Communication from the Commission to the European Parliament and the Council - European Contract Law and the revision of the acquis: the way forward
Date: 2004-10-11
Institutions: European Commission
Subjects: Community acquis, action programme, amendment of a law, consumer protection, contract, contract terms

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.10.2004 
COM(2004) 651 final 

 . 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

European Contract Law and the revision of the acquis: the way forward 

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1. 

INTRODUCTION 

This Communication sets out the Commission’s follow-up to the 2003 Action Plan1, 
in the light of the reactions from EU institutions, Member States and stakeholders. It 
outlines how the Common Frame of Reference (CFR) will be developed to improve 
the  coherence  of  the  existing  and  future  acquis,  and  sets  out  specific  plans  for  the 
parts of the acquis relevant to consumer protection, in line with the Consumer Policy 
Strategy 2002-2006. It also describes planned activities concerning the promotion of 
EU-wide  standard  contract  terms  and  intends  to  continue  the  reflection  on  the 
opportuneness of an optional instrument. 

The European Parliament (EP)2 and the Council3 adopted resolutions welcoming the 
Action  Plan  in  which  they  underlined  the  need  to  involve  all  interested  parties,  in 
particular in the elaboration of the CFR. The EP called for the CFR to be completed 
by  the  end  of  2006  and  speedily  introduced.  The  Council  also  recognised  the 
usefulness  of  EU-wide  general  contract  terms  developed  by  contractual  parties 
within the respect of Community and national provisions. Finally, these institutions 
called on the Commission to pursue further reflection on an optional instrument. 

To date, 122 contributions to the consultation were received. The Commission, with 
the consent of the authors, published their contributions and a summary thereof  4.In 
order  to  ensure  stakeholders  involvement,  two  workshops  on  contract  law  were 
organised  in  June  20035.  Another  workshop  on  standard  terms  and  conditions  was 
organised in January 20046. In addition a joint Commission and EP conference took 
place in April 20047. 

2. 

THE WAY FORWARD 

2.1 

Improving the present and future acquis (Measure I of the Action Plan) 

Contributors to the Action Plan supported the need to improve the quality and 
consistency of the acquis in the area of contract law and emphasised that the 
CFR  could  contribute  to  that  goal.  In  the  light  of  this  significant  support  the 
Commission will pursue the elaboration of the CFR. 

2.1.1  The main role of the CFR 

The Action Plan identified different categories of problems of the acquis. 
The main ones were: 

1 

2 
3 
4 
5 
6 
7 

All the documents concerning European contract law are available on the Commission’s website: 
http://europa.eu.int/comm/consumers/cons_int/safe_shop/fair_bus_pract/cont_law/index_en.htm. 
See footnote 1. 
See footnote 1. 
See footnote 1. 
See footnote 1. 
http://europa.eu.int/comm/internal_market/contractlaw/2004workshop_en.htm. 
See footnote 1. 

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● 

● 

● 

Use  of  abstract  legal  terms  in  directives  which  are  either  not 
defined or too broadly defined 

Areas  where  the  application  of  directives  does  not  solve  the 
problems in practice 

Differences between national implementing laws deriving from the 
use of minimum harmonisation in consumer protection directives  

● 

Inconsistencies in EC contract law legislation  

First  a  policy  choice  must  be  made  on  the  need  to  modify  the  existing 
directives in order to address these problems. If so, the Commission will 
use the CFR as a toolbox, where appropriate, when presenting proposals 
to  improve  the  quality  and  coherence  of  the  existing  acquis  and  future 
legal  instruments  in  the  area  of  contract  law.  At  the  same  time,  it  will 
serve the purpose of simplifying the acquis8. The CFR will provide clear 
definitions  of  legal  terms,  fundamental  principles  and  coherent  model 
rules  of  contract  law,  drawing  on  the  EC  acquis  and  on  best  solutions 
found in Member States’ legal orders.  

Example: Review of the consumer acquis  

The Commission’s key goals remain to enhance consumer and business 
confidence  in  the  internal  market  through  a  high  common  level  of 
consumer  protection  and  the  elimination  of  internal  market  barriers  and 
regulatory  simplification9.  Eight  consumer  directives10  will  be  reviewed 
to identify whether they achieve these goals, in particular in the light of 
the ‘minimum harmonisation’ clauses they contain.  

The review will evaluate to what extent the current directives, as a whole 
and  individually,  have  in  practice  met  the  Commission’s  consumer 
protection and internal market goals. That implies looking not only at the 
directives themselves but the way they are applied and the markets within 
which  they  operate  (i.e.  national  transposing  laws;  jurisprudence;  self-
regulation;  enforcement; 
in  practice;  and 
developments 
technology  and  consumer 
expectations).  

in  business  practice, 

levels  of  compliance 

In particular the review will examine the following questions: 

● 

Is the level of consumer protection required by the directives high 
enough to ensure consumer confidence? 

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9 
10 

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This  initiative  is  included  in  the  scope  of  the  Commission  Communication  on  “Updating  and 
simplifying the Community acquis” (COM(2003) 71) and aims at achieving legislative simplification. 
OJ C 137, 8.6.2002, p. 2. 
Directives 85/577, 90/314, 93/13, 94/47, 97/7, 98/6; 98/27, 99/44. 

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● 

● 

● 

● 

Is the level of harmonisation sufficient to eliminate internal market 
barriers and distortions of competition for business and consumers? 

Does  the  level  of  regulation  keep  burdens  on  business  to  a 
minimum and facilitate competition? 

Are the directives applied effectively?  

As  a  whole,  are  there  any  significant  gaps,  inconsistencies  or 
overlaps between the eight directives?  

●  Which  of  the  directives  should  be  given  the  highest  priority  for 

reform? 

