COMMISSION STAFF WORKING PAPER Impact Assessment
Date: 2011-10-11
Institutions: European Commission
Subjects: commercial contract, consumer protection, contract, corpus juris (EU), goods and services, intra-EU trade, law of obligations, provision of services, purchase, single market, trade restriction

EUROPEAN COMMISSION 

Brussels, 11.10.2011 
SEC(2011) 1165 final 

COMMISSION STAFF WORKING PAPER 

Impact Assessment  

Accompanying the document 

Proposal for a Regulation of the European Parliament and of the Council on a Common 
European Sales Law 

on a Common European Sales Law  

{COM(2011) 635 final} 
{SEC(2011) 1166 final} 

 
 
 
 
  
 
Disclaimer 

This impact assessment report commits only the Commission's services involved in its preparation 
and the text is prepared as a basis for comment and does not prejudge the final form of any decision 
to be taken by the Commission. 

  1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES ........................................... 4 
1. 
1.1.  POLICY BACKGROUND ............................................................................................................................................. 4 
1.2.  ORGANISATION AND TIMING .................................................................................................................................... 4 
1.3.  CONSULTATION AND EXPERTISE .............................................................................................................................. 5 
1.3.1.  Public consultation...................................................................................................................................... 5 
1.3.2.  Outside expertise.......................................................................................................................................... 6 
1.3.3.  Consultation of the Impact Assessment Board........................................................................................... 7 
PROBLEM DEFINITION....................................................................................................................................... 7 
2. 
2.1. 
INTRODUCTION ......................................................................................................................................................... 7 
2.2.  CURRENT EU LEGAL FRAMEWORK IN THE AREA OF CONTRACT LAW ................................................................... 7 
2.3.  PROBLEM 1: DIFFERENCES IN CONTRACT LAW HINDER BUSINESSES FROM CROSS BORDER TRADE AND LIMIT 

THEIR CROSS-BORDER OPERATIONS....................................................................................................................... 10 
2.3.1.  Negative impact of contract law differences on cross-border trade......................................................... 10 
2.3.2.  Driver 1: Additional transaction costs stemming from differences in contract law hinder cross-border 
.................................................................................................................................................................... 12 
trade 
2.3.3.  Driver 2: Perceived increased legal complexity hinders cross-border trade............................................ 17 
2.4.  PROBLEM 2: CONSUMERS ARE HINDERED FROM CROSS-BORDER PURCHASES AND MISS OPPORTUNITIES ......... 17 
2.4.1.  Driver: Contract law differences impact negatively upon cross-border shopping .................................. 18 
2.5.  NEED FOR ACTION AT EU LEVEL AND SUBSIDIARITY ............................................................................................ 22 
POLICY OBJECTIVES ........................................................................................................................................ 22 
3. 

4. 
POLICY OPTIONS................................................................................................................................................ 23 
4.1.  OPTIONS FOR TYPE OF INTERVENTION .................................................................................................................. 23 
4.2.  OPTIONS FOR SCOPE AND CONTENT....................................................................................................................... 25 
4.2.1.  Sub-option 1 for scope: B2C / B2B contracts........................................................................................... 25 
4.2.2.  Sub-option 2 for scope: Cross-border / domestic contracts...................................................................... 25 
4.2.3.  Sub-option 3 for substantive content: areas of law covered..................................................................... 26 
5.  ANALYSIS OF IMPACTS .................................................................................................................................... 27 
5.1.  MAIN IMPACTS OF POLICY OPTION 1: BASELINE SCENARIO ............................................................. 27 
5.2.  MAIN IMPACTS OF POLICY OPTION 2 ......................................................................................................... 29 
5.2.1. 
2a: Toolbox as a Commission Document ................................................................................................. 29 
5.2.2.  Main Impacts of Policy Option 2b: Toolbox as an Inter-Institutional Agreement ................................. 31 
5.3.  MAIN IMPACTS OF POLICY OPTION 3: RECOMMENDATION OF A COMMON EUROPEAN SALES 
LAW ....................................................................................................................................................................... 32 

5.4.  MAIN IMPACTS OF POLICY OPTION 4: REGULATION/DIRECTIVE SETTING UP AN OPTIONAL 

COMMON EUROPEAN SALES LAW............................................................................................................... 33 
5.5.  MAIN IMPACTS OF POLICY OPTION 5A AND 6 .......................................................................................... 44 
5.5.1.  Policy Option 5a: Directive on a mandatory CommonEuropean Sales Law (full harmonisation) and 
Policy Option 6: Regulation establishing a mandatory Common European Sales Law ....................................... 44 
5.5.2.  Main Impacts Of Policy Option 5b: Directive on a  mandatory Common European Sales Law 
(minimum harmonisation) ...................................................................................................................................... 48 
6. COMPARATIVE ASSESSMENT OF OPTIONS .................................................................................................... 49 

7. MONITORING AND EVALUATION ARRANGEMENTS ................................................................................... 56 

ANNEX I: PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES................................ 58 

ANNEX II: THE CURRENT LEGAL FRAMEWORK............................................................................................... 62 

ANNEX III: CALCULATION OF OPPORTUNITY AND TRANSACTION COSTS............................................. 71 

ANNEX IV: ECONOMIC MODEL APPLIED TO THE ASSESSMENT OF POLICY OPTIONS ....................... 87 

ANNEX V: DETAILED ANALYSIS OF IMPACTS OF POLICY OPTIONS.......................................................... 95 

ANNEX VI: IMPACTS OF THE COMMON EUROPEAN SALES LAW ON FUNDAMENTAL RIGHTS ...... 127 

ANNEX VII: ADMINISTRATIVE COSTS ................................................................................................................ 130 

2

 
 
ANNEX VIII: ANALYSIS OF IMPACTS OF MAJOR SUBSTANTIVE PROVISIONS OF A COMMON 
EUROPEAN SALES LAW .................................................................................................................................................

144 

ANNEX IX: RANKING OF BARRIERS TO TRADE............................................................................................... 208 

3

 
 
 
1.  PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

1.1. 

Policy Background 

The  European  Commission  (Commission)  has  been  working  on  European  contract  law  since  2001 
(see Annex I). With its 2001 Communication on European contract law,1 the Commission launched a 
process of extensive public consultation on the problems arising from differences between Member 
States' contract laws and on potential actions in this field. As a follow-up, the Commission issued an 
Action  Plan  in  2003,2  with  a  proposal  among  others  to  establish  a  Common  Frame  of  Reference 
containing common principles, terminology and model rules to be used by the Union legislator when 
making or amending legislation. Via a grant under the 6th Framework Programme for Research, the 
Commission  financed  the  work  of  an  international  academic  network  which  carried  out  the 
preparatory  legal  research.  This  research  work  was  finalised  at  the  end  of  2008  and  led  to  the 
publication  of  the  Draft  Common  Frame  of  Reference3  as  an  academic  text.4    In  parallel  to  this, 
analytical  work  was  also  carried  out  by  the  Association  Henri  Capitant  des  Amis  de  la  Culture 
Juridique  Française  and  the  Société  de  Legislation  Comparée  drafting  the  Principes  Contractuels 
Communs.5 

In  July  2010  the  Commission  launched  a  'Green  Paper  on  policy  options  on  progress  towards  a 
European  contract  law  for  consumers  and  businesses'  (Green  Paper)6.  The  Commission's  Work 
Programme  for  20117  provides  for  a  legal  instrument  of  European  contract  law  as  a  strategic 
initiative to be proposed in the last quarter of 2011.  

1.2. 

Organisation and timing  

The Commission adopted a Decision8 on 26 April 2010 to establish an Expert Group (EG) to conduct 
a feasibility study on a draft European contract law instrument covering the life-cycle of a contract. 
The  EG  was  composed  of  European  legal  scholars,  legal  practitioners  and  representatives  of 
consumer and business organisations (acting in their personal capacity). The backgrounds of the EG 
members  also  reflected  the  main  legal  systems  and  traditions  within  the  EU.  The  EG  study 
(completed in April 2011) served as a starting point for developing the Commission proposal on a 
possible legal instrument of European contract law. 

An Impact Assessment Steering Group (IASG) was set up in May 2010 and was composed of the 
SG,  the  SJ,  DG  COMP,  DG  COMM,  DG  ECFIN,  DG  MARKT,  DG  ENTR,  DG  SANCO,  DG 
INFSO, DG MOVE and DG TRADE. The IASG met 5 times and was consulted on the draft Green 
Paper, on the impact assessment (IA) report as well as on the EG study.  

1 Communication from the Commission to the Council and the European Parliament on European Contract Law, COM(2001) 398, 11.7.2001. 

2 Communication from the Commission to the European Parliament and the Council,  A more coherent European Contract Law: an Action Plan, COM(2003) 68, 12.2.2003. 

3 Von Bar, C., Clive, E. and Schulte Nölke, H. (eds.), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference  

(DCFR), Munich, Sellier, 2009. 

4 Although financed by the Commission, the text is not an official Commission document. 

5 Bénédicte Fauvarque-Cosson and Denis Mazeaud (eds.), European Contract Law, Materials for a Common Frame of Reference: Terminology, Guiding Principles, Model 

Rules. 

6 Green Paper from the Commission on policy options for progress towards a European Contract Law for consumers and businesses, COM(2010) 348 final, 1.7.2010. 

7 Commission's Work Programme for 2011, COM(2010) 623 final of 27.10.2010. 

8 Commission Decision 2010/233/EU, OJ 105 of 27.4.2010. 

  4 

 
 
 
 
 
 
 
 
 
 
 
                                                 
1.3. 

Consultation and expertise 

1.3.1.  Public consultation  

The Commission organised the following public consultations throughout the IA process:  

•  General consultations  

 - The Green Paper opened an EU wide public consultation on 7 policy options which closed on 31 
January 2011 and resulted in 320 responses from all categories of stakeholders from across the EU, 
demonstrating the high interest in the topic.9  

Many  respondents  saw  value  in  option  1  (the  publication  of  the  work  of  the  EG)  and  supported 
option  2  (a  'toolbox'  for  the  EU  legislator).  There  was  little  support  for  options  3  (a  Commission 
Recommendation),  5  (a  minimum  harmonisation  Directive)  and  7  (a  Regulation  establishing  a 
European civil code).  On option 4 (an optional instrument of European contract law) the responses 
were  more  varied.  Several  Member  States  (MS)  and  a  number  of  other  respondents  (business 
representatives,  legal  practitioners  and  academics)  said  they  could  support  an  optional  instrument, 
provided  that  it  fulfilled  certain  conditions  (e.g.  a  high  level  of  consumer  protection,  user-friendly 
nature,  clear  link  with  the  proposed  Consumer  Rights  Directive  (CRD)  and  other  EU-legislation). 
Many MS and business representatives did not want to take a position at that time, because they did 
not know the details of the option and the work of the Expert Group. The European Economic and 
Social Committee adopted an opinion in which it favoured a hybrid option by means of a 'toolbox' 
and  an  optional  regulatory  regime.10  In  a  Resolution  adopted  on  8  June  2011  the  European 
Parliament  (EP)  also  took  a  position  on  the  Green  Paper  options.  The  EP  supported  an  optional 
instrument,  which  would  make  the  internal  market  more  efficient  without  affecting  MS’  national 
systems of contract law. This optional instrument could be complemented by a toolbox endorsed by 
means of an inter-institutional agreement. 11 Some respondents expressed a preference for option 6 (a 
Regulation establishing a European contract law that would replace MS' national contract laws). 

Of those respondents who commented on the scope of a potential European contract law instrument 
most  only  expressed  opinions  on  a  toolbox  (option  2)  and  an  optional  instrument  (option  4).  The 
majority of those who explicitly commented on the toolbox scope (option 2) believed that it should 
be broad and comprehensive (i.e. not restricted to certain types of contract). The majority of those 
who  commented  explicitly  on  the  scope  of  option  4  seemed  in  favour  of  an  instrument  which 
focused on cross-border B2C sales contracts. The EP favoured an optional instrument for both B2C 
and B2B contracts, for cross-border situations in the first instance.12  

Based on the responses of critical stakeholders several specific and general concerns relating to the 
creation  of  a  European  contract  law,  in  particular  in  the  form  of  an  optional  instrument  could  be 
identified.  A  number  of  MS  were  concerned  about  businesses  taking  advantage  of  the  weaker 
position of the consumer/SME, the reduction of the consumer protection level and legal uncertainty. 
On  one  hand,  a  number  of  business  representatives  were  concerned  about  the  increased  legal 
uncertainty,  safeguarding  the  freedom  of  contract  and  an  unbalanced  high  level  of  consumer 
protection. On the other hand, consumer representatives feared a reduction of consumer protection 

9 An overview of the responses can be found in Annex I on Procedural Issues and Consultation (Annex I). 

10 Opinion of the European Economic and Social Committee on the Green Paper from the Commission on policy options for progress towards a European contract law for 

consumers and businesses of 19 January 2011, OJ C 84/1, 17.3.2011. 

