors and
their investment advisers to make an informed assessment of the assets and liabilities, financial position, profits and
losses, and prospects of the issuers and of the rights attaching to such securities (Article 4). Similar requirements are
applicable to the auditing of accounts (which are included in the listing particulars).

Violation of these obligations normally will lead to misleading information being published. This will be sanctioned as
violation of contract law or tort law depending on the provisions of national law.

The designated competent authorities are required to check that listing particulars meet the requirements set out in
Directive 80/390/EEC and, consequently, may be liable in private law in the case of approval of listing particulars
containing misleading information (Article 18). Directive 80/390/EEC does not affect the liability of the competent
authority. This continues to be governed solely by the applicable national law (Article 18(4)).

7.3.2.

Public offer prospectus

Public offer prospectus (cid:151) Council Directive 89/298/EEC of 17 April 1989 coordinating the requirements for
the drawing-up, scrutiny and distribution of the prospectus to be published when transferable securities are
offered to the public

Objective

To coordinate the requirements for the drawing-up, scrutiny and distribution of the prospectus to be published when
transferable securities are offered to the public for the first time.

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Content

Directive 89/298/EEC applies to securities, except open-ended collective investment undertakings and euro-securities,
which are offered for the first time to the public for subscription or sale in a Member State (Article 1(1)).

Directive 89/298/EEC imposes the requirement for the prospectus to be published by the person making the public
offer (Article 4). The prospectus should include all information needed to make an informed financial assessment of the
securities (Article 11). There are less-detailed rules of disclosure where there is no application for official listing.

Directive 89/298/EEC does not impose the obligation of examination of the public offer prospectus before publication
by competent authorities; this is left to the discretion of the Member State. The only public offer prospectuses that
can be mutually recognised and used for multinational offers, however, are those which have been drafted and
examined according to the requirements of Directive 80/390/EEC on listing particulars (Article 21).

7.3.3.

Investment services in the securities field

Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field.

Objective

To liberalise access to stock exchange membership and financial markets in host Member States for investment firms
authorised to provide the services concerned in their home Member States.

Content

Council Directive 93/22/EEC requires a Member State to draw up rules of conduct which investment firms shall
observe at all times (Article 10). These rules must implement the principles set out in the Directive. National rules are
obliged to require, amongst other things, that the investment firm acts honestly and fairly in conducting its business
activities in the best interest of its client. The investment firm is also required to seek from its client information
regarding their financial situation,
investment experience and objective with regard to the services requested. The
investment firm is further required to make adequate disclosure of relevant material information and avoid conflicts of
interests (Article 11).

These are not contract law provisions (cid:151) many provisions might influence a contractual situation, however, they are
not part of contract law themselves.

8.

PROTECTION OF PERSONAL DATA

Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal data and on the free movement of such data

Objective

To harmonise national laws relating to the processing of personal data and protect the rights and freedoms of persons,
in particular the right to privacy.

Content

Directive 95/46/EEC seeks to ensure a high level of personal data protection in the European Union. The Directive
regulates at Community level the basic civil right of privacy as regards the processing of personal data, especially in
view of a substantial increase in the cross-border flow of personal data caused by the internal market.

(1) T h e c o n t r a c t

(cid:151) Data processing is permissible if it is necessary for the performance of a contract to which the data subject (a
natural person who can be identified, directly or indirectly) is party or in order to take steps at the request of the
data subject prior to entering in to the contract (Article 7).

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(cid:151) Where a processor (the natural or legal person) processes data on behalf of a controller (the natural or legal person
which determines the purposes and means of the processing of personal data), there must be a contract or other
legal act that governs their relationship. This contract or other legal act should include certain guarantees that bind
the processor to the controller, for instance that the processor shall act only on instructions from the controller
(Article 17).

(2) T r a n s f e r o f p e r s o n a l d a t a t o t h i r d c o u n t r i e s

Directive 95/46/EC stipulates that the transfer of personal data to third countries can take place only if the third
country in question ensures an (cid:145)adequate level of protection(cid:146) (Article 25). There are, however, special situations which
by way of derogation and in the absence of an adequate level of data protection ensured by the recipient country, the
transfer of personal data to third countries may take place (Article 26).

(3) A g r e e m e n t s a n d e x p r e s s i o n s o f w i l l ( R e c h t s g e s c h (cid:228) f t i n G e r m a n l e g a l l i t e r a t u r e )

Article 2(h) of Directive 95/46/EC defines the data subject’s consent in general terms. Specific requirements for the data
subject’s consent to processing or personal data are listed in Article 7 (unambiguous consent) and Article 8 (explicit
consent).

(4) L i a b i l i t y

Article 23 of Directive 95/46/EC regulates the liability for unlawful processing of personal data and compensation to
the data subject for the damage suffered.

9.

COPYRIGHT AND RELATED RIGHTS

General remarks

Contract law in the field of intellectual property rights (IPR) has been left to national legislative provisions to a large
extent. Nevertheless, international protection of copyright and related rights is the subject of three major multilateral
agreements. Namely, these are the Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971),
the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations
(1961) and the Agreement on Trade-related Aspects of
Intellectual Property Rights (TRIPs Agreement, 1995).
Furthermore, the European Community and its Member States have already decided to ratify the WIPO Copyright
Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) which significantly update international
protection for intellectual property and improve the means to fight piracy worldwide (see Annex I).

In the field of copyright and related rights the European Community has adopted five Directives (see below). There is a
further Directive dealing with the protection of layout. These Directives set out specific rules concerning in particular,
the contents of the substantive rights, the remuneration of right-holders and the administration of that remuneration.