Certain specific questions also arise: 

● 

● 

● 

● 

Is  the  scope  of  the  directives  correct?  Are  the  pre-contractual 
information requirements appropriate?  

Should the duration and modalities of the withdrawal periods in the 
directives  on  doorstep  selling,  timeshare  and  distance  selling  be 
both fully harmonised and standardised between the directives?  

Does consumer contract law need to be further harmonised?  

Is  there  scope  for  merging  some  of  the  directives  to  reduce 
inconsistencies between them? 

In order to review the consumer acquis, a number of actions are planned: 

● 

● 

● 

Development of a public database of the acquis, including national 
legislation  and  jurisprudence.  This  project  will  also  provide  a 
comparative  analysis  of  the  implementation  of  the  directives  in 
practice.  

Establishment  of  a  standing  working  group  of  Member  States’ 
experts  to  act  as  a  forum  for  information  exchange  and  debate  on 
the implementation of the acquis.  

Implementation  reports  on  the  directives  on  price  indication, 
distance  selling,  sales  of  consumer  goods  and  injunctions.  The 
reports  will  also  consult  stakeholders  and  be  followed  up  with 
appropriate seminars.  

In  the  light  of  the  completion  of  the  project  and  the  reports,  the 
Commission  will  consider  the  necessity  for  proposals  to  amend  the 
existing directives. This diagnostic phase is expected to be completed by 
end 2006. Any proposals will take into account work on the draft CFR, as 
appropriate,  and  will  be  accompanied  by  the  appropriate  regulatory 
impact assessments. 

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It would also be desirable that the Council and the EP could use the CFR 
when  tabling  amendments  to  Commission  proposals.  Such  use  of  the 
CFR would be consistent with the shared goal of achieving high quality 
EU  legislation11  and  the  commitment  of  the  European  institutions  to 
promote simplicity, clarity and consistency of the EU legislation12.  

2.1.2  Other possible roles of the CFR 

National legislators could use the CFR when transposing EU directives in 
the area of contract law into national legislation. They could also draw on 
the CFR when enacting legislation on areas of contract law which are not 
regulated at Community level. 

Another  role,  suggested  by  the  EP,  is  the  possible  use  of  the  CFR  in 
arbitration. Arbitrators would have the possibility to refer to the CFR to 
find unbiased and balanced solutions to resolve conflicts arising between 
contractual parties. 

The CFR can also play a role in developing the other measures identified 
in the Action Plan. The EP, for example, indicated that the CFR could be 
developed into a body of standard contract terms to be made available to 
legal practitioners. The Commission agrees that it would be desirable to 
use the CFR as extensively as possible in the realisation of Measure II of 
the Action Plan. Moreover, the CFR would be likely to serve as the basis 
for the development of a possible optional instrument. 

The Commission is also considering the suggestion that it could integrate 
the CFR in the contracts concluded with its contractors. The CFR could 
still be used in addition to the applicable national law. The Commission 
would also encourage other institutions and bodies to use the CFR when 
concluding contracts with third parties.  

Finally the CFR, based on the EC acquis and on best solutions identified 
as common to Member States contract laws, could inspire the European 
Court of Justice when interpreting the acquis on contract law.  

2.1.3  Legal nature of the CFR 

Several  contributors  to  the  Action  Plan  raised  the  question  of  the  legal 
nature  of  the  CFR.  The  proposed  ideas  range  from  a  binding  legal  act 
adopted by the Council and the EP, to a non-binding instrument adopted 
by the Commission. 

The  Commission  considers  at  this  stage  that  the  CFR  would  be  a  non-
binding  instrument.  However,  the  Commission  will  consult  extensively 
all  interested  parties  when  elaborating  the  CFR.  In  that  context  this 
question might be raised again. 

11 
12 

Action Plan “Simplifying and improving the regulatory environment” (COM(2002) 278). 
Interinstitutional Agreement on Better Lawmaking, (OJ 2003/C 321/01). 

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2.2  Promoting the use of EU-wide standard terms and conditions (Measure II 

of the Action Plan) 

2.2.1  The Commission’s suggestions in the Action Plan 

The  second  measure  sought  to  promote  the  development  by  private 
parties of Standard Terms and Conditions (STC) for EU-wide use rather 
than just in a single legal order. Currently parties often think they have to 
use  different  sets  of  STC,  due  to  the  existence  of  differing  mandatory 
requirements in Member states’ laws, either in contract laws or in other 
areas of the law (e.g. tort law differences may appear to require different 
contract  terms  on  liability  issues).  However,  there  are  a  number  of 
examples  of  EU-wide  STC  being  used  successfully,  which  cover  issues 
which typically need to be dealt with in other contracts as well. 

Acceptable EU-wide solutions are therefore likely to be also available in 
other  cases  where  single-country  STC  are  currently  being  used.  There 
appears  to  be  a  lack  of  awareness  of  the  availability  of  such  EU-wide 
solutions,  so  the  Action  Plan  suggested  a  comprehensive  initiative  to 
increase awareness of the existing possibilities. 

2.2.2  The reactions from stakeholders and others 

Some  respondents  welcomed  the  suggested  approach,  but  others  were 
sceptical  of  the  Commission’s  involvement  in  this  area  as  they  thought 
that the Commission planned to draw up STC itself. This is certainly not 
the Commission’s intention: the content of STC is for market participants 
to  determine  and  the  decision  whether  to  use  STC  is  also  one  for 
economic operators. The Commission only intends to act as a facilitator 
and  an  “honest  broker”,  i.e.  bringing  interested  parties  together  without 
interfering with the substance. 