11  European Parliament Resolution of 8 June 2011 on policy options for progress towards a European Contract Law for consumers and businesses (2011/2013 (INI)). 

12  European Parliament Resolution of 8 June 2011 on policy options for progress towards a European Contract Law for consumers and businesses (2011/2013 (INI)). 

5

 
 
 
 
 
 
 
 
 
 
                                                 
levels in their MS and insisted that any new instrument in the field of consumer policy should have a 
clear  added  value  for  consumers.  They  also  expressed  a  specific  concern  relating  to  the  optional 
instrument  which  they  thought  would  lead  to  uncertainty  and  confusion  for  consumers.  Some 
associations  of  legal  practitioners  were  concerned  about  an  increase  of  legal  complexity  and 
uncertainty, largely due to the lack of accessible case law. 

In  order  to  meet  as  much  as  possible  the  abovementioned  concerns,  the  Commission  created  a 
special sub-group within the EG focusing on ensuring a high level of consumer protection. In order 
to discuss the balance of the level of consumer protection with the needs of business this parameter 
was given particular attention in the discussion with both consumer and business representatives as 
part of the key stakeholder experts group (see below). In addition, the Commission made clear that 
they intended to minimise the legal uncertainty by establishing a European database of relevant case-
law accessible by legal practitioners from all MS.   

-  A  key  stakeholder  experts  group  was  set  up  in  July  2010  which  represented  businesses, 
consumers and legal practitioners. The first role of the stakeholder group (which met 10 times) was 
to  provide  a  practitioner's  perspective  on  the  work  of  the  EG,  thereby  ensuring  the  instrument 
developed was user-friendly. In addition to this, the stakeholder group discussed IA related matters 
at half of its meetings, once the formal IA work began.  

-  The Commission published the feasibility study of the Expert Group on its web-site and invited 
stakeholders  to  provide  feedback  between  3  May  and  1  July  2011.13  The  Commission  consulted 
stakeholders on the text in order to decide if and to what extent it could serve as a starting point for 
the preparation of a political follow-up initiative. Most contributions concerned precise questions of 
legal  drafting.  However,  business  stakeholders  in  particular  also  expressed  concerns  about  the 
negative effects of a level of consumer protection, which according to them was too high.14 Reacting 
to these concerns, the Commission ensured that the level of consumer protection would be balanced. 

• 

Specific consultations targeting main stakeholder groups  

- Workshops and meetings: A workshop on contract law with business stakeholders was organised in 
November 2010. Commission officials also met representatives of BEUC and attended two meetings 
of the European Consumer Consultative Group (ECCG).  

-  Surveys:  Several  surveys  consulted  businesses  on  their  experiences  with  contract  law  related 
problems  and  the  impacts  of  a  European  contract  law  instrument.  They  included  two  Flash 
Eurobarometers  (EB  320/2011  and  321/2011),15  the  SME  Panel16  and  the  European  Business  Test 
Panel17 surveys of 2010.A consumer survey (Flash Eurobarometer 299a) enquired about consumer 
experiences with cross-border shopping and problems related to contract law.  

1.3.2.  Outside expertise 

In November 2010 the Commission awarded a public tender to IBF International  Consulting for a 
study supporting the IA preparation. The draft report was submitted in spring 2011. 

13 The Feasibility Study of the Expert Group is available at: http://ec.europa.eu/justice/contract/files/feasibility-study_en.pdf.  

14 Responses to the public consultation on the Expert Group feasibility study by  business stakeholders, such as: Business Europe, p.2-3; Eurochambres, p. 1; UEAPME, 

p.2, and legal practitioners stakeholders, such as: Council of Bars and Law Societies of Europe (CCBE) , p.3. 

15 Eurobarometers 320 on European contract law in business-to-business transactions (EB 320) and Eurobarometer 321 on European contract law in consumer transactions 

(EB 321) of 2011. 

16 The SME Panel survey was conducted within the Enterprise Europe Network and gathered responses from 1,047 micro, small and medium sized businesses. 

17 The European Business Test panel Survey (EBTP) attracted responses from 378 companies of all sizes. 

6

 
 
 
 
 
 
 
 
 
  
                                                 
1.3.3.  Consultation of the Impact Assessment Board 

The  IA  report  was  examined  by  the  Commission's  Impact  Assessment  Board  (IAB)  on  19th  July 
2011.  The  IAB  evaluated  the  IA  report  positively,  considered  its  structure  adequate  and 
recommended several aspects to be improved, in particular by including more detailed explanations 
from  the  annexes  into  the  main  report.  All  these  recommendations  have  been  addressed:  For 
instance, the existing legal framework was presented in more detail in this report and Annex II and 
the  technical  assumptions  of  economic  impacts  were  explained  in  the  main  text  of  the  report,  in 
addition to Annexes III and IV. 

2.  PROBLEM DEFINITION 

2.1. Introduction 

Differences  in  contract  law  between  MS  create  a  barrier  to  trade  within  the  internal  market.  This 
discourages some companies from trading cross-border and limits consumer choice. Analysis carried 
out  in  this  IA  suggests  that  each  year  those  companies  that  do  export  into  new  MS  markets  face 
unnecessary entry (transaction) costs of about €1 billion (bn). The value of the trade foregone each 
year between MS due to differences in contract law amounts to some tens of billions of euros. 

2.2. Current EU legal framework in the area of contract law 

The current legal framework in the EU does not contain a single set of uniform and comprehensive 
contract  law  rules  which  could  be  used  by  consumers  and  businesses  in  cross-border  trade. 
Historically laws have been created each time to meet the specific needs at the time.  This has led to 
the current patchwork of European legislation. There are only  a limited number of uniform rules in 
only  a  few  areas  of  contract  law.  As  a  result,  substantial  differences  between  MS  contract  laws 
remain.  These  differences  are  seen  as  a  barrier  to  cross-border  trade18  by  business  with  a  slightly 
higher impact on B2C transactions than in B2B transactions.19   

Conflict of law rules: In order to  improve legal certainty, the Union put in place uniform conflict of 
law rules. The Rome I Regulation20 allows contracting parties to choose which law applies to their 
contract and to determine which law applies in the absence of choice.21 For B2C contracts where a 
business directs its activity to the consumer's country of residence the business may either apply the 
consumer's  national  law  in  its  entirety  or  choose  another  law,  in  practice  mostly  the  trader's  law. 
However,  in  the  latter  case  it  needs  to  make  sure  it  complies  with  the  mandatory  consumer 
protection provisions stemming from the consumer's national law, whenever they provide a higher 
protection.  Nevertheless,  uniform  conflict  of  law  rules  do  not  remove  the  differences  between 
substantive  contract  law.  They  only  lead  to  the  application  of  a  given  substantive  national  law  in 
cross-border transactions when otherwise several different national laws could potentially apply.  

18 See, for example, EB 320 and EB 321 of 2011, 32% in B2B (p. 16) and 36% in B2C, (p. 20) of exporting businesses said that contract law difficulties were a barrier to 

cross border trade and were almost equally cited as other practical barriers such as language and delivery. More data available in SME Panel and EBTP surveys. 

19 EB 320, p. 16: 32% of companies engaged in cross-border B2B transactions considered contract law as a barrier; and EB 321, p. 20: 36% of companies engaged in cross-

border B2C transactions considered contract law as a barrier.  

20 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. 

21 Regulations (EC) of the European Parliament and of the Council  No 593/2008 of 17 June 2008 on  the law applicable to contractual obligations (Rome I) and 864/2007 

on law applicable in non-contractual obligations (Rome II). 

7

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
This  means  that  no  matter  what  law  has  been  chosen  –  for  one  of  the  parties  to  a  contract  the 
applicable  law  is  always  a  foreign  law.    This  party  is  therefore  disadvantaged  by  the  need  to 
familiarise  itself with  a different legal system. This  situation particularly  disadvantages  consumers 
who  are  confronted  with  different  laws  when  pro-actively  shopping  cross-border.  Furthermore, 
businesses  are  disadvantaged  by  additional  costs  they  incur  when  they  have  to  ensure  compliance 
with  the  consumers'  mandatory  rules  in  B2C  cross-border  transactions.  Businesses  which  agree  to 
apply a foreign law in B2B contracts also incur additional costs. 

Substantive rules: The EU has partially reduced the differences between the MS' substantive laws 
by setting substantive rules through harmonisation measures. Table 1 below illustrates key areas of 
contract  law  which  cover  the  life-cycle  of  a  contract.22  It  shows  that  the  existing  acquis  and 
international rules are limited in scope: out of the 13 key contract law areas they only cover six areas 
(one  only  partially)  for  B2C  and  eight  areas  for  B2B  contracts  (one  only  partially).  Thus,  a 
comprehensive set of uniform rules is neither available in B2C nor B2B cross-border sales.  

Table 1: EU Legal Framework in the area of contract law 

Business-to consumer contracts 

Contract law area 

Consumer 
rights 
Directive23 

Other 
relevant  EU 
consumer 
legislation 

 Directive 
on 
electronic 
commerce  

Business-to-business contracts 

 Directive 
on 
electronic 
commerce  

Directive 
on 
combating 
late 
payments 

Vienna 
Convention 
the 
on 
international 
sale of goods 

Pre-contractual  information 
and negotiation 

YES 

YES 

YES 

YES 

NO 

Conclusion of contract 

Rights to withdraw 
Defects in consent 
Interpretation 

Contents and effects  

NO 

YES 
NO 
NO  

NO 

Unfair contract terms 

NO 

NO 

to  a 

Obligations  and  remedies  of 
the  parties 
sales 
contract 
Delivery and Passing of Risk  YES 
NO 
Obligations  and  remedies  of 
to  a  related 
the  parties 
service contract 
Damages, 
payments 
performance and interest 
Restitution 
Prescription 

Stipulated 
non-

NO 
NO 

NO 

for 

NO 

YES (partially) 

NO 

YES 
NO 
NO  (with  one 
exception) 
NO 

YES 

YES 

NO 
NO 

NO 

NO 
NO 

NO 
NO 
NO 

NO 

NO 

NO 

NO 
NO 

NO 

NO 
NO 

NO 
NO 
NO 

NO 

NO 

NO 

NO 
NO 

NO 

NO 
NO 

NO 

NO 
NO 
NO 

NO 

YES 
(partially) 
NO 

NO 
NO 

YES 
(partially) 

NO 
NO 

NO  with  a 
few 
exceptions 
YES 

NO 
NO 
YES 

NO  with  a 
few 
exceptions 
NO 

YES 

YES 
NO 

YES 

YES 
NO 

For  B2C  related  transactions,  the  EU  legal  framework  contains  mainly  minimum  harmonisation 
rules in selected areas of consumer contract law.  These have been introduced among others by the 

22 The Expert Group created by the Commission identified these areas as key areas of contract law for cross-border contracts.   

23 The table reflects the scope of the CRD based on the text, which was adopted at first reading. The scope is limited to distance and off-premises B2C contracts.  

8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Directives  relating  to  doorstep  selling,24  unfair  contract  terms,25  distance  selling26  and  sales 
remedies.27  Even  though  these  Directives  have  substantially  improved  the  level  of  consumer 
protection in the EU, they have not removed the differences between MS laws. While they establish 
minimum standards for certain core consumer rights, such as unfair contract terms control and sales 
remedies, MS can build upon these to various degrees and adopt legislation which goes beyond the 
standards of these Directives. Furthermore, MS can legislate freely in areas where no harmonisation 
had taken place. As MS legislate in an un-coordinated manner the consumer contract laws across the 
EU  have  developed  into  a  patchwork  of  27  sets  of  different  rules.  Although  this  legal  framework 
ensures  an  adequate  level  of  protection  for  consumers  who  shop  in  their  own  country,  it  creates 
increased complexity and confusion for pro-active consumers who shop cross-border. It also creates 
increased complexity and costs for businesses interested in selling to consumers across border.  

The Commission addressed the differences in the MS consumer contract laws by its 2008 proposal 
for  a  CRD.  The  aim  was  to  facilitate  cross-border  shopping  and  sales.  This  would  have  been 
achieved by establishing a single set of rules through full harmonisation of key regulatory aspects for 
consumer contracts. The 2008 proposal originally set out to merge the four consumer contract law 
Directives on doorstep selling, unfair contract terms, distance selling and sales remedies. 

However, the CRD did not achieve the objective of the initial proposal, as its scope was substantially 
reduced  in  the  negotiations  during  the  legislative  process.  Two  modules  which  were  essential  in 
practical  terms,  the  rules  on  unfair  contract  terms  and  sales  remedies,  were  excluded.  Thus,  key 
issues which posed serious concerns to consumers in cross-border shopping, such as their rights and 
obligations  with  respect  to  defective  products,  remained  regulated  at  different  levels  across  MS. 
Although  successful,  the  outcome  of  the  negotiations  on  the  CRD  showed  therefore  that  the  full 
harmonisation approach in those areas of consumer contract law had limits. The CRD succeeded in 
creating  fully  harmonised  substantive  rules,  but  only  for  distance  and  off-premises  contracts  and 
even  then  these  were  limited  to  the  areas  of  pre-contractual  information,  withdrawal  and 
delivery/passing of risk. Placing this in context, these are only 3 out of 13 key areas of contract law 
mentioned in Table 1. Thus, the rules for B2C contracts in the remaining 10 areas are harmonised 
either at a minimal level or not harmonised at all. 