Licensing contracts and contractual relations concerning copyright have not been subject to overall harmonisation
within the Community. On the other hand, rights administration or licensing in general and the issue of collective
management in particular has been addressed in several Community instruments.

9.1.

Rental, lending and other rights related to copyright in the field of intellectual property

Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights
related to copyright in the field of intellectual property

Objective

To harmonise the law relating to rental right, lending right and certain rights related to neighbouring rights, including
the right of fixation, reproduction, broadcasting and distribution to the public, so as to provide a high level of
protection of literary and artistic property.

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Content

Council Directive 92/100/EEC provides for an exclusive right to authorise or prohibit the rental and lending of both
works subject to copyright and other objects subject to neighbouring rights.

Provisions of the Directive refer to contractual relationships between performers and authors on the one side, and film
producers on the other (Article 2(5), (6) and (7)). They contain rules on the presumption of transfer of certain rights in
film productions including the right for authors and performers to equitable remuneration for rental of phonograms
and films that cannot be waived (Article 4). The administration of this right may be entrusted to collecting societies
representing authors or performers. The rights referred to in this Directive may be transferred, assigned or subject to
the granting of contractual licences (Articles 2(4), 7(2) and 9(4)).

9.2.

Term of protection of copyright and certain related rights

Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection of copyright and certain
related rights

Objective

Council Directive 93/98/EEC establishes a total harmonisation of the period of protection for all types of works and
subject matter protected by copyright and related rights in the Member States.

Content

Under Council Directive 93/98/EEC the duration of protection for copyright lasts 70 years after the death of the author
(or 70 years after an anonymous work is lawfully available to the public), and 50 years for the neighbouring rights
after the event setting the term running (Article 1). Directive 93/98/EEC also deals with other issues, such as the
protection of previously unpublished works (Article 4) critical and scientific publications (Article 5) and photographic
works (Article 6).

9.3.

Computer programs

Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs

Objective

Directive 91/250/EEC aims to harmonise Member States’ legislation concerning the protection of computer programs in
order to create a legal environment that will afford a degree of security against unauthorised reproduction of such
programs.

Content

Directive 91/250/EEC gives copyright protection to computer programs as literary works within the meaning of the
Berne Convention for the Protection of Literary and Artistic Works. It provides a number of exclusive rights and lists
some exceptions to these rights (including the important possibility of de-compiling a program to make it interoperable
with other programs). It also provides rules on some issues of enforcement and harmonises the level of originality
required for protection.

The Directive addresses issues of contractual relations by granting minimum rights to users. In particular, the right for
any lawful user of a computer program to make a back-up copy of the program, (cid:145)in so far as it is necessary for that
use(cid:146), may not be set aside by contract (Article 5(2)). The possibility to observe, study or test the functioning of the
program (Article 5(3)) cannot be prevented by contract. Furthermore, the Directive provides that any contractual
provisions contrary to the de-compilation exception (Article 6) are null and void.

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9.4.

Databases

Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of
databases

Objective

Directive 96/9/EC provides harmonised protection,
provisions, and non-original databases through a sui generis regime.

for both original databases, through the Directive’s copyright

Content

Any original collections of work and compilation of data or other materials are covered by the copyright provisions
contained in Directive 96/9/EC (Article 1). In addition, the Directive introduces a sui generis regime setting out to
protect non-original databases made with substantial investments for a period of 15 years (Article 10).

The sui generis right may be transferred, assigned or granted under contractual licence (Article 7(3)). The Directive also
contains a provision similar to those in Directive 91/250/EEC on the legal protection of computer programs (Article 8).
In particular, any contractual agreement contrary to the possibility for the lawful user to extract and reutilise
insubstantial parts of the database for any purposes whatsoever, shall be null and void.

9.5.

Satellite broadcasting and cable retransmission

Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright
and rights related to copyright applicable to satellite broadcasting and cable retransmission

Objective

To fill the gaps in the protection of programmes broadcast across borders where satellite broadcasting or cable
retransmission are involved. Directive 93/83/EEC aims to remove legal uncertainties resulting from disparities in
Member States’ levels of protection of copyright and neighbouring rights in national rules and uncertainties concerning
the applicable law in the field of cross-border satellite broadcasting and the cable retransmission of programmes from
other Member States.

Content

Directive 93/83/EEC completes the Community’s initiative on establishing a European audiovisual area, namely the
missing elements to the (cid:145)television without frontiers Directive(cid:146) (89/552/EEC), which does not contain provisions on
copyright.

Directive 93/83/EEC states the principle that broadcasting and cable retransmission rights should only be acquired by
(individual or collective) agreements (instead of statutory licence systems)
(Articles 3 and 8). The Directive also
stipulates the mandatory administration by collecting societies of cable retransmission rights (Article 9). It also provides
for the assistance of one or more mediators in the case that no agreement is concluded regarding authorisation of the
cable retransmission of a broadcast (Article 11) and aims to prevent the abuse of negotiating positions (Article 12).

9.6.

Topographies of semiconductor products

Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor
products

Objective

To provide for the legal protection of the layout designs (topographies) of semiconductor products, whether individual
components or a part or the whole of an integrated circuit on a semiconductor chip.

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Content

Directive 87/54/EEC protects the intellectual property rights of the creator of a layout design, providing that the design
is a product of the creator’s own intellectual effort and is not commonplace in the industry. It includes the rights to
authorise or prohibit (a) the reproduction of a protected design and (b) its commercial exploitation or importation of a
design or a product incorporating the design.