The  issues  were  further  explored  at  a  work-shop  on  19  January  200413 
where  the  focus  was  on  the  use  of  STC  in  business  to  business  (B2B) 
transactions  as  well  as  in  contracts  between  the  business  sector  and  the 
government (B2G). Two principal conclusions were reached: 

First,  there  was  general  agreement  that  EU-wide  STC  could  be 
successfully used in a significant number of cases, in spite of the fact that 
some  legal  and  administrative  obstacles  remain  in  certain  areas.  An 
inventory  of  the  most  egregious  obstacles  would  be  drawn  up  by  the 
Commission with the help of stakeholders. 

Second, it was agreed that raising awareness of existing possibilities, in 
particular by providing structured information about successful examples 
of EU-wide STC on a Commission-hosted website would be useful.  

13 

See footnote 6. 

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2.2.3  Actions: a website to promote the development and use of EU-wide STC 

In the light of all these contributions, the Commission has concluded that 
there would be benefits from raising awareness of existing possibilities. 
The  Commission  will  focus  on  STC  regarding  B2B  and  B2G 
transactions. 

In  the  light  of  an  assessment  of  these  actions,  further  measures  may  be 
proposed and further consideration may be given to extending this work. 

2.2.3.1  A  platform  for  the  exchange  of  information  on  existing  and 

planned EU-wide STC 

The Commission will host a website, on which market participants 
can  exchange  information  about  EU-wide  STC  which  they  are 
currently  using  or  plan  to  develop.  The  information  will  be 
published  at  the  sole  responsibility  of  the  parties  posting  it.  Such 
publication  will  not  constitute  any  recognition  of  the  legal  or 
commercial  validity  of 
the 
to  obtain 
Commission  will  consult 
information about precisely what information users need and what 
information organisations will be prepared to post on the website.  

those  STC.  Before  proceeding, 

interested  stakeholders 

The  information  should  allow  parties  to  avoid  the  mistakes  and 
repeat  the  positive  experiences  of  those  who  went  before.  The 
Commission  does  not,  therefore,  intend  to  define  itself  a  set  of 
“best practices”.  

2.2.3.2  Guidelines  on  the  relationship  between  the  competition  rules 

and EU-wide STC  

The  Commission  does  not  intend  at  this  stage  to  publish  separate 
guidelines  relating  to  the  development  and  use  of  STC.  It  has 
already  pointed  out  that  it  generally  takes  a  positive  approach 
towards agreements that promote economic interpenetration in the 
common market or encourage the development of new markets and 
improved  supply  conditions14.  Although  agreements  on 
the 
development  or  use  of  EU-wide  STC  will  therefore  generally  be 
looked  upon  positively,  in  certain  cases  agreements  or  concerted 
practices  to  use  STC  may  be  incompatible  with  the  competition 
rules. 

In this regard the Commission draws attention to its “Guidelines on 
the  applicability  of  Article  81  of  the  EC  Treaty  to  horizontal 
cooperation agreements”15, particularly section 6 which lays down 
guidelines  on  standardisation  agreements.  Although  they  do  not 
specifically apply to agreements on STC, parties may use them to 
find guidance for avoiding problems when agreeing to use STC. 

14 
15 

Commission Notice Nr. 2001/C 3/02, (OJ C3/2 of 6 January 2001) point 169. 
Ibid. 

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2.2.3.3 

Identifying legislative obstacles to the use of EU-wide STC 

The  Commission  will  examine,  together  with  interested  parties, 
whether and if so what legislative obstacles to EU-wide STC exist 
in  the  Member  states,  with  a  view  to  eliminating  them  where 
needed  and  appropriate.  This  could  be  done  through  voluntary 
action by the Member State concerned, infringement procedures by 
the  Commission  where  the  obstacles  violate  EU  law,  or  other  EU 
action, such as legislative measures, where they do not.  

In the first instance the Commission will organise a survey on this 
following  consultation  with  stakeholders  on  its  content  and 
structure,  to  ensure  that  the  survey  focuses  on  aspects  relevant  to 
market participants. 

2.3  A  non-sector  specific  measure  -  An  optional  instrument  in  European 

contract law (Measure III of the Action Plan) 

The  Action  Plan  concluded,  inter  alia,  that  at  this  stage  there  were  no 
indications  that  the  sectoral  approach  followed  thus  far  leads  to  problems  or 
that  it  should  be  abandoned.  It  was  nevertheless  considered  appropriate  to 
examine whether non-sector-specific-measures such as an optional instrument 
may be required to solve problems in the area of European contract law. 

The Commission intends to continue this process in parallel with the work on 
developing the CFR and taking into account the comments received so far from 
stakeholders about their preferences for the parameters of any such instrument, 
if  the  need  for  it  were  to  arise.  The  process  of  developing  the  CFR  and  in 
particular  the  stakeholder  consultation  may  well  provide  relevant  information 
in this regard. 

The  Commission  will  establish  specific  opportunities  for  exchange  of 
information  on  the  opportuneness  of  such  an  instrument.  Although  it  is 
premature  to  speculate  about  the  possible  outcome  of  the  reflection,  it  is 
important to explain that it is neither the Commission’s intention to propose a 
“European  civil  code”  which  would  harmonise  contract  laws  of  Member 
States,  nor  should  the  reflections  be  seen  as  in  any  way  calling  into  question 
the current approaches to promoting free circulation on the basis of flexible and 
efficient solutions.  

A number of parameters for the reflections on the need for an instrument have 
been  determined  based  on  the  contributions  to  the  Action  Plan  and  the 
Commission’s own considerations. These include the need to take into account 
differences between transactions with consumers and those between businesses 
or with public authorities, the  degree to which other solutions, including  EU-
wide STC already offer satisfactory solutions and the need to respect different 
legal  and  administrative  cultures  in  the  member  states.  These  parameters  will 
need to be taken into account during the future discussion on the opportuneness 
of this instrument. Some of these parameters are explained in Annex II. 