For  B2B  contracts  the  existing  EU  rules  are  even  more  limited:  The  Directive  on  Electronic 
Commerce28  introduced  some  rules  on  pre-contractual  information for  electronic  contracts.  The 
Directive on combating late payments29 harmonises the rules on the default interest rate which apply 
in cases of late payment, but allows MS to go beyond the standards of the Directive in favour of the 
creditor.  Thus,  the  EU  acquis  exists  only  in  2  out  of  the  13  key  contract  law  areas,  mentioned  in 
Table 1 and also contains rules partially harmonised only at a minimum level. 

A  set  of  rules  of  a  broader  scope  was  introduced  at  an  international  level  by  the  1980  UN 
Convention  on  the  International  Sales  of  Goods  (The  Vienna  Convention).  However,  the  Vienna 
Convention was not ratified by all MS. It is not applicable in the UK, Ireland, Portugal and Malta. In 
addition, it does not cover the whole life cycle of a contract comprehensively. For example, it hardly 
covers  any  general  contract  law,  while  in  practice  legal  disputes  about  remedies  for  defective 
products are often intrinsically linked to general contract law (e.g. interpretation of contracts in order 

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

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

26 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. 

27 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. 

28  Directive  2000/31/EC  of  the  European  Parliament  and  of  the Council  of  8  June  2000 on  certain  legal  aspects  of  information  society  services,  in  particular  electronic 

commerce, in the Internal Market ('Directive on electronic commerce'). 

29 The Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast).  

9

 
 
 
 
 
 
                                                 
to  determine  conformity  or  the  question  whether  a  contract  is  validly  concluded  despite  defects  in 
consent). Finally, there is no mechanism ensuring its uniform application as different national courts 
may interpret it differently. All these difficulties may contribute to the result that only a relatively 
small number of companies intentionally use the Vienna Convention.30 

Table 1 shows the contract law areas where minimally harmonised or uniform rules exist, but also 
where  gaps  lead  to  differences  of  national  contract  law  regimes.  It  demonstrates  the  lack  of  a 
uniform and comprehensive set of rules covering the whole life cycle of a contract both for B2C and 
B2B  cross-border  transactions.  The  remaining  differences  in  contract  laws  continue  to  generate 
obstacles to the smooth functioning of the internal market affecting both consumers and businesses, 
as described further in sections 2.3 and 2.4.  

The European contract law as such addresses all the problems that differences in contract laws pose 
to cross-border trade in the EU. As goods account for the major share of intra-EU trade,31 the focus 
of  this  initiative  is  on  the  sale  of  goods.  The  economic  sectors  involved  in  the  sale  of  goods 
considered  in  this  report  are  according  to  the  categorisation  of  Eurostat  mining,  manufacturing, 
wholesale,  retail  and  agriculture.  These  sectors  also  include  trade  in  digital  products,  a  sector  of 
growing economic importance.  

In addition, some services are intrinsically linked to the cross-border sales of goods because they are 
provided  in  close  connection  to  a  contract  of  sale  and  are  agreed  with  the  seller  of  goods, 
simultaneously with the sales transaction. These services (e.g. installation, repair or maintenance) are 
therefore also covered by this initiative.  

2.3.  Problem 1: Differences in contract law hinder businesses from cross border trade and 

limit their cross-border operations  

Currently on average only 9.3% of the EU companies involved in the sales of goods export inside of 
the EU.32 The majority of them (62% in B2B and 57% in B2C) export to no more than 3 other MS.33 
One of the reasons for this relatively low level of cross-border trade – besides a lack of interest in 
export  –  is  that  some  companies  are  hindered  by  regulatory  (e.g.  differences  in  tax  regulations, 
contract  law,  administrative  requirements  and  company  law)  and  practical  barriers  (e.g.  language, 
transportation  and  after-sales  maintenance).  Recent  business  surveys  show  that  the  regulatory 
barriers are a greater hindrance to the expansion of cross-border trade than the practical ones.34 The 
Commission is tackling the regulatory barriers to cross-border trade with several initiatives.35 This 
IA deals exclusively with contract law related barriers.36 

2.3.1.  Negative impact of contract law differences on cross-border trade 

30 EB 320, p.57: Only 9% of respondents said they frequently applied international instruments, including the CISG and the UNIDROIT principles.   

31 According to Eurostat Statistics in Focus 37/2010 and the Eurostat External and Intra-EU Trade Yearbook of 2009, the intra-EU trade volume in goods was 4 times the 

volume of trade in services in 2008.  

32 See Annex on calculations of transaction and opportunity costs (Annex III). 

33 EB 320, p. 55 and 321, p. 56. 

34 EB 320 and EB 321, the SME Panel and EBTP surveys. Similarly, a survey by Eurochambres in 2010 found that the differences in legislation were the main difficulty in 

cross-border  trade  for  36%  of  the  respondents.  It  was  conducted  among  1,330  companies  in  12  EU  MS  and  Croatia.  83%  of  the  respondents  were  involved  in  B2C 

transactions while 57% were delivering products cross-border.   

35 For instance, a  measure on tax barriers aims at improved coordination of the national tax policies by means of a Directive on a common consolidated corporate tax base.  

Administrative barriers are tackled by the application of the Services Directive, the Small Business Act and the review of accounting Directives. Measures in the area of 

company law include a legislative proposal on linking of company registers. 

36 This report acknowledges the importance of all existing barriers to cross-border shopping.  

10

 
 
 
 
 
 
 
 
                                                 
According  to  survey  data37  contract  law  related  barriers  rank  amongst  the  top  regulatory  barriers, 
which  influence  the  companies'  decision  to  trade  cross-border:  In  B2B  transactions  35%  of 
companies involved or interested in cross-border trade and 51% of companies with no cross-border 
experience were affected by contract law differences. In B2C transactions at least 40% of retailers 
interested or involved in sales to consumers in other EU countries were affected.  

Contract  law  related  barriers  hinder  cross-border  trade  in  two  ways:  Firstly,  they  dissuade  some 
companies  from  trading  cross-border.  61%  of  companies  involved  in  B2B  and  55%  in  B2C 
transactions and affected by contract law differences were often or at least occasionally deterred by 
contract law related barriers. Additionally 3% of companies involved in B2B and 2% in B2C always 
gave  up  exports  for  this  reason.38  Secondly,  contract  law  related  barriers  lead  companies  to  limit 
their cross-border operations. Above 80% (both in B2B and B2C transactions) of companies active 
or interested in cross-border trade and affected by contract law barriers suggested that they exported 
to fewer EU countries for this reason. 

This  has  impacts  at  a  macroeconomic  level,  although  they  are  difficult  to  quantify  precisely.39 
Nevertheless,  the  value  of  failed  intra-EU  trade  as  the  result  of  companies  giving  up  cross-border 
trade  due  to  contract  law  only,  can  be  estimated40  at  a  range  between  €26  bn  (equivalent  to 
Lithuania's GDP) and €184 bn (slightly more than Portugal's GDP).41  

These opportunity costs only relate to the lost value of cross-border trade for companies which were 
dissuaded from cross-border trade due to contract law. While part of these costs will be reduced due 
to  the  domestic  transactions  which  may  take  place  instead  of  the  failed  cross-border  ones,42  it  is 
hardly  possible  to  quantify  the  value  of  the  compensatory  domestic  transactions.  However,  the 
domestic  trade  would  most  likely  take  place  at  a  higher  price  and  would  therefore  disadvantage 
consumers. 

Companies which limit their cross-border activities due to differences in contract law also miss the 
opportunities of cross-border demand by refusing orders from consumers. At least 23% of exporting 
European retailers43 refused orders by consumers from other MS due to differences in contract law.44 
Out  of  these,  5%  refused  sales  to  consumers  in  other  MS  systematically  and  18%  did  so 
occasionally. The overall percentage of EU retailers refusing sales is likely to be much higher, as the 
majority of them do not export and are thus even more likely to refuse cross-border sales (discussed 
further in section 2.4.2).  

37 Unless otherwise stated, the data in this section comes from EB 320, p. 15 and 321, p.19.  

38 These experiences were confirmed by the participants in the SME and EBTP surveys where 47% and 67% of the respondents respectively said that barriers relating to 

contract law have dissuaded them from cross-border transactions to various degrees. See Annex III. 

39 For example, determining the impact of differences in contract law on trade flows requires knowledge about the number of companies that are discouraged from trading 

cross-border due to these differences, the number of countries with which they would trade, and the amount they would trade. This data is not available.  

40 The estimate is based on the answers to Eurobarometer surveys, Eurostat data on intra-EU trade and a number of assumptions. More details are in Annex III. 

41 Eurostat Statistical Books, External and Intra-EU trade – a statistical yearbook, 2009 edition, p. 82. The value of forgone intra-EU trade is calculated as a percentage of 

the actual trade that failed as companies were deterred from cross-border transactions. It is based on the value of total intra-EU trade estimated by Eurostat at €2704 billion 

in 2008 (see Annex III for details). 

42 The estimate does not reflect cross-border trade which failed for other reasons than contract law. It also does not take into account the domestic transactions which could 

compensate the failed cross-border trade.   

43The figure of 23% of retailers who refused cross-border sales only covers the companies which are currently trading cross-border or interested in doing so. 

44 EB 321, p. 29. 

11

 
 
 
 
 
 
 
 
                                                 
Econometric  research  has  shown  that  when  two  countries  have  legal  systems  based  on  a  common 
origin, there is a positive effect on their bilateral trade.45 Assuming conservatively that the removal 
of  differences  in  contract  law  would  contribute  1  percentage  point  to  this  positive  effect46,  the 
increase in intra-EU trade could be in the order of magnitude of €30 bn.47  

2.3.2.  Driver  1:  Additional  transaction  costs  stemming  from  differences  in  contract 

law hinder cross-border trade  

The need to apply different foreign contract laws is likely to generate additional transaction costs48 
compared  to  domestic  trade.  Moreover,  these  costs  usually  grow  proportionately  to  the  number  of 
EU countries a company trades with and thereby hinder trade expansion within the internal market. 
Indeed, businesses exporting to more MS than average assign a greater importance to differences in 
contract  laws.  For  instance,  whereas  about  41%  of  companies  trading  with  businesses  in  only  one 
country considered contract law differences a barrier, this figure went up to 55% for those trading 
with more than 4 countries.49 Companies’ own estimates of their transaction costs for entering one 
MS range between less than €100050 to above €30,000.51 These are mostly one-off  costs  that vary 
depending on the company's business activity, its place of business, distribution channels and type of 
transaction (B2C or B2B). The cumulative costs for all exporting EU companies are between €6 and 
€13 bn as explained in the section on cumulative transaction costs for the EU economy below.  

Other  types  of  costs  in  addition  to  the  one-off  costs  are  not  taken  into  account,  as  comprehensive 
data on their scale is not available. These other types could include for instance ongoing compliance 
costs  for  periodical  adaptations  to  changes  in  the  respective  national  laws.  Business  stakeholders 
have pointed out that these costs could be of a considerable scale and occur annually.52 Furthermore, 
additional costs specific to litigation occur when courts have to apply a foreign contract law. These 
costs  stem  from  the  need  for  translation  and  expert  legal  opinions  on  foreign  contract  laws  in 
litigation cases.53 

45 A.Turrini and T. Van Ypersele, Traders, courts and the border effect puzzle, Regional Science and Urban Economics, 40, 2010, p. 82: "Analysing international trade 

across OECD countries we show that controlling for countries specific factors, distance, the presence of common border and common language […], similar legal systems 

have a significant impact on trade […]. If two countries share common origins for their legal system, on average they exhibit trade flows 40% larger."  

46 Based on the results of EB 320, p. 33, this effect is assumed to range between 0.76% and 1.53%, 1% being an average example that takes into account both extremes. 

This range is computed as a weighted average of the responses of the traders interviewed. They were asked about the impact of a single European contract law on their cross-

border operations. Available replies ranged between a possible decrease to a possible significant increase, and on each of these categories assumptions have been made on 

the attribution of a weight. For example, "increase a lot" may mean 5% more trade to have a low estimate, or 10% to have a medium one; "increase a little" may mean 1% 

more trade as a low estimate or 2% as a medium one etc. See details in Annex IV.   

47 Intra-EU trade amounts to approximately € 2700 bn in 2008 (Eurostat external and intra-EU trade – a statistical yearbook, 2009 edition), an increase in trade of 0.76%-

1.53% would be by consequence equal to € 20.5 – 41.3 bn (€ 30 bn, based on 1%, on average). 