Ongoing legislative actions

On the basis of the relevant provision (Article 14 ter) in the Berne Convention, the European Commission proposed a
Directive on the artist’s resale right (droit de suite) (1). Resale right is the right whereby the author, or after his death,
his heirs or other beneficiaries, receives a percentage of the resale price of a work in the field of visual arts each time it
is resold.

The Council has already reached a Common Position; according to Article 6(2) of
administration of the resale right may be entrusted to collecting societies.

the Common Position the

The draft Directive on copyright and related rights in the information society aims to ensure an internal market in
copyright and related rights with particular emphasis on new products and services. It will adjust and complement the
existing Community framework on copyright and related rights to respond to the new challenges of technology, to the
benefit of both right-holders and users. Furthermore,
implement the main obligations in substance of the
it will
WIPO-Internet Treaties at European Community level. Council has already reached political agreement on a Common
Position. Final adoption of the Directive on copyright and related rights in the information society could be attained by
early 2001 (2).

10.

PUBLIC PROCUREMENT

Ongoing legislative action

The European Commission has published a proposal to simplify and modernise the Directives on the coordination of
procedures for the award of public supply contracts, public service contracts and public works contracts (3). The
proposal
is presented in the form of a single text for supply, works and service contracts in order to codify the
procedures relating to these in one single text in order to maintain consistency during the legislative process. Title II of
the proposal concerns the specific rules applicable to contracts. The proposal is at an early stage in the legislative
process and a Council Common Position is expected no earlier than June 2001.

10.1.

Public service contracts

Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of
public service contracts

Objective

To coordinate procedures for the award of public service contracts in so far as such procurement is not already covered
by procedures for the award of public works contracts and public supply contracts.

Content

Directive 92/50/EEC applies to public service contracts the estimated value of which is not less than EUR 200 000 net
of VAT including estimated total remuneration of the service provider. The Directive covers contracts for services and
goods or supplies together if the value of the services exceeds that of the goods or supplies. The Directive does not
apply to contracts governed by certain international agreements or to be awarded under the specific procedure of an
international organisation, to contracts declared secret or the execution of which must be accompanied by special
security measures, nor to public service contracts awarded on the basis of an exclusive right enjoyed under national
provisions compatible with the Treaty.

(1) This proposal is currently awaiting second reading by the Council of Ministers (7 February 2001).
(2) This proposal is currently awaiting second reading by the European Parliament (7 February 2001).
(3) OJ C 29, 30.1.2001, p. 11.

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For all services, contracting authorities must define technical specifications consistent with European standards. For
those services defined as priority services (Annex IA) there are additional rules that apply concerning choice of award
procedures and rules governing design contests. Contracting authorities are obliged to adhere to one of three types of
procedure when awarding a contract for priority services. Firstly there is the open procedure where all
interested
contractors may submit tenders. Alternatively there is the restricted procedure where only contractors who have been
invited to submit tenders can do so. Finally there is the negotiated procedure in specified cases listed in the Directive,
whereby the contracting authority consults contractors of its choice and negotiates the terms of the contract with one
or more of them. A contracting authority may also decide to organise a design contest.

For priority services the Directive also sets out common advertising rules through the use of model notices. There are
also common rules on participation and the award of contracts to ensure that these are awarded on the basis of stated
criteria. Service providers who are bankrupt, in liquidation, having their affairs administered by the court or being
wound up may be excluded from selection.

10.2.

Public works contracts

Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of
public works contracts

Objective

To consolidate and coordinate procedures for the award of public works contracts.

Content

Directive 93/37/EEC applies to contracts (1) that have either the execution or both the execution and design, of works
involving building, civil engineering, installation or building completion work, or the execution, by whatever means, of
a work corresponding to the requirements specified by the contracting authority.

Member State contracting authorities financing more than 50 % of a works contract, with an estimated value net of
VAT above certain thresholds (2) awarded by themselves or another entity, are required to ensure that such a contract
must comply with the Directive.

Contracting authorities are obliged to adhere to one of three types of procedure when awarding a contract. Firstly there
is the open procedure where all
tenders. Alternatively there is the restricted
procedure where only contractors who have been invited to submit tenders can do so. Finally there is, in specified cases
listed in the Directive, the negotiated procedure whereby the contracting authority consults contractors of its choice
and negotiates the terms of the contract with one or more of them.

interested contractors may submit

The Directive also obliges contracting authorities to give technical specifications consistent with European standards for
the works in general or contractual documents relating to each contract. There is the obligation to publish notices, in
compliance with certain prescribed models and deadlines, giving certain items of information on the contract.

The Directive also lays down rules on the selection of contractors and award of contracts. An unsuccessful applicant or
tender who requests reasons for the rejection of his application of tender is to be informed of this within 15 days. This
is to be communicated in the form of a detailed written report on each contract awarded, identifying the contracting
authority, the successful applicants or tenderers and the reason for their selection. This report must also list the
unsuccessful applicants or tenders and the reason for their rejection, the successful bidder and the reason why this
tender was chosen.

(1) Excluding those concerning the production, transport and distribution of drinking water; contracts awarded by entities whose main
activity is to produce or distribute energy, and contracts relating to telecommunications. Contracts declared secret or which concern
the protection of the Member State’s basic interests are also exempt from this Directive. Also certain contracts governed by
international agreement or the particular procedure of an international organisation are excluded.

(2) Not less than EUR 5 million, this in national currencies is revised every two years from 1 January 1992.

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10.3.