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Moreover,  if  problems  are  identified  that  require  solutions  at  EU  level,  the 
Commission  would  proceed  to  an  extended  impact  assessment  in  order  to 
determine the nature and contents of those solutions. 

3. 

PREPARATION AND ELABORATION OF THE COMMON FRAME OF REFERENCE 

3.1  Preparation: research and participation of EU institutions, Member States 

and other stakeholders 

3.1.1  Overview 

In  order  to  ensure  that  the  CFR  is  of  high  quality  the  Commission  will 
finance  three  years  of  research  under  the  Sixth  Framework  Programme 
for  research  and  technological  development16.  Proposals  for  research 
were evaluated and work is expected to begin soon.  

By 2007, the researchers are expected to deliver a final report which will 
provide  all  the  elements  needed  for  the  elaboration  of  a  CFR  by  the 
Commission. It shall therefore include a draft CFR which the researchers 
believe to be fit for the purposes set out in the Action Plan.  

3.1.2  Stakeholder participation 

Stakeholder  participation  to  the  process  is  essential,  as  was  emphasised 
by all respondents to the Action Plan. 

At the joint EP/Commission conference  in  April  2004,  four  key  criteria 
for successful participation were proposed and supported: 

• 

• 

• 

• 

Diversity of legal traditions: account needs to be taken of the range 
of different legal traditions in the EU; 

Balance  of  economic  interests:  account  needs  to  be  taken  of  the 
interests of a wide range of businesses in diverse economic sectors 
from  SMEs  to  multi-nationals,  as  well  as  consumers  and  legal 
practitioners; 

Commitment: stakeholders need to devote real resources to provide 
ongoing, substantive input;  

Technical expertise: to provide detailed feedback and challenge to 
the academic researchers. 

16 

Decision No 1513/2002/EC (OJ L 232, 29.8.2002, p. 1). 

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These  criteria  will  be  taken  into  account  in  establishing  the  structures 
outlined  below.  The  structures  in  the  first  strand  will  form  part  of  the 
agreement between the Commission and the researchers:  

First strand: technical input 

• 

• 

• 

• 

The Commission will establish a network of stakeholder experts to 
make  an  ongoing,  detailed  contribution 
the  researchers’ 
preparatory work. 

to 

Regular workshops on all themes of the research will be organised 
to  enable  stakeholders  to  identify  practical  issues  to  be  taken  into 
account and give feedback. On each topic, there will be workshops 
so that stakeholders and the Commission can follow the evolution 
of the works. Workshops’ subjects will be specific and the number 
of participants to each workshop will be limited in order to ensure 
efficiency.  

This  process  will  be  supported  by  a  dedicated  internet  site, 
accessible  to  researchers,  stakeholder  experts,  the  Commission, 
Member  State  experts  and  the  EP.  Drafts  will  be  updated  on  this 
website  as  the  research  evolves  and  in  the  light  of  stakeholder 
comments. 

Once decisions are taken on how to divide the different aspects, it 
may  be  helpful  to  establish  guidelines  for  the  operation  of  the 
technical strand, to ensure that researchers and stakeholders have a 
clear and shared understanding of the process. These could include 
a structure for ensuring overall co-ordination of stakeholder input, 
such as a steering group involving both members of the academic 
research and stakeholder experts. 

Second strand: political consideration and review 

The Commission will: 

• 

• 

• 

Provide regular updates to the EP and to the Council on progress, 
as they have requested  

Organise  regular  high  level  events  involving  the  EP  and  Member 
States 

Establish a working group of experts from Member States to ensure 
that they are informed about progress and have an opportunity for 
feedback 

In addition, the two strands could be brought together periodically into a 
discussion forum, to allow discussion in a broader context. 

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3.1.3 Possible structure and content of the CFR 

the  EC  acquis  and  relevant 

The research preparing the CFR will aim to identify best solutions, taking 
into  account  national  contract  laws  (both  case  law  and  established 
instruments, 
practice), 
particularly the UN Convention on Contracts for the International Sale of 
Goods of 1980. Other existing material will also be relevant and will be 
taken  into  account,  while  ensuring  that  the  CFR  fits  the  EU’s  specific 
requirements. 

international 

The structure envisaged for the CFR (an example for a possible structure 
is provided in Annex I) is that it would first set out common fundamental 
principles  of  contract  law,  including  guidance  on  when  exceptions  to 
such  fundamental  principles  could  be  required.  Secondly, 
those 
fundamental  principles  would  be  supported  by  definitions  of  key 
concepts.  Thirdly,  these  principles  and  definitions  would  be  completed 
by  model  rules,  forming  the  bulk  of  the  CFR.  A  distinction  between 
model  rules  applicable  to  contracts  concluded  between  businesses  or 
private  persons  and  model  rules  applicable  to  contracts  concluded 
between a business and a consumer could be envisaged. 

Some respondents identified areas which they argued could be included 
in  the  CFR.  Many  of  these  relate  to  general  concepts,  which  are  not 
specific to particular types of contract or contracting parties. The primary 
criterion  for  determining  which  areas  are  covered  should  be  the 
usefulness in terms of increasing the coherence of the acquis. 

insurance  contracts.  The  Commission  expects 

However, two types of contracts which were mentioned specifically were 
consumer  and 
the 
preparation of the CFR to pay specific attention to these two areas. Other 
areas mentioned specifically which the CFR could cover were contracts 
of sale and services and clauses relating to the retention of title and the 
transfer of title of goods.  

The Commission also took into account a study launched, following the 
requests  from  the  EP  and  the  Council,  to  examine  whether  problems 
arose  from  differences  in  the  interaction  between  contract  laws  and  tort 
laws, and between contract laws and property laws17. In the light of this 
study, the Commission concluded that there are no appreciable problems 
arising from differences in the interaction between contract law and tort 
law in the different Member States. More significant problems appear to 
arise from the different interactions between contract and property law in 
Member States. The preparation of the CFR will need to consider how to 
resolve these problems, as far as necessary for improving the present and 
future acquis. 