48  The  references  to  'transaction  costs'  in  this  report  are  limited  only  to  the  transaction  costs  for  cross-border  trade  which stem  from  differences  in contract  law  i.e.  for 

identifying the applicable law, becoming familiar, complying with it and adapting contracts accordingly.   

49 EB 320, p. 19. 

50 7% of the respondents to the EBTP survey expected costs savings of less than €1,000 per MS entry if a single European contract law was  introduced; the majority of 

20% expected cost savings between €1,000 and €5 000  and 17% - between €5,000 and €10,000.  

51  12%  of  the  respondents  to  the  EBTP  survey  and  3%  of  the  SME  Panel  survey  respondents  expected  costs  savings  of  more  than  €30,000    per  MS  entry  if  a  single 

European contract law was introduced.   

52 Deutscher Industrie-und Handelskammertag (DIHK), Position Paper on the Feasibility Study carried out by the Expert Group on European contract law, p.2: the annual 

ongoing costs for compliance could amount to € 25 000.    

53 Dr. jur. Thomas U. Klink, LL.M. Judge at Regional Court of Stuttgart, speaker at an EP workshop on European contract law, October 2010 , 'EU contract law as a tool 

for facilitating cross-border transactions: a point of view from national courts', note, 2010: the litigation costs may result from the need to translate foreign documents in 

order to introduce them into the legal proceedings and to determine the rules of a foreign law, amongst others by expert opinions. 

12

 
 
 
 
 
 
                                                 
The additional transaction costs occur for companies when they have to deal with a foreign contract 
law.  To  what  extent  this  is  the  case  in  practice  differs  in  B2C  and  B2B  transactions  as  described 
below.   

•  Costs in B2C transactions  

As part of the transaction costs, in B2C transactions businesses need to bear specific costs to ensure 
compliance with the mandatory consumer protection rules of the consumer's country of residence. In 
B2C transactions it is in practice mostly the business which determines the applicable law and can 
therefore  choose  a  law  it  is  familiar  with.  Nevertheless,  in  cross-border  B2C  transactions  which 
target consumers in other countries, businesses have, at the very least, to ensure compliance with the 
mandatory consumer protection rules of the consumer's country of residence. The costs may vary in 
the below described two scenarios. Both these scenarios are  derived  from  Article 6 of the Rome I 
Regulation.  

In the first scenario when a business may choose to apply the consumer's national law in its entirety, 
the  business  would  bear  the  whole  range  of  transaction  costs  stemming  from  legal  advice  and 
adapting standard terms and conditions to a different contract law. In the second scenario, when a 
business  chooses  to  apply  its  preferred  law,  the  transaction  costs  are  likely  to  be  slightly  lower 
compared to the first scenario,54(as the preferred law is in all likelihood a law the business is familiar 
with).  However  a  business  will  have,  at  least,  to  research  whether  the  level  of  the  mandatory 
consumer protection rules in the consumer's law is higher and adapt its terms and conditions if this is 
the case. While there is no data on the preference of choice between these two scenarios, it is more 
likely  that  in  practice  businesses  would  prefer  to  operate  under  their  own  law,  as  this  would  in 
general be less costly. 

38% of companies with experience or an interest in cross-border trade considered the need to adapt 
and  comply  with  different  consumer  protection  rules  in  foreign  contract  laws  as  a  barrier.55 
Businesses with no experience in cross-border trade see these costs as an even greater barrier. While 
50%  of  retailers  engaged  in  cross-border  trade  considered  the  extra  costs  for  compliance  with 
consumer protection regulations, including contract law,56 as important or very important, for those 
who did not sell cross-border this percentage went up to 66%.57  

The costs for B2C transactions are estimated as an average for the two above-mentioned scenarios. 
The  average  transaction  costs  per  company  per  MS  range  between  €8,695  and  €9,565.These  costs 
are estimated based on companies' responses to a business survey and the range is verified by other 
sources.58  

 Assuming that all exporting companies carefully examine the applicable foreign law in advance, the 
cumulative  sunk  contract  law-related  costs  that  must  already  have  been  incurred  by  companies 

54 A business would need less legal support, when it applies its own law with possible adjustments. 

55 EB 321, p. 62: respectively for 7%, 13% and 18% of the respondents this barrier had a large, some or minimal impact on their decision to trade cross-border.  

56 The area of consumer protection and contract law partially overlap, but differ in scope. They overlap to the extent that contract law regulates a number of  

consumer rights which are key for ensuring consumer protection. However, consumer protection rules also cover other regulatory areas beyond the scope of contract law, 

such as product safety. Contract law goes beyond the scope of consumer protection, as it contains rules of general contract law and also regulates B2B relations.  

57 EB 224 on Business attitudes to cross-border sales and consumer protection, 2008, p. 22-23. 

58 The average transaction costs per company per MS are calculated based on the SME Panel survey: See Annex III. The estimate based on the SME Panel is confirmed by 

other sources. The EBTP survey gives an interval between €11,132 and €14,704 of average transaction costs for both B2C and B2B. According to the calculations of small 

business representatives (Federation of Small Businesses (FSB) in the UK, Response to the Green Paper on policy options for progress towards a possible European contract 

law for consumers and businesses; see for detailed explanation Federation of Small Businesses Position Paper on Rome I, p. 3) for an SME engaged in cross-border B2C e-

commerce the transaction costs amount to €9,120 of legal and translation costs per MS. 

13

 
 
 
 
 
 
 
 
                                                 
currently  active  in  cross-border  B2C  trade  are  between  approximately  €4  and  €9  bn.59  However, 
surveys  among  exporting  businesses  suggest  that  in  practice  not  all  of  them  consult  a  lawyer  on 
foreign  law  and  thus  do  not  incur  all  transaction  costs.  Therefore,  the  cumulative  costs  are  more 
likely to be lower. They are estimated at between €3.6 and €7.4 bn.60  

Furthermore,  specific  contract-law  related  IT  costs  may  occur  for  businesses  selling  online  to 
consumers  in  other  EU  countries.  These  costs  are  on  average  €2,91661  and  stem  from  the  need  to 
adapt the business' website to the legal requirements of each MS it directs its activity to.62 This raises 
the cumulative contract-law related costs by a range between €0.4 and €0.8 bn.63 

Therefore, the cumulative contract-law related costs that have been incurred by companies currently 
active  in  cross-border  B2C  trade  (legal,  IT  and  translation  costs)  and  on  which  data  is  available 
range between approximately €4 and €8 bn . These are sunk costs that cannot be recovered by the 
retailers who have begun exporting which could alternatively be invested in productive activities.  

•  Costs in B2B transactions 

In B2B transactions companies also bear specific costs of negotiations on applicable law. They are 
seen as a barrier on average by 30% of companies engaged or interested in cross-border trade.64 In 
addition, 44% of companies who are interested, but not yet actively exporting, are concerned about 
the difficulties relating to negotiations on applicable law.65  

Example: Difficulties in negotiating applicable law 
Mr. Kowalski, the owner of a small Polish company in Radom, develops a uniquely designed organic wooden bed for 
children. He takes part in a furniture fair in Cracow with a €2,500 participation fee. There his beds attract the attention 
of two well known German and Italian retailers. Mr. Kowalski's company has the capacity to sell to both retailers and he 
starts negotiations with both of them. 

A few days later, Mr Kowalski contacts Ms Janowska, his company's local lawyer. He sends her both sales contracts in 
English for legal advice for the agreed price of €750. When examining the contracts, Ms Janowska discovers that they 
are governed by German and Italian laws respectively. As she is not familiar with either of the two legal systems, she 
recommends  to  Mr.  Kowalski  to  use  his  own  standard  contract  which  is  governed  by  Polish  law.  However,  both  the 
German  and  Italian  retailers  explain  that  they  are  not  familiar  with  Polish  law  and  therefore  prefer  the  contract  to  be 
covered by their national law. Ms Janowska advises Mr Kowalski to hire an international law firm to assist him with 
these contracts. In view of their ongoing business relationship she considerately does not bill him for this advice. 

Mr Kowalski contacts an international law firm in Warsaw and learns that they would bill him €5,000 for checking each 
contract and helping negotiate the terms. This is a significant amount for Mr Kowalski. He has so far invested €2,500 for 
the  participation  in  the  fair  and  at  least  two  days  of  his  time  in  contacts  with  lawyers  and  his  potential  clients.  He 
definitely  does  not  want  to  lose  these  two  deals,  but  he  is  frustrated  that  in  order  to  be  aware  of  his  legal  rights  and 
obligations he needs to check, for every potential client from another MS another contract law regime. He now has a 
dilemma: spend an additional €10,000 to be sure of his legal rights and obligations under the contracts or take the risk, 

59  The  aggregate  general  one  off-costs  for  B2C  transactions  can  be  estimated  based  on  the  formula:  number  of  exporting  retailers  who  are  likely  to  consult  a  lawyer  * 

transaction costs of entering one additional MS * average number of EU countries a business exports to. See Annex III. 

60 EB 321, p. 58 found that 18% of retailers currently involved in cross-border trade are not at all informed about the consumer protection provisions in the contract laws of 

the  EU  countries  where  they  target  consumers.  It  is  reasonable  to  assume  that  these  exporters  have  not  consulted  a  lawyer  on  foreign  law  at  all.;  the  range  of  costs  is 

therefore reduced accordingly. 

61 Estimates based on the SME Panel survey show that the transaction costs are higher for businesses selling online, compared to face-to-face. While the average transaction 

costs in B2C are estimated between €8,695 and €9,565, for companies selling online the average costs are €11,875- €13,541. Therefore, both in the high and low estimate the 

additional costs for e-commerce amount to approximately  €2,900. The costs are estimated based on the formula: additional contract law related IT costs * % of retailers 

exporting through e-commerce * average number of EU countries exported to. See Annex III for detailed methodology of calculations. 

62 The costs include adapting the web-site so that it can recognise the consumer's country of residence and retrieve the correct set of pages. See FSB, Response to the Green 

Paper on policy options for progress towards a possible European contract law for consumers and businesses , p. 3; see FSB  Position Paper on Rome I, p. 3. 

63 See also Annex III.  

64 According to EB 320, p. 61: respectively 5%, 10% and 15% of the respondents considered this was a barrier which impacts their decision to sell cross-border.  

65 EB 320, p. 61. 

14

 
 
 
 
 
 
 
 
 
                                                 
sign the contracts as they stand and hope that no legal problems will arise in future. 

For  B2B  transactions  the  average  transaction  costs  per  company  per  MS  range  from  €9,000  to 
€10,658.66  These  costs  are  estimated  based  on  companies'  responses  to  a  business  survey  and  the 
range is verified by another source.67  

These transactions costs occur when a business agrees to apply a foreign law to the contract. This 
usually  affects  the  party  with  the  weaker  negotiating  power,68  which  is  often  an  SME.  In  their 
relations with companies with more bargaining power SMEs may have to agree to apply the law of 
their  business  partner.  Thus,  they  bear  the  transaction  costs  of  finding  out  about  the  content  and 
consequences  of  the  foreign  law  applicable  to  the  contract.  In  contracts  between  SMEs  of 
comparable bargaining power the need to negotiate the applicable law may be a significant obstacle 
for both parties, as none of them may be familiar and willing to accept the law of the other partner.69 
Practically,  the  most  frequently  chosen  foreign  laws  are  the  law  of  the  business  partner  (14.6%), 
international legal instruments, including the Vienna Convention (9%), or the law of a third country 
(0.6%).70  According  to  a  conservative  estimate  of  B2B  transaction  costs  on  the  basis  of  only  the 
14.6% of companies which most frequently apply the law of their business partner,71 the cumulative 
72 
sunk contract-law related costs incurred for B2B trade range between approximately €2 and €5 bn.
These estimates are used throughout this report. However, if one would also consider the costs of the 
9.6% of companies applying the laws of a third country or international instruments the cumulative 
B2B costs would increase to about €3 to €6 bn.73  

•  Cumulative transaction costs for the EU economy (B2C and B2B costs combined) 

The estimate of overall cumulative transaction costs for currently exporting companies in B2C and 
B2B stemming from fragmentation in national contract law is therefore in the range of €6-€13 bn .74 
This estimate is conservative, for the following reasons: Firstly, it is based on the  assumption that 
some companies do not investigate foreign law in advance of exports.75 For instance, assuming that 
all  B2C  exporters  would  consult  a  lawyer  on  the  applicable  foreign  law,  the  costs  would  be  even 
higher in the range of about €7 bn and €15 bn.  Secondly, the estimate only considers the sunk one-
off costs (incurred by the 9.3% of EU businesses which are currently involved in EU cross-border 
trade in goods) whose scale can be estimated with reasonable certainty and does not include ongoing 
compliance costs and litigation costs.  

66 See Annex III for detailed explanations. 

67  The  estimate  is  based  on  the  aggregated  data  from  the  SME  Panel  survey.  It  is  verified  by  the  results  of  the  EBTP  panel survey,  which give  the  range of  €11,132 – 

€14,704. 