Review procedures to the award of public supply and public works contracts

Council Directive 89/665/EEC of 21 December 1989 on the coordination of
laws, regulations and
administrative provisions relating to the application of review procedures to the award of public supply and
public works contracts as amended by Council Directive 92/50/EEC

Objective

The Directive seeks to ensure that the review procedures are available to sufficiently interested parties having been or
likely to be injured by an alleged infringement (Article 1).

Contents

In all Member States decisions of contracting authorities which are in breach of law are subject to remedies. Such
remedies must include, in particular, interim measures including suspension of the award procedure in question, setting
aside of the unlawful decisions and discriminatory conduct (Article 2).

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LIST OF INTERNATIONAL INSTRUMENTS RELATING TO SUBSTANTIAL CONTRACT LAW ISSUES

ANNEX II

1. UNITED NATIONS CONVENTIONS

CONVENTION ON THE LIMITATION PERIOD IN THE INTERNATIONAL SALE OF GOODS adopted in New York in
1974 (as amended by the PROTOCOL AMENDING THE CONVENTION ON THE LIMITATION PERIOD IN THE
INTERNATIONAL SALE OF GOODS of 11 April 1980)

Status:

The Convention, as amended by the Protocol, is in force (neither the Protocol nor the Convention has been signed by
any EU Member State). The former German Democratic Republic was a participant by virtue of its accession on 31
August 1989 to the Protocol amending the Convention and therefore also to the Convention of 1974.

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS adopted in
Vienna in 1980

Status:

Only the United Kingdom, Portugal and Ireland have not acceded to the Convention, i.e. are not contracting parties.
The Convention is in force for the rest of the EU Member States.

UNCITRAL LEGAL GUIDE ON INTERNATIONAL COUNTERTRADE TRANSACTIONS adopted in 1992

Status:

Not legally binding

UNITED NATIONS CONVENTION ON INTERNATIONAL BILLS OF EXCHANGE AND INTERNATIONAL
PROMISSORY NOTES adopted in New York in 1988

Status:

The Convention is not in force. Ten actions are required. No EU Member State has signed.

UNCITRAL LEGAL GUIDE ON ELECTRONIC FUNDS TRANSFERS adopted in 1987

Status:

Not legally binding

UNCITRAL MODEL LAW ON INTERNATIONAL CREDIT TRANSFERS adopted in 1992.

Status:

Binding once enacted in domestic law

UNITED NATIONS CONVENTION ON INDEPENDENT GUARANTEES AND STAND-BY LETTERS OF CREDIT adopted
in New York in 1996

Status:

The Convention entered into force on 1 January 2000. No EU Member State has signed.

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UNITED NATIONS CONVENTION ON THE CARRIAGE OF GOODS BY SEA adopted in Hamburg in 1978
(HAMBURG RULES)

Status:

The Convention entered into force on 1 November 1992.

Signed by Denmark (18.4.1979), Finland (18.4.1979), France (18.4.1979), Germany (31.3.1978), Portugal (31.3.1978)
and Sweden (18.4.1979).

Ratified by Austria (29.7.1993).

UNITED NATIONS CONVENTION ON THE LIABILITY OF OPERATORS OF TRANSPORT TERMINALS IN
INTERNATIONAL TRADE adopted in Vienna in 1991

Status:

The Convention is not in force. Five actions are required.

Signed by France (15.10.1991) and Spain (15.4.1991).

UNCITRAL MODEL LAW ON ELECTRONIC COMMERCE WITH GUIDE TO ENACTMENT adopted in 1996, with
additional Article 5 bis as adopted in 1998

Status:

Binding once enacted in domestic law

UNCITRAL LEGAL GUIDE ON DRAWING UP INTERNATIONAL CONTRACTS FOR THE CONSTRUCTION OF
INDUSTRIAL WORKS adopted in New York in 1987

Status:

Not legally binding

2. UNIDROIT (THE INTERNATIONAL INSTITUTE FOR THE UNIFICATION OF CONTRACT LAW)

INSTRUMENTS

UNIDROIT PRINCIPLES FOR INTERNATIONAL COMMERCIAL CONTRACTS adopted in 1994

Status:

Not legally binding

CONVENTION RELATING TO A UNIFORM LAW ON THE INTERNATIONAL SALE OF GOODS signed in the Hague
in 1964

Status:

In force in the United Kingdom (ratified 31.8.1967). Denounced by Italy (11.12.1986), Germany (1.1.1990), the
Netherlands (1.1.1991), Belgium (1.11.1996) and Luxembourg (20.1.1997)).

Signed by Greece (ad referendum, 3.8.1964) and France (31.12.1965).

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CONVENTION RELATING TO A UNIFORM LAW ON THE FORMATION OF CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS signed in The Hague on 1 July 1964

Status:

In force in the United Kingdom (ratified 31.8.1967), and denounced by Italy (11.12.1986), Germany (1.1.1990), the
Netherlands (1.1.1991), Belgium (1.11.1996) and Luxembourg (20.1.1998).

Signed by Greece (ad referendum, 3.8.1964) and France (31.12.1965).

CONVENTION ON AGENCY IN THE INTERNATIONAL SALE OF GOODS signed in Geneva on 17 February 1983

Status:

Ratified by Italy (16.6.1986) and France (7.8.1987).

Has not been signed by other EU Member States.

The Convention will only enter into force when accepted by 10 contracting States (Article 33).

UNIDROIT CONVENTION ON INTERNATIONAL FINANCIAL LEASING adopted in Ottawa on 28 May 1988

Status:

The Convention is in force.

Ratified by France (with declaration, 23.9.1991) and Italy (29.11.1993).

Signed by Finland (30.11.1990) and Belgium (21.12.1990).