17 

See footnote 1. 

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3.2  Elaboration by the Commission of the Common Frame of Reference 

3.2.1  Suitability for the objectives of the Action Plan 

The  Commission  is  not  bound  by  the  researchers’  final  report  and  will 
amend it where necessary to achieve the Action Plan’s objectives. 

3.2.2  Practicability test 

In  its  evaluation  of  the  researchers'  final  report  the  Commission  will 
ensure that the draft CFR is subjected to a practicability test on the basis 
of concrete examples for the anticipated uses of the CFR.  

Firstly  this  will  involve  checking  that  the  draft  CFR  is  fit  for  use  in 
improving  the  acquis  and  preparing  legislation.  This  could  mean  using 
the draft CFR in a proposal to modify an existing directive.  

This could  be  done,  for  instance, within the context of the Commission 
plans to review the consumer law acquis and in any actions arising from 
the  review  of  Directive  2000/35/EC  on  combating  late  payment  in 
commercial transactions18 

Any  lessons  learned  will  be  incorporated  before  adoption  of  the 
Commission’s final CFR. 

Secondly,  the  draft  CFR  could  be  used  by  other  institutions  on  a  trial 
basis.  This  phase  could  also  involve  asking  Member  States  to  examine 
the transposition of a sample of existing legislation and consider to what 
extent the draft would have contributed to it. The suitability of the draft 
CFR  for  use  in  Measures  II  and  III,  again  using  practical  examples, 
would  also  need  to  be  tested.  Ways  to  check  the  suitability  of  the  draft 
CFR  as  a  tool  in  international  arbitration  or  in  the  Commission’s  own 
contractual relationships will also be sought. 

3.2.3  Consultation on the Commission’s CFR 

This  elaboration  process  will  result  in  a  Commission  CFR  that  will  be 
submitted  for  final  consultation.  The  EP,  the  Council  and  the  Member 
States  will  be  invited  to  examine  the  researchers’  final  report  and  the 
Commission’s  evaluation.  An  inter-institutional  working  group  could 
also be used to discuss the CFR's use throughout the legislative process. 
Consultation  of  Member  States  could  be  continued  through  the  same 
working group of national experts which will track the preparatory work. 

. 

Next step will be an open consultation in the form of White Paper, giving 
stakeholders  the  opportunity  to  contribute.  For  that  purpose,  the 
Commission’s  CFR  will  be  translated  into  all  official  EU  languages. 
Stakeholders  will  have  at  least  six  months  to  comment  on  the 
Commission draft. The consultation will allow for detailed consideration 

18 

OJ L 200, 8.8.2000, p. 35. 

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of  the  CFR's  content  and  provide  an  opportunity  to  address  differences 
between  the  language  versions,  to  ensure  that  the  final  version  is  fully 
compatible and clearly intelligible in all languages. 

3.2.4  Adoption of the CFR by the Commission 

The  adoption  of  the  CFR  by  the  Commission  is  foreseen  for  2009.  The 
CFR  will  be  widely  published,  including  in  the  Official  Journal  of  the 
European  Union  and  reviewed  as  necessary.  Mechanisms  for  updating 
the CFR will be identified.  

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ANNEX I 

Possible structure of the CFR 

The  main  goal  of  the  CFR  is  to  serve  as  a  tool  box  for  the  Commission  when  preparing 
proposals,  both  for  reviewing  the  existing  acquis  and  for  new  instruments.  To  that  aim,  the 
CFR could be divided into three parts: fundamental principles of contract law; definitions of 
the main relevant abstract legal terms and model rules of contract law. 

CHAPTER I – Principles 

The  first  part  of  the  CFR  could  provide  some  common  fundamental  principles  of  European 
contract law and exceptions for some of these principles, applicable in limited circumstances, 
in particular where a contract is concluded with a weaker party. 

Example:  Principle  of  contractual  freedom;  exception:  application  of  mandatory  rules; 
Principle  of  the  binding  force  of  contract;  exception:  e.g.  right  of  withdrawal;  principle  of 
good faith 

CHAPTER II – Definitions 

The  second  part  of  the  CFR  could  provide  some  definitions  of  abstract  legal  terms  of 
European contract law in particular where relevant for the EC acquis. 

Examples:  definition  of  contract,  damages.  Concerning  the  definition  of  a  contract,  the 
definition could for example also explain when a contract should be considered as concluded.  

CHAPTER III – Model rules 

SECTION I – Contract  

1. 

2. 

3. 

4. 

5. 

6. 

Conclusion of a contract: i.e. notion of offer, acceptance, counteroffer, revocation of 
an offer, time of conclusion of a contract. 

Form  of  a  contract:  i.e.  written  contract,  oral  contract,  electronic  contract  and 
electronic signature. 

Authority of agents: direct and indirect representation. 

Validity: i.e. initial impossibility, incorrect information, fraud, threats. 

Interpretation:  i.e.  general  rules  of  interpretation,  reference  to  all  relevant 
circumstances. 

Contents  and  effects:  i.e.  statements  giving  rise  to  contractual  obligation,  implied 
terms, quality of performance, obligation to deliver the goods / provide the services, 
conformity of the performance with the contract. 

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SECTION II – Pre-contractual obligations 

1. 

2. 

Nature of pre-contractual obligations (mandatory or not) 

Pre-contractual information obligations:  

a.  General/Form: i.e. written information, by any clear and comprehensible way. 

b. 

c. 

d. 

Information to be given before the conclusion of the contract: i.e. information 
regarding  the  main  characteristics  of  goods  or  services,  price  and  additional 
costs,  regarding  the  rights  of  the  consumer,  specific  information  for  e-
contracts. 