68 EB 320, p. 27: While 24% of respondents said they frequently applied another than their national law, this percentage is likely to be higher as 17% of the respondents 

were not able to (or did not want to) answer the question: "Which contract law most often governs your business-to-business cross-border transactions in the EU?" 

69 See response to the Green Paper by the Scottish Law Commission, p. 5. 

70 EB 320, p. 27. 

71 It is assumed that the companies which frequently apply the law of their business partner would bear additional transaction costs for each MS they enter 

72  The  costs  are  estimated  based  on  the  formula:  number  of  exporting  businesses  *  %  of  companies  usually  applying  the  law  of  their  business  partner  in  cross-border 

transactions * transaction costs of entering one additional MS * average number of EU countries a business exports to. See also Annex III. 

73 These 9.6% of companies are likely to pay the transaction costs once, while trading with multiple MS based on the same law, e.g. Common law or Swiss law or the 

Vienna Convention.  

74 See Annex III for detailed explanations on transaction costs.  

75 EB 320, p. 57, suggests that 15% of exporting businesses do not know what law applies to their contract and EB 321, p. 58, found that 18% of exporting retailers are not 

informed at all about consumer protection provisions in the contract laws of the EU countries where they sell to final consumers.  

15

 
 
 
 
 
 
 
                                                 
However, more transaction costs for the EU economy occur annually, as new EU exporters (14.6%76 
yearly)77  pay  transaction  costs  for  entering  cross-border  trade.  Thus,  the  annual  transaction  costs 
 bn, considering that not all exporters consult a lawyer.78 In the 
amount to approximately €0.9-€1.9
absence of action, by the year 2020 they would accumulate to €9-€19 bn  if the same level of export 
entry persists. The annual costs would be substantially higher if the ongoing annual compliance costs 
were  indeed  significant,  as  some  business  representatives  pointed  out.79  However,  they  are  not 
included in this estimate, due to lack of more representative data.  

The impact of transaction costs is likely to vary depending on the size of the company and would 
affect mostly micro and small enterprises. The smaller a company turnover the greater the share of 
the  transaction  costs,  as  shown  by  Table  2.  Notably,  the  impact  on  micro-enterprises  is 
disproportionately high: for a micro enterprise exporting to 3 MS the transaction costs could amount 
to  1/5th  of  the  annual  turnover.  Moreover,  the  costs  for  a  micro  retailer  wishing  to  export  to  the 
whole of the EU, for instance through e-commerce, could exceed its annual turnover. This situation 
is detrimental to intra-EU trade on the whole, as micro enterprises account for more than 90% of all 
EU companies.80  

Indeed,  survey  data  indicates  that  the  overwhelming  majority  of  companies  interested,  but  not 
involved in cross-border trade are micro enterprises.81 This could be an indication that the costs may 
dissuade  many  micro  companies  with  no  cross-border  experience  from  even  starting  cross-border 
activities. This situation is contrary to the Europe 2020 objective to achieve an inclusive growth in 
the  internal  market,  reiterated  in  the  Single  Market  Act,  which  highlights  the  importance  of 
facilitating the development of small and micro enterprises.82   

Table 2: Transaction costs as a percentage of annual turnover 

Manufacturing 

Average 
annual 
turnover  per 
firm1 

Wholesale and retail trade 

Number of MS entered (with transaction costs per MS 
= €9 000)  

Number of MS entered (with transaction costs per MS 
= €9,000) 

Average 
annual 
turnover  per 
firm1 

1 MS 

2 MS 

3 MS 

4 MS 

26  (whole 
EU)  

1 MS 

2 MS 

3 MS  

4 MS 

26 
(whole 
EU)  

Micro 

Small 

214 791 

4.19% 

8.38% 

12.57% 

16.76% 

108.94% 

138,110 

6.52% 

13.03% 

19.55% 

26.07% 

169.43% 

2 703 212 

0.33% 

0.67% 

1.00% 

1.33% 

8.66% 

3,658,098 

0.25% 

0.49% 

0.74% 

0.98% 

6.40% 

Medium 

18 344 866 

0.05% 

0.10% 

0.15% 

0.20% 

1.28% 

10,524,563 

0.09% 

0.17% 

0.26% 

0.34% 

2.22% 

Large 

237 342 066 

0.00% 

0.01% 

0.01% 

0.02% 

0.10% 

397,210,535 

0.00% 

0.00% 

0.01% 

0.01% 

0.06% 

1.Source: Eurostat structural business statistics 

Example: A small business limits its cross-border trade because of high transaction costs 

A British company of 6 people producing designer hats becomes famous after a celebrity wears one of its hats on Ladies' Day 
at Royal Ascot. Now that its products are popular, the company receives enquiries from all over Europe. It decides to set up an 
online shop which would be accessible by clients in the whole of the EU. For this purpose, the company contacts a lawyer and a 
software developer.  

76 Eurostat database DS-056329-1: Trade by activity and enterprise size class. 

77 The estimate of 14.6% does not reflect that some of the new exporters may have already exported in the past and incurred the transaction costs. However, this is partly 

balanced, as this estimate does not include companies which already export and want to expand their operations to more EU countries. See Annex III for explanations. 

78 Simplified estimate: approximately 6 bn*14.6%= €0.88 bns; 13 bn*14.6%= €1.90 bn. For more precise explanations, see Annex III.  

79  Deutscher Industrie-und Handelwkammertag (DIHK), Position Paper on the Feasibility Study carried out by the Expert Group on European contract law, p.2. 

80 According to the figures underlying the Small Business Act, micro enterprises account for 91.8% of all EU enterprises.  

81 The sample of respondents to the EB 320 and EB 321 show that 86% of the surveyed companies that were interested, but not involved in cross-border trade were micro 

enterprises.  

82 Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions, Single Market 

Act, Twelve levers to boost growth and strengthen confidence, Working together to create new growth, COM(2011) 206 final of 13.4.2011, p.5. 

16

 
 
  
 
 
  
  
 
  
  
  
 
 
                                                 
The lawyer advises to hire an expert in contract law from each relevant country as it would be necessary to check the relevant 
national consumer contract laws and possibly draft an amended set of country specific terms and conditions. This could cost 
around €8,850 per country (5 days work billed at €295 per hour). The market entry cost for all the other 26 MS would therefore 
be €230,100. The software developer explains that the current website needs to be adapted to reflect the legal requirements for 
each country they sell to: it needs to determine the consumer's country of residence, locate and retrieve the correct set of pages 
and display them in a correct language. This adaptation would take between 2-6 weeks at a cost €1,550 per week. Thus, the cost 
per country would be at least €3,100 and upon entering the other 26 MS this would rise to €80,600.  

The transaction costs for offering products in the whole of the EU would be about €310,000. This would be 50% more than the 
company's complete turnover of the previous year. Upon seeing the amounts, the company decides that the maximum it can 
afford would be €25,000 - the approximate costs of entering two additional MS. It decides to offer products only in the larger 
markets of Germany and France instead of selling it to all the other countries. 

2.3.3.  Driver 2: Perceived increased legal complexity hinders cross-border trade  

The perception of legal complexity is an additional factor affecting the decision to start cross-border 
trade. Out of 11 obstacles to cross-border trade the difficulty in finding out about the foreign contract 
law affected the highest percentage of export oriented businesses (40% of respondents experienced 
an impact) for B2C83 and a slightly lower percentage (35% of respondents) for B2B transactions84 
(see Annex IX). Out of the companies with an interest, but no cross-border experience 44% involved 
in B2C and 51% in B2B transactions regarded this as a barrier.85  

In B2B transactions the complexity results from the frequent need to adapt to the national laws of 
business partners, as is the case for at least 14.6% of companies involved in cross-border trade.86 In 
B2C transactions the companies need to be aware of applicable mandatory provisions of the national 
law  of  the  consumers  towards  whom  they  direct  their  activities.  61%  of  businesses  with  no  cross-
border  experience  are  not  at  all  or  not  well  informed  about  such  provisions.87  Thus,  a  legal 
environment  characterised  by  complexity  and  high  costs  for  overcoming  is  likely  to  dissuade 
companies from commencing cross-border trade.  

2.4.  Problem  2:  Consumers  are  hindered  from  cross-border  purchases  and  miss 

opportunities 

The  level  of  cross-border  shopping  in  the  EU  remains  relatively  low  with  26%  of  consumers 
purchasing from another EU country when they travel88 and 9% from a distance.89 Barriers on the 
supply and demand side appear to hinder its growth. On the supply side, businesses limit their cross-
border operations and may refuse sales to consumers in other MS (e.g. because of costs related to the 
mandatory provisions of the consumer's national law). On the demand side, most consumers are still 
reluctant to shop cross-border, as the low level of cross-border e-commerce illustrates: while 33% of 
consumers purchased products online in their own country, only 7% made purchases cross-border.90 
The  barriers  reinforcing  this  reluctance  are  regulatory  barriers  (mostly  related  to  contract  law 
provisions  protecting  the  consumer  e.g.  remedies  for  faulty  goods,  delivery91  and  availability  of 
redress)92 and practical barriers (e.g. language, geographical location, access to the internet).  

83 EB 321, p. 19.  

84 EB 320, p. 15. 

85 EB 320, p. 63; EB 321, p. 64. 

86 EB 320, p. 57: 14.6% of respondents said they frequently applied the law of their business partner in their cross-border B2B transactions.  

87 EB 321, p. 58, on awareness of consumer protection provisions in the contract law of other MS by respondents who are interested, but not yet trading cross-border. 

88 EB 299 Cross-border trade and consumer protection, 2010, p. 23. 

89 EB 299, p. 23. 

90 EB 299, p. 13. 

91 Problems of delivery may be of a regulatory (different contractual rights, availability of redress to enforce these rights) or practical (transport and logistics) nature.  

92 This report acknowledges the importance of all existing barriers to cross-border shopping.    

17

 
 
 
 
 
 
 
 
 
                                                 
While  the  impact  of  practical  barriers  is  gradually  decreasing,93  the  importance  of  the  regulatory 
ones  remains  high.  They  are  key  factors  for  consumer  confidence  in  cross-border  shopping.94  The 
Commission  is  tackling  the  regulatory  barriers  with  several  initiatives.95  This  IA  addresses  the 
contract law related barriers.  

2.4.1.  Driver:  Contract 

law  differences 

impact  negatively  upon  cross-border 

shopping 

Contract law includes rules protecting consumers entering into economic transactions. The certainty 
about the content of these rules is a major factor determining consumer confidence in cross-border 
shopping.  Certainty  decreases  when  consumers  are  confronted  with  the  complexity  of  different 
foreign laws and the subsequent uncertainty about their rights in a cross-border context. As a result, 
many consumers are dissuaded from purchasing cross-border: 44% of European consumers say that 
uncertainty about their consumer rights in general discouraged them from purchasing from other EU 
countries.96  When  asked  about  specific  problems,  a  significant  percentage  of  EU  consumers 
expressed concerns related to rights regulated in contract law in particular. For instance, 57% were 
dissuaded by the  uncertainty about their rights in case of faulty products and 47%  in case  of non-
delivery.97 For instance, in a study on online shopping 26% out of the participants who had problems 
in online cross-border shopping said that delivery took too long; 20% were not delivered the product 
at all and for 18% the delivered product did not match the description on the web-site.98  

When such problems arise consumers have to rely on their contractual rights. Based on these rights 
consumers  can  use  remedies  for  non-performance.  However,  in  a  cross-border  context  they  may 
need to deal with increased legal complexity. Depending on the law which applies to the contract, 
the level of consumer rights the seller is obliged to respect may differ.  

Moreover, the conflict of law rules which determine which law applies in cross-border transactions 
do not protect the pro-active consumers who shop cross-border. The Rome I Regulation only grants 
the consumer the protection of the mandatory rules of his own national law in case the trader directs 
its  activities99  to  the  MS  where  the  consumer  is  domiciled.  If  the  trader  does  not  envisage  doing 
business with consumers from another MS, but agrees to contract with them at the consumers' own 
initiative, the consumers do not benefit from the protection rules of their national law. In the latter 
situation, consumers who are used to certain rights in their own country may not have the same level 
of  protection  if  they  contract  with  a  foreign  trader.  For  instance,  as  regards  remedies  for  faulty 
goods, when consumers shop cross-border, under the laws of some countries they have to notify the 
trader if the goods they bought are defective. If they do not do this they will lose their rights to a 
remedy. In other countries this notification duty is not required. This can lead to a situation where 
the consumer does not notify the business because he does not know about this duty from his own 
law and therefore inadvertently loses his right to a remedy. Furthermore there may be differences in 
the way consumers can exercise a given right. For instance, in the case of faulty products, only in a 
handful of the 27 MS can consumers choose between the remedies of repair, replacement, reduction 

93 EB 299, p. 6: A higher number of consumers (39%) are prepared to purchase products using another EU language (compared to 33% in 2006) and fewer consumers 

(25%) are not interested in cross-border shopping because of lack of internet access (compared to 39% in 2006). 