UNIDROIT CONVENTION ON INTERNATIONAL FACTORING adopted in Ottawa on 28 May 1998

Status:

The Convention is in force.

Ratified by France (with declaration, 23.9.1991), Italy (29.11.1993) and Germany (20.5.1998).

Signed by Finland (30.11.1990), Belgium (21.12.1990) and the United Kingdom (31.12.1990).

3. COUNCIL OF EUROPE INSTRUMENTS

EUROPEAN CONVENTION ON COMPULSORY INSURANCE AGAINST CIVIL LIABILITY IN RESPECT OF MOTOR
VEHICLES signed in Strasbourg on 20 April 1959

Status:

The Convention entered into force on 22 September 1969.

Ratified by Austria (10.4.1972), Denmark (24.6.1969), Germany (5.1.1966), Greece (29.5.1961) and Sweden
(22.6.1969).

Signed by Belgium (20.4.1959), France (20.4.1959), Italy (20.4.1959) and Luxembourg (20.4.1959).

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CONVENTION ON THE LIABILITY OF HOTELKEEPERS CONCERNING THE PROPERTY OF THEIR GUESTS signed in
Paris on 17 December 1962

Status:

The Convention entered into force on 15 February 1967.

Ratified by Belgium (14.9.1972), France (19.9.1967), Germany (14.11.1966), Ireland (7.5.1963), Italy (11.5.1979),
Luxembourg (25.1.1980) and the United Kingdom (12.7.1963).

Signed by Austria (17.12.1962), Greece (17.12.1962) and the Netherlands (17.12.1962).

CONVENTION ON THE UNIFICATION OF CERTAIN POINTS OF SUBSTANTIVE LAW ON PATENTS FOR
INVENTION signed in Strasbourg on 27 November 1963

Status:

The Convention entered into force on 1 August 1980.

Ratified by Belgium (23.9.1999), Denmark (29.9.1989), France (27.2.1980), Germany (30.4.1980), Ireland (25.1.1968),
Italy (17.2.1981), Luxembourg (14.9.1977), Netherlands (2.9.1987), Sweden (3.3.1978) and the United Kingdom
(16.11.1977).

EUROPEAN CONVENTION ON ESTABLISHMENT OF COMPANIES signed in Strasbourg on 20 January 1966

Status:

The Convention is not in force. Five ratification actions are needed.

Signed by Belgium (20.1.1966), Germany (5.11.1968), Italy (24.3.1966) and Luxembourg (18.9.1968).

EUROPEAN CONVENTION ON FOREIGN MONEY LIABILITIES signed in Paris on 11 December 1967

Status:

The convention is not in force. Three ratification actions are needed.

Ratified by Luxembourg (9.2.1981).

Signed by Austria (11.12.1967), France (11.12.1967) and Germany (11.12.1967).

EUROPEAN AGREEMENT ON (cid:145)AU PAIR(cid:146) PLACEMENT signed in Strasbourg on 24 November 1969

Status:

The agreement entered into force on 30 May 1971.

Ratified by Denmark (29.4.1971), France (5.2.1971),
(11.8.1988).

Italy (8.11.1973), Luxembourg (24.7.1990) and Spain

Signed by Belgium (24.11.1969), Finland (16.7.1997), Germany (2.10.1976) and Greece (22.8.1979).

EUROPEAN CONVENTION ON THE PLACE OF PAYMENT OF MONEY LIABILITIES signed in Basle on 16 May 1972

Status:

The Convention is not in force. Five ratification actions are needed.

Signed by Austria (16.5.1972), Germany (16.5.1972) and the Netherlands (16.5.1972).

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EUROPEAN CONVENTION ON THE CALCULATION OF TIME LIMITS signed in Basle on 6 May 1974

Status:

The Convention entered into force on 28 April 1983.

Ratified by Austria (11.8.1977) and Luxembourg (10.10.1984).

Signed by Sweden, Portugal, Spain, Germany, Belgium, Italy and France.

EUROPEAN CONVENTION ON CIVIL LIABILITY FOR DAMAGE CAUSED BY MOTOR VEHICLES signed in Strasbourg
on 14 May 1973

Status:

The Convention is not in force. Three ratification actions are needed.

Signed by Germany (14.5.1973).

EUROPEAN CONVENTION ON PRODUCTS LIABILITY IN REGARD TO PERSONAL INJURY AND DEATH signed in
Strasbourg on 27 January 1977

Status:

The Convention is not in force. Three ratification actions are needed.

Signed by Austria (11.8.1977), Belgium (27.1.1977), France (27.1.1977) and Luxembourg (27.1.1977).

CONVENTION ON CIVIL LIABILITY FOR DAMAGE RESULTING FROM ACTIVITIES DANGEROUS TO THE
ENVIRONMENT signed in Lugano on 21 June 1993

Status:

The Convention in not in force. Three ratification actions are needed.

Signed by Finland (21.6.1993), Greece (21.6.1993),
(21.6.1993) and Portugal (6.3.1997).

Italy (21.6.1993), Luxembourg (22.6.1993),

the Netherlands

EUROPEAN CONVENTION RELATING TO QUESTIONS ON COPYRIGHT LAW AND NEIGHBOURING RIGHTS IN
THE FRAMEWORK OF TRANSFRONTIER BROADCASTING BY SATELLITE signed in Strasbourg on 11 May 1994

Status:

The Convention is not in force. Seven ratification actions are needed.

Signed by Belgium (6.8.1998), Germany (18.4.1997), Luxembourg (11.5.1994), Spain (11.5.1994) and the United
Kingdom (2.10.1996).