Information  to  be  given  at  the  conclusion  of  the  contract:  i.e.  information 
regarding the right to ask for arbitration. 

Information to be given after the conclusion of the contract:  i.e. obligation to 
notify any modification of the information. 

SECTION III – Performance / Non-Performance: 

1. 

2. 

3. 

General rules: i.e. place and time of performance, performance by a third party, time 
of delivery, place of delivery, costs of performance. 

Non-performance and remedies in general: 

a.  Non-performance : notion of breach of contract 

b. 

Remedies  in  general:  i.e.  remedies  available,  cumulation  of  remedies,  clause 
excluding or restricting remedies. 

Particular remedies for non-performance: i.e. right to performance, to terminate the 
contract (right of rescission), right of cancellation, right for a price reduction, repair, 
replacement, right to damages and interest.  

SECTION IV – Plurality of parties 

1. 

2. 

Plurality of debtors 

Plurality of creditors 

SECTION V – Assignment of claims  

1. 

General  principles:  i.e.  contractual  claims  generally  assignable,  partial  assignment, 
form of assignment. 

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2. 

3. 

Effects  of  assignment  as  between  Assignor  and  Assignee:  i.e.  rights  transferred  to 
assignee, when assignment takes effects. 

Effects  of  assignment  as  between  Assignee  and  Debtor:  i.e.  effect  on  debtor’s 
obligation, protection of debtor. 

SECTION VI – Substitution of new debtor - Transfer of contract 

1. 

2. 

Substitution of new debtor: i.e. effects of substitution on defences and securities 

Transfer of contract 

SECTION VII – Prescription  

1. 

2. 

3. 

4. 

Periods of prescription and their commencement 

Extension of period 

Renewal of periods 

Effects of prescription 

SECTION VIII – Specific rules for contract of sales 

SECTION IX – Specific rules for insurance contracts 

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ANNEX II 

Parameters concerning the optional instrument – For further discussion on the 
opportuneness of this instrument 

This  annex  presents  some  parameters  concerning  an  optional  instrument  which  should  be 
taken into account during the further discussion on its opportuneness.  

1. 

Concerning the general context of an optional instrument: 

The existing legal framework, in particular existing European legislation relating to 
contract  law  and  the  ongoing  work  regarding  the  future  Regulation  on  the  law 
applicable  to  contractual  obligations  should  be  taken  into  account  within  this 
reflection process. The results of measure I regarding the improvement of the acquis 
as well as those of measure II will have to be considered.  

Moreover, an extended impact assessment will have to be carried out regarding this 
measure.  Such  an  exercise  implies  that,  among  others,  the  following  questions  are 
considered before any decision on the adoption of an optional instrument:  

●  What problem(s) are being addressed? 

●  What is the overall policy objective, in terms of the desired impacts? 

●  What would happen under a ‘no change’ scenario? 

●  What other options are available to meet the objectives? (eg different types of 

action, more or less ambitious options) 

● 

How are subsidiarity and proportionality taken into account? 

●  What are types and the scale of positive and negative impacts associated with 
each  option  –  whether  economic,  social,  environmental  –  and  are  there 
tensions/trade offs between them? 

● 

How can the positive impacts be maximised and negative impacts minimised? 
Are any associated measures needed to achieve this? 

●  Who is affected? Are any specific groups particularly affected? 

● 

● 

Are there impacts outside the EU? 

How will the instrument be implemented and the impact in practice monitored 
and evaluated? 

●  What were the views of stakeholders? 

2. 

Concerning the binding nature of an optional instrument 

In  the  Action  Plan,  the  Commission  presented  different  possible  approaches 
concerning the binding nature of an optional instrument. This instrument could either 
be a set of rules on contract law which would apply unless its application is excluded 

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by  the  contract  of  the  parties  (“opt  out”)  or  a  purely  optional  model  which  would 
have to be chosen by the parties through a choice of law clause (“opt in”). The latter 
would give parties the greatest degree of contractual freedom.  

Respondents’  positions  on  this  issue  were  clear,  with  most  favouring  an  “opt  in” 
model.  The  governments  which  expressed  an  opinion  on  this  point,  supported  the 
“opt  in”  model  which  they  consider  being  of  great  importance  in  preserving  the 
principle of contractual freedom. Businesses also supported such a voluntary scheme 
and  again  stressed  the  importance  of  the  general  principle  of  contractual  freedom. 
Further,  almost  all  legal  practitioners  called  for  an  “opt  in”  solution.  Finally,  a 
majority of academics seemed also to prefer this solution. 

The  Commission  shares  stakeholders’  view  of  the  importance  of  the  principle  of 
contractual freedom and had already underlined in the Action Plan that the principle 
of “contractual freedom should be one of the  guiding  principles of such a contract 
law instrument” and that consequently “ it should be possible for the specific rules of 
such  a  new  instrument,  once  it  has  been  chosen  by  the  contracting  parties  as  the 
applicable  law  to  their  contract,  to  be  adapted  by  the  parties  according  to  their 
needs”. A limit to contractual freedom would only be acceptable in relation to some 
mandatory  provisions  contained  in  the  optional  instrument,  particularly  provisions 
aiming to protect consumers (see point 4 below). 

In  that  context,  and  as  suggested  by  contributors,  the  Commission  considers  that 
future  consultations  and  debates  should  follow  this  direction  and  should  take  into 
account the coherence of such an optional instrument with the Rome Convention of 
1980 on the law applicable to the contractual obligations and the subsequent Green 
Paper of January 2003 on the conversion of the Rome Convention into a Community 
instrument and its modernisation. This latter point was underlined by all respondents. 