94 EB 299: While 47% - 57% of EU consumers did not shop cross-border due to various regulatory barriers, only 25% did not do it due to lack of internet access. 

95 The Commission is also preparing a legislative initiative on ODR aimed at giving consumers the possibility to have easier access to online dispute resolution. If it is 

necessary to resort to court procedure the EU has adopted the small claims procedure. The Commission will adopt guidelines for the effective application of provisions of 

the Services Directive to combat the discrimination against recipients of services. 

96 EB 299a, p. 5. 

97 EB 299, p. 30: Problems of delivery may be of a regulatory (different contractual rights and redress to enforce them) or a practical (transport and logistics) nature.   

98 Preliminary data, forthcoming Consumer Market Study on the functioning of the e-commerce in goods, Civic Consulting: 16% out of the respondents who had problems 

in online cross-border shopping were delivered a damaged product, 13% received the wrong product, 5% could not return a product they did not like and get reimbursed and 

4% were refused replacements or repair of a faulty product by the business. 

99 This concept has been clarified by the ECJ in the Pammer and Alpenhof Judgments (C-585/08 and C-144/09).  

18

 
 
 
 
 
 
                                                 
in price or reimbursement. However, in most MS they would initially be entitled only to repair and 
replacement.   

Example: a consumer uncertain about his rights is dissuaded from cross-border shopping  

Manuel is Portuguese and he lives in Lisbon. His partner Joana is a student, who received an Erasmus scholarship and 
is spending a semester in Berlin. On her birthday she will have to study in Berlin for an exam. Manuel wants to surprise 
her  with  a  present.  He  decides  to  give  Joana  a  watch  and  finds  a  beautiful  watch  for  €150  in  a  French  online  shop. 
Luckily they deliver to Germany. However, Manuel has doubts: What if the watch gets damaged on the way and does 
not work? Would Joana have the right to return the watch, like they do in Portugal? Would she herself have to pay the 
additional delivery costs for returning the watch? Or if she really wanted to keep the watch, could she replace it? If so, 
who would bear the costs for the replacement? With all those questions in mind, Manuel thinks it is better to be safe 
than sorry. He decides to buy Joana a present in Lisbon and to give it to her in person when they see each other in two 
months.  

Furthermore, at least a third of consumers have wrongful expectations about the applicable law in a 
cross-border  context.100  While  it  is  usually  indicated  in  the  terms  of  the  contract,  the  majority  of 
consumers  do  not  always  check  this  clause.  101  Moreover,  most  consumers  either  do  not  read  the 
terms  and  conditions  (27%)  or  do  not  read  them  carefully  and  completely  (30%).102  Thus,  the 
majority of consumers may not be fully aware of their rights.  

With a relatively high uncertainty about their rights, most consumers do not feel as confident to shop 
cross-border, as they do domestically. Almost half of EU consumers (48%) are more confident when 
ordering products online from traders based in their own country than from those in other parts of 
the  EU.103  Moreover,  a  clear  majority  (56%)  of  Europeans  thought  that  suppliers  from  other  EU 
countries are less likely to respect consumer protection laws than those from their home country.104 
Notably,  concerns  relating  to  contract  law  have  a  greater  impact  upon  consumers  with  no  cross-
border shopping experience - currently the majority.105 These concerns will not entirely be removed 
even after the adoption of the CRD, which will not regulate some of the key problematic areas, such 
as remedies for faulty goods. Therefore, pro-active consumers interested in cross-border shopping to 
a  large  extent  will  still  have  to  deal  with  a  highly  complex  legal  environment,  which  discourages 
many from taking advantage of the internal market.  

2.4.2.   Consumers miss out opportunities of the single market 

Consumers  who  are  deterred  from  cross-border  shopping  may  be  disadvantaged  within  their 
domestic market. Due to substantial differences in price and choice across the EU, the best offers can 
often be found in another EU country.  

•  Higher prices and restricted choice: The average differences in price for consumer goods  
across MS, as shown in table 3, amount to approximately 24%.106 The high price differences in the 
EU  are  particularly  visible  online:  A  basket  of  124  consumer  goods  could  be  bought  online  much 
cheaper  in  the  UK,  followed  by  Germany  and  Italy,  while  Denmark  and  the  Netherlands  had  the 

100 EB 342 Consumer empowerment survey, p. 122-125. 

101 Allen and Overy, Online consumer research, 2011: 54% of consumers in the 6 largest EU MS never or only occasionally check which country's laws govern the sellers 

terms and conditions. 

102 EB 342, p. 122-125; Allen and Overy, Online consumer research,2011: 52% of the consumers in the 6 largest EU MS never (5%) or only occasionally (47%) read the 

terms and conditions when purchasing online.  

103 EB 299, p. 25. 

104 EB 252, Consumer protection in the internal market, 2006, p. 55. 

105 EB 299a, p. 10: uncertainty about their contractual rights which 45% of consumer with no cross-border experience perceived, dissuaded from purchasing cross-border. 

Out of the consumers who had cross-border shopping experience, 26% were uncertain about their rights. 

106 Eurostat, Statistics in focus 50/2009. 

19

 
 
 
 
 
 
 
 
                                                 
highest average prices.107 Further  evidence suggests that  consumers in smaller MS, notably Malta, 
Cyprus,  the  Czech  Republic,  Slovakia  and  Slovenia,108  are  particularly  disadvantaged  by  higher 
prices.  

Table 3: Price differences of consumer goods across the EU  

Clothing (prices vis-a vis EU 27  
average= 100) 

Most costly country 

Finland = 123 

Cheapest country 
Difference in % 

UK= 83 
48% 

Source: Eurostat 2009, Statistics in focus 50/2009 

Footwear (prices  
vis-a vis EU 27  
average = 100) 
Finland=121 

Consumer electronics 
(prices vis-a vis  
EU 27 average= 100) 
Cyprus=120 

Household appliances 
(prices vis-a vis EU 27  
average=100) 
Malta=141 

Bulgaria=80 
51% 

UK=86 
39% 

UK/ Bulgaria=84 
68% 

A recent mystery shopper study109 testing the availability of online offers also demonstrated the price 
discrepancies  across  EU  countries.  In  50%  or  more  of  the  cases  consumers  in  13  MS  could  have 
bought products at least 10% cheaper abroad than in the domestic market.110 Likewise, there were 
discrepancies  in  choice:  in  over  50%  of  the  product  searches  for  100  popular  consumer  product, 
products  were  not  available  domestically  online  in  13  MS.  Indeed,  a  better  price  is  the  decisive 
factor for purchasing cross-border for 65% of consumers shopping online, while the unavailability of 
a product in the consumer's country is decisive for 56%.111 

Nevertheless,  a  substantial  number  of  consumers  prefer  to  shop  domestically,  due  to  uncertainty 
about their rights in cross-border shopping. They do not even try to access better offers elsewhere in 
the  EU  and  are  often  disadvantaged  by  the  limited  choice  and  higher  prices  in  their  domestic 
markets. If the 44% who are uncertain about their rights in cross-border shopping112 out of the group 
of  consumers  who  shop  online  only  domestically  would  make  at  least  one  online  cross-border 
purchase, these consumers could save €380 million.113 

Example: a consumer who does not shop cross-border faces higher prices at home 

Mrs Korhonen lives in Turku, Finland. Her daughter Taru works in Paris. When returning to Finland, Taru is always 
shocked by the prices she has to pay for the same products in Turku compared to Paris. For example, clothing and 
footwear  are  about  30%  more  expensive  in  Finland  than  in  France.  Taru  tries  to  encourage  her  mother  to  start 
shopping  online  and  buy  products  like  shoes  of  her  favourite  brand  from  France  online.  She  could  pay  €110 
(including the delivery costs) compared to €150 she pays in Turku. Her mother, however, is sceptical and asks "what 
if the delivered shoes are of a different size than I ordered? Can I send them back? What if the sole wears out only 
after a week – can I ask for a replacement?" Mrs Korhonen is uncertain whether she would have the same rights she 
enjoys in Finland and is confident about than, if she shops cross-border, and decides that it is safer to buy the shoes 
at a much higher price from the high street shop she goes to in Turku. 

107 Kelkoo European Online Price Index , conducted among 10 European countries and the USA, March 2011. The study is based on an average price index comparing over 

a thousand prices for a basket of consumer goods. 

108 Eurostat report (Borchert 2009), comparison of price levels of 2,500 consumer goods.  

109 YouGov Psychonomics, Mystery Shopping Evaluation of Cross-border E-commerce in the EU, October 2009, p. 38 (YouGov Psychonomics). 

110 Portugal (70%), Italy (54%), Slovenia (72%), Spain (52%), Denmark (53%), Romania (54%), Latvia (50%), Greece (63%), Estonia (59%), Finland (55%),  

Hungary (50%), Cyprus (50%) and Malta (50%). 

111 Civic Consulting, Consumer Market Study on the functioning of the e-commerce in goods, expected date of publication: September 2011.  

112 EB 299a, p. 5. 

113 Currently 33% of consumers above 15 years of age (this age group represents 84% of 500 million of EU citizens) shop online, but only domestically. Assuming that 

44% out of  this group  would  make  at least one  cross-border  purchase  on  average of  €52  (i.e.  the  average  amount per  credit card transaction,  ECB,  Value of  credit  card 

transactions divided by volume of credit card transactions, http://www.ecb.int/stats/payments/paym/html/index.en.html), and that at least half of these consumers would find 

the product  on  average  24%  cheaper  than  in  their  own  country  (Eurostat  2009,  Statistics  in  focus  50/2009), these  consumers  would save  around €380  million.  Formula: 

44%*50%*33%*84%*500  000  000*52*24%=  €380  540  160;  Data  sources:  Eurostat  Population  database,  ECB,  Value  of  credit  card  transactions  divided  by  volume  of 

credit card transactions: http://www.ecb.int/stats/payments/paym/html/index.en.html (last visited: June 2011). 

20

 
 
 
 
 
 
 
 
 
 
                                                 
 
•  Refusal to sell due to contract law related barriers hinders consumers from purchasing 
cross-border  

Survey data shows that almost a quarter of export-oriented European retailers refused sales due to 
contract  law.114  Scaling  up  the  data  to  EU  level  implies  that  9,000  companies  refused  often  or 
always, while 33,000 did so occasionally.115 It is difficult to identify though how many consumers 
were affected by the refused sales due to contract law. One company may refuse orders of multiple 
consumers  and  contract  law  may  be  only  one  reason.116  However,  the  number  of  consumers  who 
were affected by the refusal of sales for whatever reason is established. Survey data suggest that at 
least 3 million consumers117 said that they experienced the refusal of a sale or delivery from another 
EU country within one year.118 This percentage ranged widely between 4% of consumers affected in 
Belgium to 22% in Ireland and 28% in Malta.119 A person who engages in multiple transactions may 
experience the refusal of sale many times. A study where mystery shoppers tried to perform 10,964 
cross-border  test  transactions  showed  that  61%  of  the  attempts  to  purchase  cross-border  products 
would have failed.120 In 50% of the cases121 traders refused to serve the consumer's country. Contract 
law  accounts  for  a  proportion  of  these  cases;  however  for  the  reasons  mentioned  above,  the  exact 
proportion is difficult to identify.  

The  refusal  of  sales  may  dissuade  proactive  consumers  from  shopping  cross-border  and  may 
disadvantage  them  economically.  European  consumers  spend  €42.3  bn  annually  on  cross-border 
purchases. Assuming that within a year the 3 million consumers who experienced a refusal to sell122 
were  refused  an  order  of  a  product  of  an  average  value  of  €52,123  the  value  of  failed  transactions 
would be €157 million.124  

Example: a Cypriot consumer is refused a better cross-border offer  

Eleni is a 20 year old Cypriot. She loves photography and would love to buy a new camera with an advanced zoom lens 
to take pictures of butterflies. The price of such a camera in Nicosia is around €1,540. Eleni works the whole summer 
as a lifeguard at a hotel swimming pool to save this money. There she meets Ben, a young Briton, who is spending his 
summer holidays in Cyprus. Ben mentions that the average prices for cameras he has seen in the UK were considerably 
lower. Eleni starts searching online and indeed finds offers for the same camera sold in the UK about €500 cheaper than 
in Cyprus. She thinks that the delivery costs to Cyprus could not be more than €50. This means that she would need to 
spend only €1,100 instead of €1,540 to buy the camera of her dreams. She contacts the shop, but they reply that they do 
not accept international orders. Eleni finds another shop the website of which is available in French and German. There, 
the camera cost €1,110, a bit more than in the first shop but it is still a good deal. She contacts the shop and gets the 
similar answer "we deliver only to France, Belgium, Luxembourg and Germany". After a third unsuccessful attempt, 

114 EB 321, p.29: 1% of export-oriented retailers said that they always refused sales due to differences in consumer contract laws; 4% did so often and 18% did not very 

often.  The overall number of retailers which refused cross-border orders is likely to be significantly higher, as the survey data does not cover businesses which do  

not export. This is the overwhelming majority of retailers (4,420,563 out of 4,605,233 according to data from Eurostat's Structural Business Statistics, 2007).  