CIVIL LAW CONVENTION ON CORRUPTION signed in Strasbourg on 4 November 1999

Status:

The Convention is not in force. Fourteen ratification actions are needed.

Signed by Belgium (8.6.2000), Denmark (4.11.1999), Finland (8.6.2000), France (26.11.1999), Germany (4.11.1999),
Greece (8.6.2000), Ireland (4.11.1999), Italy (4.11.1999), Luxembourg (4.11.1999), Sweden (8.6.2000) and the United
Kingdom (8.6.2000).

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CONVENTION RELATING TO STOPS ON BEARER SECURITIES IN INTERNATIONAL CIRCULATION signed in The
Hague on 28 May 1970

Status:

The Convention entered into force on 11 February 1979.

Ratified by Austria (11.8.1977), Belgium (23.5.1973), France (23.5.1973) and Luxembourg (23.5.1973).

Signed by Germany (28.5.1970),
(28.5.1970).

Ireland (23.4.1974),

the Netherlands

(23.4.1974) and the United Kingdom

EUROPEAN CONVENTION ON CERTAIN INTERNATIONAL ASPECTS OF BANKRUPTCY signed in Istanbul on 5 June
1990

Status:

The Convention is not in force. Three ratification actions are needed.

Signed by Belgium (13.6.1990), France (5.6.1990), Germany (5.6.2000), Greece (5.6.1990),
Luxembourg (5.6.1990).

Italy (15.1.1991) and

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ANNEX III

STRUCTURE OF THE ACQUIS AND RELEVANT BINDING INSTRUMENTS

1.

THE CONTRACT

1.1.

General

Directive 90/314/EEC on package travel is the only one giving a legal definition of the term (cid:145)contract(cid:146): (cid:145)contract means
the agreement linking the consumer to the organiser and/or the retailer(cid:146) (Article 2(5)).

There are pre-formulated standard contracts and individually negotiated ones. Directive 93/13/EEC on unfair terms in
consumer contracts stipulates when a contract term shall be regarded as not individually negotiated (Article 3(2)) and
therefore is submitted to control according to this Directive.

Directive 2000/35/EEC on late payments,
determining whether an agreement is unfair (Article 3(3) to (5)).

too, provides for some elements to be taken into consideration in

As an expression of a general principle in consumer protection law, contract terms must be drafted in plain and
intelligible language (see Directives 93/13/EEC on unfair terms (Article 5), 90/314/EEC on package travel (Article 3(2)),
1999/44/EC on sales of consumer goods (Article 6(2)), 97/7/EC on distance contracts (Article 4(2)) as well as the
proposal for a directive on distance contracts in financial services (Article 3(2))).

Unfair terms used in a consumer contract shall not be binding on the consumer (Article 6(1) of Directive 93/13/EEC
on unfair terms).

A few Directives contain provisions reflecting common principles such as the principle of good faith (see Directive
86/653/EEC on self-employed commercial agents (Article 3) and 93/13/EEC on unfair terms (Article 3)) and the
principle of the most favourable interpretation of contractual provisions (see Article 5 of Directive 93/13/EEC on unfair
terms).

1.2.

Conclusion of a contract: offer and acceptance

The United Nations Convention on Contracts for the International Sales of Goods (CISG) contains provisions dealing
with the formation of the contract (Articles 14 to 24).

The CISG describes the circumstances under which a proposal for concluding a contract can be regarded as an offer.
Furthermore, it addresses issues of effectiveness, withdrawal and rejection of an offer as well as the issue of acceptance
of an offer.

According to Article 9 of Directive 97/7/EC on distance contracts as well as Article 9 of the proposal for a directive on
distance contracts in financial services, the supply of goods and services without being ordered by the consumer is
prohibited (inertia selling). The absence of a response does not constitute consent.

1.3.

Form

According to Directive 2000/31/EC on electronic commerce, Member States shall ensure that their legal systems allow
contracts to be concluded by electronic means.

Directive 86/653/EEC on self-employed commercial agents stipulates that each party is entitled to receive from the
other on request a signed written document. But in general, contracts might also be validly concluded only verbally
(Article 13).

Other Directives in the consumer protection area prescribe the written form (see Directives 87/102/EEC on consumer
credit (Articles 4 and 6(1)), 90/314/EEC on package travel (Article 4(2)(b) and 94/47/EC on time-sharing (Article 4)).

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Directive 1999/93/EC on a framework for electronic signatures sets criteria for according the same status to electronic
signatures as to handwritten signatures.

1.4.

Termination

The CISG confirms that a contract can be terminated by agreement of the parties (Article 29).

According to Article 15 of Directive 86/653/EEC on self-employed commercial agents, each party may terminate a
contract concluded for an indefinite period but only by notice (one to three months depending on the duration of the
contract).

Some consumer protection Directives give a right of withdrawal without penalty and without giving any reason (see
Directive 97/7/EC on distance contracts (Article 6: period of seven days) as well as in the proposal for a directive on
distance contracts in financial services (period of 14 to 30 days), 85/577/EEC on contracts negotiated away from
business premises (Article 5: period of seven days), and 94/47/EC on time-sharing (Article 5: period of 10 days)). Rules
in this respect also can be found in Directive 90/619/EEC on life insurance (Article 15: period of 14 to 30 days).

2.

PRECONTRACTUAL AND CONTRACTUAL OBLIGATIONS

2.1.

Obligations of the party providing the service or the goods

2.1.1.