Contributors to the Action Plan mentioned different approaches which could be used 
as  a  basis  for  further  reflection  on  the  question  of  the  articulation  of  an  optional 
instrument  and  the  successor  of  the  Rome  Convention  (“Rome  I”).  The  first 
suggestion,  as  put  forward  by  some  contributors,  would  be  to  adopt  the  optional 
instrument as international uniform law. The main example of an instrument adopted 
as  international  uniform  law  is  the  Vienna  Convention  on  the  International  Sale  of 
Goods  (CISG).  Within  that  approach,  the  optional  instrument  would  contain  a 
provision  relating  to  its  scope19  and  Rome  I  would  not  then  apply  to  matters 
regulated by the optional instrument. Moreover, for all the aspects of contract law not 
provided  by  the  optional  instrument,  the  parties  would  use  the  national  law 
applicable according to the provisions of Rome I. The second approach presented by 
respondents  to  ensure  such  coherence  would  be  through  Article  20  of  the  Rome 
Convention20.  In  this  case,  the  optional  instrument  would  again  contain  a  clause 
relating  to  its  scope  and  Rome  I  would  not  then  apply  to  matters  regulated  by  the 
optional  instrument.  An  adaptation  of  Article  20  could  be  envisaged.  Finally,  the 

19 

20 

The scope clause could provide that the optional instrument is applicable to contracts where at least one 
of the parties is established in a Member State. 
Article  20  of  the  Rome  Convention:  “This  Convention  shall  not  affect  the  application  of  provisions 
which, in relation to particular matters, lay down choice of law rules relating to contractual obligations 
and  which  are  or  will  be  contained  in  acts  of  the  institutions  of  the  European  Communities  or  in 
national laws harmonized in implementation of such acts”. 

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third possibility suggested by stakeholders would be to adopt the optional instrument 
as a Community instrument, which would not benefit from any priority over Rome I 
and  that  the  parties  could  choose  as  applicable  law  to  their  contract  on  the  base  of 
Article 321 of the Rome Convention. In this case, the optional instrument would not 
contain  any  scope  clause  but  only  provisions  of  substantive  law.  As  suggested  by 
stakeholders,  Article  3,  paragraph  1  could  be  interpreted  in  a  way  to  leave  the 
possibility for the parties to choose the optional instrument as applicable law to their 
contract. The possibility of such interpretation could be clarified in Rome I. 

It is clear from the approaches suggested by respondents that the works undertaken 
on  the  conversion  of  the  Rome  Convention  into  a  Community  instrument  and  its 
modernisation and those on European Contract Law need to be coherent. Even if it is 
too premature to take any decision on the opportuneness and adoption of the optional 
instrument, it is important to ensure that the future Community instrument “Rome I” 
takes  into  account  the  possibility  of  a  coherent  articulation  of  its  provisions  with  a 
possible future optional instrument. 

3. 

Concerning the legal form of an optional instrument 

In the Action Plan, the Commission suggested that an optional instrument could take 
the  legal  form  of  a  regulation  or  a  recommendation  which  would  exist  in  parallel 
with, rather than instead of, national contract laws. 

As we have seen above, a great majority of respondents expressed its preference for 
an “opt in” instrument. If this approach is followed, there is significant support for a 
regulation.  However,  among  the  academics’  contributions,  some  are  in  favour  of  a 
non-binding instrument, for example a recommendation.  

For  an  “opt-out”  instrument  a  regulation  would  be  more  appropriate  as,  unlike  a 
recommendation, it  is  directly  applicable. For an “opt-in” instrument, the choice of 
its  legal  form  will  depend  on  the  approach  chosen  for  the  articulation  of  this 
instrument  with  the  successor  of  the  Rome  Convention  (see  point  1  above).  In  this 
context, in the light of the three approaches suggested by stakeholders, the form of a 
Regulation may seem more appropriate. 

4. 

Concerning the content of an optional instrument 

In its Action Plan, the Commission made clear that in reflecting on the content of a 
non-sector-specific  instrument,  the  future  CFR  should  be  taken  into  account.  The 
content  of  this  CFR  would  be  likely  to  serve  as  a  basis  for  the  discussions  on  the 
optional  instrument.  On  that  point,  most  of  the  stakeholders  agreed  with  the 
Commission view even if the question of whether the new instrument should cover 
the whole scope of the CFR or only parts of it was left open. 

The question of whether this optional instrument should contain only some general 
contract  law  components  or  also  components  for  specific  contracts  which  are  of  a 

21 

Article 3.1 of the Rome Convention: “A contract shall be governed by the law chosen by the parties. 
The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or 
the circumstances of the case. By their choice the parties can select the law applicable to the whole or a 
part only of the contract. 

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transactions.  Concerning  provisions  of  general  contract 

great  economic  importance  in  the  internal  market,  i.e.  contract  of  sale  or  services, 
was also left open in the Action Plan. Many stakeholders agreed on the fact that an 
optional instrument should contain  some provisions of general contract law as well 
as  provisions  relating  to  specific  contracts  which  have  significant  importance  for 
law, 
cross-border 
stakeholders  suggested  that  the  optional  instrument  could  contain,  for  instance, 
provisions relating to the conclusion, validity and interpretation of contracts as well 
as  performance,  non-performance  and  remedies.  Concerning  specific  contracts, 
several suggestions were made: the optional instrument should contain rules relating 
to contract of sale, exchange, donation, lease, cross-border financial transactions and 
contracts of insurance. Some stakeholders also expressed the view that the optional 
instrument should cover areas of law linked to contract law, i.e. security law, unjust 
enrichment as well as rules on credit securities on movable goods.  

Thus,  according  to  these  contributions,  an  optional  instrument  could  have  different 
components,  i.e.  parts  relating  to  general  contract  law  and/or  certain  specific 
contracts.  However,  the  exact  content  of  an  optional  instrument  and  which  sectors 
should  receive  special  attention  will  need  to  be  further  discussed.  An  optional 
instrument  should  only  contain  those  areas  of  contract  law,  whether  general  or 
specific  to  certain  contracts,  which  clearly  contribute  to  addressing  identified 
problems, such as barriers to the smooth functioning of the internal market.  