115 EB 321, p. 29: 5% of retailers with experience or an interest in exports refused sales to consumers in other MS often or always and 18% occasionally. Considering that 

the number of exporting retailers is 184,670 the number of them which refused sales equals 5%*184,670 – always or often and 18%*184,670 – occasionally.  

116 Matrix Insight Business practices applying different condition of access based on the nationality or the place of residence of the service recipients, 2009, p. 35: the study 

found that companies may refuse sales for a range of reasons, including legal and regulatory considerations, as well as supply and demand related drivers.  

117 EB 299a, p. 6: 8% of the consumers who had made cross-border distance purchases over the internet, postal service or by phone (9% of consumers above the age of 15 

years) were refused cross-border offers. Formula: 8%*9%*84%*500,000,000= 3,024,000. 

118 EB 299a, p. 9. 

119 EB 299a, p. 9. 

120 YouGov Psychonomics, p. 24. 

121 YouGov Psychonomics, p. 24. 

122 EB 298, p. 16. 

123  The  average  amount  per  credit  card 

transaction 

(ECB,  Value  of  credit  card 

transactions  divided  by  volume  of  credit  card 

transactions, 

http://www.ecb.int/stats/payments/paym/html/index.en.html). 

124 8%*9%*84%*500,000, 000= 3,024, 000 * €52 =157,248,000. 

21

 
 
 
  
 
 
                                                 
Eleni gives up and buys a camera in a shop in Nicosia paying €1,540. She still cannot understand why the UK shops 
refused to sell the camera to her. She could have saved €500 and bought with that money an extra zoom lens to take 
even better pictures of butterflies. 

2.5. Need for action at EU level and subsidiarity  

•  Right to act 

The Union's right to act in this field is set out in Article 114 TFEU, which provides that the Union 
shall  adopt  the  measures  for  the  approximation  of  the  provisions  laid  down  by  law,  regulation  or 
administrative  action  in  MS  which  have  as  their  object  the  establishment  and  functioning  of  the 
internal market.125  

•  Subsidiarity 

This initiative complies with the principle of subsidiarity for a number of reasons. The objectives of 
facilitating  the  expansion  of  cross-border  trade  for  business  and  purchases  by  consumers  in  the 
internal market cannot be fully achieved as long as businesses and consumers cannot use a uniform 
set  of  contract  law  rules  for  their  cross-border  transactions.  The  current  legal  framework  is  not 
sufficient,  as  it  lacks  single  set  of  uniform  substantive  rules  which  cover  comprehensively  the 
lifecycle  of  a  cross-border  contract.  Furthermore,  as  market  trends  evolve  and  prompt  MS  to  take 
action independently (e.g. in regulating digital content products) regulatory divergences grow. They 
lead to increased transaction costs and legal complexity for business, as well as uncertainty, affecting 
businesses and consumers involved in cross-border transactions.  

A number of stakeholders acknowledge that the existence of differences in contract laws have led to 
legal  fragmentation  which  can  affect  the  functioning  of  the  internal  market;  this  may  entail 
additional transaction costs and legal uncertainty for business and a lack of consumer confidence.126 
The  Union  is  best  placed  to  address  obstacles  to  the  functioning  of  the  internal  market  as  these 
obstacles have a clear cross-border dimension. More specifically, it is best placed to address contract 
law related obstacles by developing a single set of uniform substantive contract law rules. It will add 
value  to  the  existing  legal  framework  by  creating  such  rules  for  consumers  and  businesses  that 
engage in cross-border transactions.  

3.  POLICY OBJECTIVES  

The  overall  objective  is  to  support  the  economic  activity  in  the  internal  market  by  improving  the 
conditions  for  cross-border  trade  for  the  benefit  of  businesses  and  consumers.  The  improvement 
should be achieved by reducing the barriers caused by differences in contract law between MS. 

General objective 1 – Businesses 

General Objective 2 – Consumers 

Facilitate  the  expansion  of  cross-border  trade  in  the 
internal market 
Specific objectives 
•  Increase  number  of  companies  starting  cross-border 
activities 
•  Increase  number  of  companies  expanding  their 
activities to more MS  

cross-border  purchases  by 

Facilitate 
consumers in the internal market 
Specific objectives 
•  Increase  in  consumer  confidence  in 
shopping cross-border 
•  Decrease  number  of  consumers  who 
experience refusal to sell  
•  Improve  access  to  offers  from  across 

125 Furthermore, according to Article 114(3) TFEU, when submitting proposals, the Commission must take as a base a high level of consumer protection.  

126  Response  to  the  Green  Paper  by  Member  States,  such  as  the  Government  of  Luxembourg,  p.2-3,    or  the  Netherlands,  p.  1;    business  stakeholders,  such  as 

BusinessEurope, p.2,  British  Retail Consortium,  p.2,  Federation  of  Small  Businesses  in  the  UK,  p.3,    Association des  Banques  et Banquiers,  Luxembourg, p.  1-2,  CEA, 

Insurers of Europe, p. 1, LVMH, p. 2, or Nokia Corporation, p.2; or others like the Scottish Law Commission, p.4 and the CEP, Centrum für Europäische Politik, p. 3. 

22

 
 
 
 
 
 
 
 
 
 
                                                 
Operational objectives  
•  Reduce  additional  transaction  costs  when  trading 
with more than 1 MS 
•  Reduce legal complexity in cross-border trade  

the EU 

Operational objectives 

•  Ensure  high  level  of  consumer 
protection 
•  Reduce 
consumer 
shopping 

about 
cross-border 

uncertainty 
in 

rights 

Compliance with horizontal EU policies 
The above objectives are in compliance with the horizontal policies of the EU. The need to tackle 
barriers posed by differences in contract law is recognised in a number of strategic documents for the 
EU,  such  as  the  Commission's  Europe  2020  Strategy,127  the  Digital  Agenda  for  Europe,128  the 
Review of the Small Business Act,129 the Single Market Act130 and the Action Plan for Implementing 
the Stockholm Programme.131 

Moreover,  the  objectives  of  this  initiative  contribute  to  the  achievement  of  the  strategic  objectives 
for  the  development  of  the  Single  Market,  highlighted  in  the  Europe  2020  strategy.  Europe  2020 
states  that  often,  businesses  and  citizens  still  need  to  deal  with  27  different  legal  systems  for  the 
same transaction in the context of the bottlenecks to the Single Market. It is noted that the access for 
SMEs  to  the  Single  Market  must  be  improved  and  that  citizens  must  be  empowered  to  play  a  full 
part in it. This requires strengthening their ability and confidence to buy goods and services cross-
border,  in  particular  on-line.  Making  it  easier  and  less  costly  for  businesses  and  consumers  to 
conclude  contracts  with  partners  in  other  EU  countries  is  foreseen  as  one  of  the  actions  the 
Commission will propose in order to tackle the remaining bottlenecks in the Single Market.   

4.  POLICY OPTIONS  

This initiative focuses on the obstacles that differences in contract law pose to cross-border trade in 
goods as demonstrated in Section 2 on the Problem Definition. The policy options examined focus 
on the areas of contract law that are most relevant for addressing the problems identified, i.e. sales of 
goods and digital content.132 These contract law areas will be referred to as a Common European 
Sales Law. The notion of a Common European Sales Law is introduced for the purpose of accuracy, 
as the concept of European contract law is very broad and it also includes a number of other contract 
law areas that were not addressed by this initiative.  

4.1. Options for type of intervention 
•  Option 1: Baseline scenario (No policy change) 

127 Communication from the Commission, Europe 2020, A strategy for smart,  sustainable and inclusive growth, COM(2010) 2020 final, p. 21, 3.3.2010; See also Annual 

Growth Survey, Annex 1, progress report on Europe 2020 (COM(2011) 11 - A1/2) p. 5. 

128 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A 

Digital Agenda for Europe, COM(2010) 245 final ,26.8.2010, p. 13 and p. 37. 

129  Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions, 

Review of the "Small Business Act" for Europe, COM(2011) 78 final, 23.2.2011, p. 11 and p. 13. 

130 Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions, Single Market 

Act, Twelve levers to boost growth and strengthen confidence, Working together to create new growth, COM(2011) 206 final, 13.4.2011, p. 14 and p. 19.  

131 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, 

Delivering an area of freedom, security and justice for Europe's citizens, Action Plan Implementing the Stockholm Programme, COM(2010) 171 final, p. 5 and p. 24, 

20.4.2010. 

132 These are discussed in detail in section 4.2.3 on the Substantive Content and illustrated in Table 2 in Annex II. 

23

 
 
 
 
 
 
                                                 
The current legal framework133 (including the CRD) could be maintained without further EU action. 
This option would also take into account the text developed by the EG.134 Although not politically 
endorsed, it could be used by European and national legislators as a source of inspiration when 
drafting legislation. In addition, contractual parties could agree to integrate the rules developed by 
the EG in their contracts.  

•  Option 2: A toolbox for the EU legislator 
The toolbox could set out definitions, principles and model rules on topics related to contract law 
that are likely to be subject to EU legislation. Two toolbox forms could be envisaged:  
a) Toolbox as a Commission document: The Commission could adopt for instance a communication 
on a toolbox and commit itself to use the concepts set out in the toolbox when preparing relevant 
legislative proposals. However the Council and EP would not be bound to do so.  
b)  Inter-institutional  agreement  on  a  toolbox:  An  inter-institutional  agreement  between  the 
Commission,  EP  and  Council  would  bind  the  three  institutions  to  use  the  toolbox  concepts  when 
drafting and negotiating legislative proposals related, except when overriding sector-specific reasons 
would lead to another result.  

•  Option 3: Recommendation on a Common European Sales Law 
A Common European  Sales  Law  instrument could be attached to a Recommendation  addressed to 
MS encouraging them to incorporate it into their national laws voluntarily, allowing them discretion 
on  time,  method  and  extent  of  implementation.  Two  possibilities  can  be  envisaged  for  the 
Recommendation, which could encourage MS to: 

a)  Replace  their  respective  national  contract  law  rules  with  a  Common  European  Sales  Law 
instrument.  A  similar  approach  has  been  implemented  in  USA:  the  Uniform  Commercial  Code 
(UCC)  was  agreed  by  experts  in  commercial  law  and  endorsed  by  neutral,  quasi-public 
organisations. The UCC has been adopted in the United States, even though with changes in some 
states.  

b) Incorporate a Common European Sales Law instrument as an optional regime, which contractual 
parties from different MS could choose as an alternative to national law.  

•  Option 4: Regulation/Directive setting up an optional Common European Sales Law 
An optional Common European Sales Law could be set up and used as a 'second regime', co-existing 
in  the  national  legal  regimes  with  the  relevant  specific  national  laws  as  an  alternative  particularly 
suitable for cross-border trade. It would be a comprehensive, self-standing set of contract law rules 
with a high level of consumer protection, which could be chosen by the parties as the law applicable 
to their cross-border contracts. This self-standing legal regime would allow businesses to use one set 
of  rules  irrespective  of  where  in  the  EU  they  wish  to  sell  their  products.  In  B2C  transactions, 
business would have the choice  of proposing to apply the optional Common European Sales Law, 
while the consumer will be free to reject this offer and purchase the product from another provider 
under its domestic law. 

•  Option 5: Directive on a mandatory Common European Sales Law 
A mandatory Directive on Common European Sales Law could harmonise the national contract laws 
of  the  27  MS.  It  would  complement  the  consumer  acquis  and  would  be  based  on  a  high  level  of 
consumer protection, as required by the Treaty. It could take one of two forms:  

133 See section 2.2 and Annex II for further explanations.  

134 The publication of the work of the  EG was foreseen as option 1 in the Green Paper. As it was published on 3 May 2011 on the website of the Commission, at the time 

of the submission of this report this option is part of the baseline scenario.  

24

 
 
 
 
 
 
                                                 
a)  Full harmonisation Directive: This would ensure that the same EU contract law concepts apply in 
all MS and, for B2C contracts, would allow businesses to apply the same consumer contractual rules 
in all countries towards which they direct their activities.  
b)  Minimum harmonisation Directive: MS would be able to maintain or introduce more protective 
rules for B2C contracts, subject to compliance with the Treaty. They would also have the freedom to 
choose  the  means  necessary  to  implement  the  provisions  of  the  Directive.  However,  businesses 
would  still  need  to  ensure  compliance  with  the  different  consumer  contract  law  rules  where  they 
have gone beyond the Directive in all those countries towards which they direct their activities.  

•  Option 6: Regulation establishing a mandatory Common European Sales Law 
A mandatory Regulation establishing a Common European Sales Law could replace all EU national 
contract laws with a uniform set of rules. This solution would remove legal differences in contract 
laws  and  lead  to  a  uniform  application  and  interpretation  of  the  provisions  of  the  Regulation.  As 
regards  the  intended  result,  the  outcome  of  this  option  is  close  to  a  full  harmonisation  Directive. 
Thus, the two options will be analysed jointly. 