Information requirements

2.1.1.1. General/form

Many Directives stipulate that the information has to be given in writing (see Directives 85/577/EEC on contracts
negotiated away from business premises (Article 4), 87/102/EEC on consumer credit (Articles 4 and 6(1)), 90/314/EEC
on package travel (Article 4(1)(a) and (b)), 94/47/EC on time-sharing (Articles 3(1) and 2(4)), 97/7/EC on distance
contracts (Article 5) as well as the proposal for a directive on distance contracts in financial services (Article 3)).

The information must be given in a clear and comprehensible way (see Directives 2000/31/EC on electronic commerce
(Article 10(1)), 97/7/EC on distance contracts (Article 5), 85/577/EC on contracts negotiated away from business
premises (Article 4), 90/314/EEC on package travel (Article 4(1)), 94/47/EC on time-sharing (Article 3(2))).

The information given becomes an integral part of the contract and binds the supplier of the service in the cases of
Directives 94/47/EC on time-sharing (Article 3(2)) and 90/314/EEC on package travel (Article 3(2)).

There are provisions concerning modifications of the information and the communication of these to the consumer as
well
(Article 3(2)) and
87/102/EEC on consumer credit (Article 6(2))).

(see Directives 94/47/EC on time-sharing (Article 3(2)), 90/314/EEC on package travel

2.1.1.2. Examples of information requirements and time at which the information is to be given

(aa) Prior to the conclusion of the contract

There are many directives with regard to consumer protection providing for information requirements to be given prior
to the conclusion of the contract. Basically, such information, i.e., regards the main characteristics of the goods or
services, price and additional costs, arrangements for payment, rights and obligations of the consumer, as well as
procedures to terminate the contract and to take redress (see Directives 97/7/EC on distance contracts (Article 4; the
information might also be given in good time during the performance of the contract or at the latest at the time of
delivery (Article 5)), 87/102/EEC on consumer credit (Article 6; the information might also be given only at the time of
the agreement), 94/47/EC on time-sharing (Article 3(1)), 90/314/EEC on package travel
(Articles 3 and 4(1)(a)),
92/96/EEC on life assurance (Article 31(1) and Annex II, with specific information on benefits, surrender and paid-up
values), 97/5/EC on cross-border credit transfer (Article 3, with specific information on the execution time, commission
fees and charges).

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According to Directive 2000/31/EC on electronic commerce, information has to be given on the different technical
steps to follow to conclude a contract, how the contract will be filed, and the languages offered to conclude the
contract, as well as on existing codes of conduct (Article 10(1) and (2)).

(bb) At the time of the conclusion of the contract

The Directive on legal assistance, 87/344/EEC, obliges the insurer to inform the policy holder about his right to ask for
an arbitration procedure and to acknowledge him of his right of free choice of a lawyer.

Directive 90/314/EEC on package travel stipulates in Article 4(2) that certain elements listed in the Annex have to be
part of the contract.

(cc) After conclusion of the contract

According to the third life assurance Directive 92/96/EEC, in a given case the insurer has to provide the insured with
an update of information concerning the insurance company and the policy conditions. He has to inform the insured
about benefits and bonuses (Article 31(2) and Annex II). Similar, according to Directive 87/102/EEC on consumer
credit, the consumer shall be informed of any change in the annual rate of interest and other relevant charges (Article
6(2)).

The cross-border credit transfer Directive 97/5/EC stipulates that after a cross-border credit transfer has been carried
out, institutions must provide information on a reference to enable the customer to identify the transfer, the actual
amount of the transfer, the amount of charges, etc. (Article 4).

According to Article 12 of Directive 86/653/EEC on self-employed commercial agents, a commercial agent shall be
supplied with a statement of the commission due, including components used for the calculation.

According to Directive 90/314/EEC on package travel, the consumer has to be given additional information on the
journey (Article 4(1)(b)).

According to Directive 85/577/EEC on contracts negotiated away from business premises, information has to be given
on the right of cancellation together with the coordinates of the person against whom the right may be exercised
(Article 4).

2.1.2.

Commercial guarantees

There is a special Directive dealing with commercial guarantees: Directive 1999/44/EC on sales of consumer goods
with provisions defining a guarantee, describing the content etc. (Article 6).

2.1.3.

Execution of the obligations

The CISG stipulates the seller’s obligation to deliver the goods and provides rules on the definition of the place and
time of delivery (Articles 30 and 31).

According to Article 7(1) of Directive 97/7/EC on distance contracts, the supplier must execute the order within a
maximum of 30 days from the day following that on which the consumer forwarded his order.

The proposal for a directive on distance contracts in financial services provides an express consent of the consumer
concerning the execution of the contract before the end of the period of notice of his right of withdrawal (Article 5).
The CISG leaves it to the buyer to decide if to take delivery or refuse to take delivery if the seller delivers the goods
before the date fixed.

2.1.4.

Conformity of the performance with the contract

Directive 1999/44/EC on sales of consumer goods stipulates the seller’s obligation to deliver goods in conformity with
the contract and his consequent liability in the case of lacking conformity (Articles 2 and 3 as well as Articles 35 to 44
CISG).

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Directive 90/314/EEC on package travel, too, requires Member States to ensure that the organiser and/or retailer are
liable for the proper performance of its obligations (Article 5(2)).

2.2.

Obligations of the other party of the contract

As far as the obligations of the buyer are concerned, the CISG stipulates that the buyer has to pay the price of the
goods and take delivery of them (Articles 53 and 60). The Convention provides rules on the definition and place and
time of the payment as well (Articles 55 to 59).