5. 

Concerning the scope of an optional instrument 

Concerning  the  scope  of  an  optional  instrument,  two  main  issues  can  be  identified 
which would need to be addressed through further reflection. 

Firstly,  in  the  Action  Plan,  the  Commission  raised  the  question  of  whether  an 
optional  instrument  should  cover  solely  business-to-business  transactions  or  also 
business-to-consumer contracts. In the latter case, the new instrument would contain 
mandatory provisions concerning consumer protection. The Commission underlined 
the importance of the principle of contractual freedom that allows parties, once they 
have  decided  to  apply  the  optional  instrument  to  their  contract,  to  adapt  this 
instrument according to their needs. However, it also noted that this freedom could 
be  restricted  by  the  mandatory  character  of  some  limited  provisions  of  the  new 
instrument, e.g. those relating to consumer protection.  

In answering this question, it is important to remember the main goal of the optional 
instrument,  namely  the  smoother  functioning  of  the  internal  market.  It  is  clear  that 
including  business-to-business  transactions  would  facilitate  that  goal.  However, 
business-to-consumer  transactions  are  also  of  great  economic  importance  for  the 
internal  market  and,  to  that  extent,  their  inclusion  would  be  justified.  In  this  case, 
consumers would need to be afforded a sufficiently high level of protection to ensure 
benefits  for  the  demand-side  of  the  market  (consumers)  as  well  as  the  supply-side 
(businesses).  In  that  context,  most  stakeholders  considered  that  a  new  instrument 
should apply to business-to-consumer transactions as well and so include mandatory 
rules to ensure a high level of consumer protection.  

Here  it  should  be  noted  that  national  mandatory  rules,  applicable  on  the  basis  of 
Articles  5  and  7  of  the  Rome  Convention,  can  increase  transaction  costs  and 
constitute obstacles to cross-border contracts. In that context, the introduction in the 

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optional instrument of mandatory provisions in the meaning of in Articles 5 and 7 of 
the Rome Convention could represent a great advantage: the parties, by choosing the 
optional instrument as applicable law to their contract, would know from the moment 
of  the  conclusion  of  the  contract  which  mandatory  rules  are  applicable  to  their 
contractual  relationship.  That  would  provide  legal  certainty  in  cross  border 
transactions  and  the  relevant  providers  of  services  and  goods  could  market  their 
services or products throughout the whole European Union using one single contract. 
The  optional  instrument  would  then  become  a  very  useful  tool  for  the  parties. 
However, in such a situation, it would need to be certain that, where the parties have 
chosen  the  optional  instrument  as  applicable  law,  other  national  mandatory  rules 
would  no  longer  be  applicable.  That  would  depend  on  the  solution  chosen  for  the 
articulation of the optional instrument with Rome I (see point 1 above). 

Secondly, the introduction of the business-to-business transactions within the scope 
of  the  optional  instrument  raises  another  issue.  It  concerns  the  articulation  of  the 
optional  instrument  and  the  Vienna  Convention  on  the  International  Sale  of  Goods 
(CISG). In its Action Plan, the Commission asked for some comments on the scope 
of the optional instrument in relation to the CISG. Many stakeholders presented their 
view on this issue. All of them agreed on the necessity to ensure coherence between 
an optional instrument and the CISG. However, there was less consensus on how to 
ensure  such  coherence:  while  some  considered  that  the  optional  instrument  should 
only  provide  for  complementary  rules  to  the  CISG,  others  proposed  that  the  CISG 
should become part of the optional instrument.  

The  question  of  the  relationship  between  the  optional  instrument  and  the  CISG 
would depend, on the one hand, on the scope of the optional instrument22, and, on the 
other hand, on the binding nature of this new instrument, i.e. “opt in” or “opt out”. 
As noted in point 1, the majority of respondents favoured an “opt in” instrument. In a 
scenario  where  the  optional  instrument  was  an  “opt  in”  instrument  applicable  to 
business-to-business 
the  optional 
instrument as applicable law to their contract, the parties would have tacitly excluded 
the application of the CISG on the base of Article 6 of the CISG23. However, in the 
alternative  scenario  of  an  “opt  out”  instrument  applicable  to  business-to-business 
international sales of goods, the problem of determining the appropriate application 
of the two instruments could be more difficult to solve. That would be an argument 
in favour of an “opt in” instrument, an approach preferred so far by stakeholders. 

international  sales  of  goods,  by  choosing 

6. 

Concerning the legal base of an optional instrument 

In its Action Plan, the Commission launched the reflection on the legal base of a new 
instrument  and  welcomed  comments  from  stakeholders.  However,  very  few 
contributors  expressed  their  view  on  that  issue.  While  one  Member  State  proposed 
Article  308  of  the  TEC  for  an  “opt  in”  instrument  and  Article  95  TEC  for  an  “opt 
out” scheme, a group of academic lawyers preferred Article 65 TEC.  

22 

23 

If  the  optional  instrument  is  not  applicable  to  international  sales  of  goods,  there  is  no  problem  of 
competition between this optional instrument and the CISG. 
Article  6  of  the  CISG:  “The  parties  may  exclude  the  application  of  this  Convention  or,  subject  to 
article 12, derogate from or vary the effect of any of its provisions.” 

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The question of the legal base is closely linked with the questions of the legal form 
of the optional instrument (see point 2 above), of its content (see point 3 above) and 
its  scope  (see  point  4  above).  More  reflections  on  the  important  issue  of  the  legal 
base  will  be  necessary  within  a  larger  debate  on  the  parameters  of  an  optional 
instrument. 

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