Directive 86/653/EEC on self-employed commercial agents distinguishes between a negotiated remuneration and a
customary commission and gives rules on the entitlement to it (Articles 6 to 8) as well as on the extinction of the right
(Article 11). If there is no agreement and no customary practice, the agent shall be entitled to reasonable remuneration
(Article 6(1)).

3.

CONSEQUENCES OF IN-EXECUTION OF CONTRACTUAL OBLIGATIONS

3.1.

Withdrawal, rescission and cancellation

The relevant Directives give different options to terminate a contract.

According to Directive 90/314/EEC on package travel, the consumer has the right to withdraw from the contract
without penalty in the case where the organiser of the travel arrangement alters significantly an essential term of the
contract.

Some Directives expressly stipulate rights of cancellation (see Directive 94/47/EC on time-sharing (Article 5(1), period
of three months, and Article 7 for contracts on credit)).

In others, provisions in this regard are missing ( Directive 87/102/EEC on consumer credit).

In cases of withdrawal by the consumer as well as in cases of cancellation by the supplier for another cause than the
fault of the consumer, some Directives provide for the consumer a right to be repaid all sums paid by him under the
contract (see Directives 97/7/EC on distance contracts (Article 7(2)) and 90/314/EEC on package travel (Article 4(6))).

3.2.

Contract-specific rights

Due to the specific objective of the Directive, various rights of the consumer in case of a performance being not in
conformity with the contract are stipulated in the most detailed way in Directive 1999/44/EC on sales of consumer
goods (see Article 3: repair or replacement, price reduction (see also Article 5 of Directive 90/314/EEC on package
travel), rescission). Along the same lines Directive 2000/35/EC on late payments provides for retention of title before
the delivery of the goods (Article 4).

The CISG contains a certain number of remedies for breach of contract by the seller (e.g. the buyer may require under
certain conditions performance by the seller of his obligations, delivery of substitutes, or to remedy the lack of
conformity by repair; he may also declare the contract void or may reduce the price (see Articles 46 to 52)).

3.3.

Compensation

Provisions on compensation in the case of non-delivery or delivery of goods and services in a way not respecting
contractual requirements can also be found in the CISG (Articles 45(1)(b), and 74 to 77), Directive 86/653/EEC on
self-employed commercial agents (Article 17),
transfer Directive 97/5/EC, and Directive
90/314/EEC on package travel (Article 4(6) and (7)).

the cross-border credit

Specific compensation in the case of an unlawful processing operation is provided for in Directive 95/46/EC on the
protection of individuals with regard to the processing of personal data (Article 23(1)). Directive 2000/35/EC on late
payments provides that unless the debtor is not responsible for the delay, the creditor shall be entitled to compensation
for all costs incurred due to the late payment (Article 3(1)(e)). Moreover, interest rates as a penalty are provided for in
Directive 2000/35/EC on late payments in the case of a fixed date for a payment as well as in the case where the date
is not fixed (Article 3).

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4.

EXTRA-CONTRACTUAL LIABILITY

4.1.

Liability for defective products

Directive 85/374/EC on the responsibility for defective goods defines the notion of defective goods and sets common
liability rules in the case of damages caused to individuals by defective goods. The producer or importer is liable to
compensation whether or not he is negligent. The Directive introduces joint and several liability where several persons
are liable for the same damage.

4.2.

Protection of the right of privacy

Under Directive 95/46/EC concerning the protection of individuals with regard to the processing of personal data,
specific requirements and conditions for the data subject’s consent to the processing of the data are given (Article 7),
while Directive 97/66/EC on the processing of personal data and the protection of privacy in the telecommunications
sector (Article 12(1)) and Directive 97/7/EC on distance contracts (Article 10) only allow the use of automated calling
systems or fax machines for the purpose of direct marketing in cases of prior consent. The latter provision also
subordinates other means of distance communication which allow individual communications only where there is no
clear objection from the consumer.

According to Articles 10, 11, 12 and 14 of Directive 95/46/EC, in cases of collection of data, information has to be
given, inter alia, with regard to the purposes of the processing for which the data are collected and the data subject’s
right to access and rectify the data concerning him.

5.

MANDATORY NATURE OF THE PROVISIONS

The consumer is not allowed to waive his rights according to most of the consumer protection Directives such as
85/577/EEC on contracts negotiated away from business premises (Article 6), 87/102/EEC on consumer credit (Article
14), 90/314/EEC on package travel (Article 5(3)), 94/47/EC on time-sharing (Article 8), 97/7/EC on distance contracts
(Article 12(1)), 1999/44/EC on sales of consumer goods (Article 7), 93/13/EEC on unfair clauses, the proposal for a
directive on distance contracts in financial services (Article 11), as well as Directive 85/374/EEC on the responsibility
for defective goods (Article 12), and Directive 86/653/EEC on self-employed commercial agents (Article 19).

6.

MINIMUM HARMONISATION

According to a number of consumer protection Directives, the Member States are allowed to introduce rules being
more strict than agreed on for the Directives (see Directives 85/577/EEC on contracts negotiated away from business
premises (Article 8), 87/102/EEC on consumer credit (Article 15), 90/314/EEC on package travel (Article 8), 94/47/EC
on time-sharing (Article 11), 97/7/EC on distance contracts (Article 14), 1999/44/EC on sales of consumer goods
(Article 8) and 93/13/EC on unfair terms (Article 8)).

Many Directives only give options for provisions, while in other Directives similar issues are regulated in a binding way
(for example, for the provision on burden of proof, Directive 97/7/EC on distance contracts, on the one hand, and
Directive 1999/44/EC on sales of consumer goods, on the other).