•  Option 7: Regulation establishing a European Civil Code 
A Regulation establishing a European Civil Code would create a uniform set of European civil law 
rules which would replace national laws. It would go a step further than the Regulation establishing 
a Common European Sales Law, as it would regulate additional matters, for example tort law. Due 
to its broad scope such an instrument would minimise the need to fall back on national provisions in 
related areas of law. 

•  Discarded options  

•  Option 3a: Recommendation encouraging MS to replace national laws 
•  Option 7: Regulation establishing a European Civil Code 

Option 3a received hardly any support from the MS who responded to the Green Paper.135 Thus, it is 
practically  not  plausible,  since  MS  would  have  to  implement  the  recommendation  voluntarily. 
Similarly, the European Civil Code received hardly any support from MS at this stage. Moreover, it 
would  go  beyond  what  is  necessary  and  would  be  disproportionate.  It  also  raises  serious  issues  of 
subsidiarity.  

4.2. Options for scope and content  

4.2.1.  Sub-option 1 for scope: B2C / B2B contracts  

•  An instrument applicable to B2C contracts: It would contain provisions typical for consumer 
contracts, such as mandatory provisions ensuring a high level of consumer protection, but also rules 
of general contract law which would apply by default.  
•  An instrument applicable to B2C and B2B contracts: In this sub-option, a distinction between 
provisions specific to consumer and business contracts would be necessary. Contrary to these B2C 
rules with specific consumer protection contents, almost all B2B rules would be default provisions 
which apply when parties have not agreed on different terms.  

4.2.2.  Sub-option 2 for scope: Cross-border / domestic contracts 

•  An instrument applicable to cross-border transactions: The instrument could be chosen only 
in  a  contractual  relationship  between  parties  across  borders.  In  B2C  contracts  (in  addition  to  their 

135  Only  the  Czech  government  said  that  it  could  accept  option  3a  in its  response  to  the  Green  Paper,  due  to  its  voluntary  nature.  The  Finnish,  Hungarian  and  French 

governments also considered option 3 acceptable, without specifying explicitly a preference for option 3a. However, considering that these governments particularly liked 

the  voluntary  nature  of  this  option  and  rejected  the  binding  options  which  require  replacing  their  national  laws,  it  would  seem  unlikely  that  they  would  be  willing  to 

implement option 3a at this stage.  

25

 
 
 
 
 
 
                                                 
national law which would apply to domestic transactions with consumers) businesses would be able 
to sell to 26 other MS on the basis of a single Common European Sales Law.  
•  An  instrument  applicable  to  cross-border  and  domestic  transactions:  It  would  further 
simplify the regulatory environment, as business could operate domestically and in all other EU MS 
based on the same single Common European Sales Law for both B2B and B2C contracts.  

4.2.3.  Sub-option 3 for substantive content: areas of law covered  

The Green Paper consulted on a narrow and a broad interpretation of the substantive content.  
•  A narrow substantive content: An instrument with a narrow content would be limited to rules 
on:  definition  of  contract,  pre-contractual  duties,  formation,  right  of  withdrawal,  representation, 
grounds  of  invalidity,  interpretation,  contents  and  effects  of  contracts,  performance,  remedies  for 
non-performance,  plurality  of  debtors  and  creditors,  change  of  parties,  set-off  and  merger,  and 
prescription. 
•  A broad substantive content: An instrument with a broad content would cover all the areas of 
contract law mentioned above. In addition, it would cover areas, such as restitution, non-contractual 
liability,  acquisition  and  loss  of  ownership  of  goods  and  proprietary  security  in  movable  assets. 
Moreover, it could contain rules on specific services contracts. 
For  the  purpose  of  the  current  IA  a  combination  of  the  narrow  and  broad  content  possibilities 
will be analysed. This combination has been chosen, as it covers the vast majority of usual practical 
problems within a life cycle of cross-border contractual relationships.  
The  contract  law  areas  included  are  those  where  most  problems  occur,  namely  pre-contractual 
duties, right of withdrawal, performance and non-performance, which are currently largely regulated 
on a minimum level in the existing acquis. As repeated in many responses to the Green Paper, the 
instrument should in any case cover mandatory consumer contract law rules, taking the Union acquis 
as a starting point. However, as these areas are intrinsically linked to several areas considered in the 
narrow content (i.e. contract formation, grounds of invalidity, interpretation, contents and effects of 
contracts, and prescription), it is reasonable to include them too. Furthermore, the area of restitution 
(mentioned  in  the  broad  content)  should  also  be  included,  as  it  deals  with  the  consequences  of 
withdrawal from, termination or avoidance of the contract.  

Including digital products136 is justified to ensure consistency with the CRD which includes rules on 
digital  products  in  its  scope  and  contains  rules  on  pre-contractual  information  and  right  of 
withdrawal  for  them.  The  Common  European  Sales  Law  instrument  will  take  over  the  respective 
rules  from  CRD.  As  the  Common  European  Sales  Law  instrument  would  also  include  the  added 
value  of  complementing  them  by  uniform  rules  on  remedies,  these  rules  would  also  (with 
appropriate adaptations) apply to digital products. A uniform and comprehensive set of contract law 
rules applicable to digital products would facilitate the cross-border trade in this sector, by reducing 
transaction costs and increasing legal certainty.  

Other  contract  law  areas  were  excluded.  They  include  representation,  plurality  of  debtors  and 
creditors, change of parties, set-off and merger (under sub-option 3.1). Discussions in the EG and the 
stakeholders expert group led to the conclusion that they do not generate many problems in cross-
border contractual relationships. Furthermore, services contracts in general were excluded from the 
scope  for  two  main  reasons:  services  are  very  heterogeneous  (e.g.  they  include  many  different 
categories  like  contracts  for  transport  and  hairdressers)  and  therefore  are  complicated  to  regulate. 
Furthermore, there was minimal support for their inclusion by the respondents to the Green Paper. 
While financial services received some support, it was considered that they are totally unrelated to 
sales. It is therefore  practically  impossible  to  deal with them in the same instrument. On the other 
hand,  specific  services  contracts  (e.g.  maintenance  and  repair)  which  are  directly  related  to  sales, 

136 Digital product are currently not regulated under EU law: they are excluded from the scope of the Sale of Consumer Goods Directive. The Directive only applies to 

tangible goods. They were also not included in the scope of the Proposal on Consumer Rights Directive, but negotiations have changed this. 

26

 
 
 
 
                                                 
provided by the seller and concluded at the same time as the sales contract are intrinsically linked to 
sales contracts. Therefore, they could not be left out.  

Other  areas  of  law  excluded  were  non-contractual  liability,  acquisition  and  loss  of  ownership  of 
goods and proprietary security in movable assets. A study conducted during at an earlier stage of the 
work  on  European  contract  law  found  that  no  serious  problems  existed  in  these  areas  in  a  cross-
border context.137 In the field of property law the only problems concerned the issue of retention of 
title clauses, but this is dealt with to a large extent in the Late Payments Directive. Other areas of 
property law are not envisaged for regulation at EU level, considering also that Article 345 TFEU 
states  that  the  EU  shall  not  prejudice  the  rules  in  the  MS  governing  the  system  of  property 
ownership. 

This scope has largely been determined based on the advice of the EG and the stakeholders expert 
group. The feasibility study of the EG reflects this approach and contains a self-standing set of rules, 
developed  within  19  chapters  (see  Annex  on  Legal  Framework  for  details).  In  determining  the 
appropriate substantive content the Commission took into account the stakeholder concerns that the 
instrument  should  be  user-friendly,  practical  and  that  it  should  have  a  balanced  level  of  consumer 
protection.  

•  Key substantive provisions (See Annex VIII on Substantive provisions for details) 

The  key  provisions  analysed  in  detail  in  Annex  VIII  would  produce  significant  impacts  upon 
stakeholders.  They  include  consumer  protection  provisions  (e.g.  pre-contractual  information, 
remedies  for  non-performance,  burden  of  proof,  damages)  and  SMEs  protection  provisions  (pre-
contractual information, surprise clauses, unfair terms, penalty clauses control). While there may be 
numerous variants for each individual provision what matters most is that the instrument as a whole 
strikes a reasonable balance, so that it suits the interests of business and gains the trust of consumers 
in line with the objectives in section 3. While most of the provisions lead to an increase in the level 
of protection compared to the existing acquis and the national laws of a representative selection of 
MS, the analysis found that they strike a reasonable balance.  

5.  ANALYSIS OF IMPACTS138 

For further description of the assumptions underlying the analysis, see Annex IV139 of this IA; for 
detailed description of the policy options' (POs) impacts, see Annex V. 

5.1. MAIN IMPACTS OF POLICY OPTION 1: BASELINE SCENARIO  

Economic impacts  

Transaction costs: The current legal framework in the EU does not contain a single set of uniform 
and comprehensive contract law rules which could be used by consumers and businesses in cross-

137 C. von Bar, U. Drobnig, The Interaction of Contract Law and Tort and Property Law in Europe, A Comparative Study, European Law Publishers, May 2004. 

138 Unless otherwise stated the analysis in this section applies to both B2B and B2C transactions in a cross border only context. In addition, unless otherwise stated, all data 

in this section comes from EB 320 and 321. (EB surveys 320 and 321 provide data on the attitudes of export oriented companies, in particular, on their willingness to use the 

European contract law and the impacts it could have on the level of their cross-border trade. More specifically, the respondents indicated to what extent they would use 

European contract law if it was made available and whether they would expand their trade to more Member States. The impacts on all considered macro-economic variables 

are computed based on the companies' expectations for cross-border expansion of their trade if European contract law existed).   

139 The economic impacts in this section have been calculated using the Global Trade Analysis Project (GTAP) model. (See www.gtap.agecon,purdue.edu and Hertel et al. 

(1997),  Global trade analysis; Modelling and applications, Cambridge University Press.)  GTAP is a static general equilibrium model analysing changes in production, trade 

and  consumption  as  a  consequence  of  changes  in  such  exogenous  variables  as  costs.  The  model  has  an  Input-Output  structure  for  all  the  economies  included.  Trade  is 

identified at the bilateral level. The model includes all countries in the EU27 and 57 products among which 24 are manufactured goods. GTAP is able to calculate the impact 

of a new policy on GDP, trade, employment, intra-EU trade, consumer prices, expenditure and consumer welfare.  

27

 
 
 
 
 
 
  
 
 
 
                                                 
border trade. The existing patchwork of European and international legislation has led to a limited 
number  of  uniform  rules  only  in  a  few  areas  of  contract  law.  As  a  result,  substantial  differences 
between  MS  contract  laws  remain.  The  baseline  scenario  (BS)  transaction  costs140  (one  off)  for 
trading with one other MS amount to on average: in B2C transactions €9,100 (€8,695- €9,565, plus 
€2,900  for  e-commerce  oriented  enterprises  selling  to  consumers  that  face  additional  contract  law 
related IT costs) and in B2B transactions €9,800 (€9,000-€10,658).  

For a micro trader the cost of trading in one additional MS amounts to 6.5% of its average annual 
turnover and for trading in the whole of the EU exceeds its average annual turnover by almost twice. 
For a small enterprise in the same sector the cost of trading in one additional MS would amount to 
0.25% of its annual turnover. For trading in the whole of the EU this would be 6.4% of its annual 
turnover,  for  a  medium  enterprise  this  cost  would  be  2.22%  of  its  annual  turnover  for  a  large 
enterprise it would cost 0.06% of its annual turnover. There is an annual aggregate transaction cost 
for the EU economy as new traders enter the market which is  approximately €1-2 billion.  If these 
costs continued by the year 2020, exporting firms would face transaction costs of €9-19 billion due 
to the differences in contract laws.   

Administrative  costs  (included  in  the  overall  figure  of  transaction  costs):  With  no  EU  action,  the 
average administrative costs141 per company per MS with which it trades would amount to: in B2C 
€2,500,  in  B2B  €1,500.  These  are  mostly  one-off  costs  but  accumulate  as  the  number  of  MS  a 
company trades with increases.142 For example, for trade with 5 MS these figures would be €7,500 
for B2B and €12,500 for B2C.   

Competition in internal market and impact on consumer prices: With no EU action, competition in 
the internal market would remain limited. Due to the remaining legal differences and related costs, 
many businesses would not be encouraged to trade cross-border and therefore create a competitive 
environment  which  would  drive  down  prices.143  Without  an  increase  in  competition  in  the  market 
place, consumers would continue to face a restricted choice of products at a higher price. 

Impact  on  consumer  protection:  This  option  includes  the  adoption  of  the  CRD  which,  due  to  its 
nature  as  a  full  harmonisation  Directive  ensures  that  within  its  scope,  consumers  have  the  same 
rights which are harmonised across the EU. Therefore differences between the consumer protection 
rules of different MS remain. Many Green Paper respondents stated that action should only be taken 
if a previously adopted instrument has proven to be inefficient.144  However the text adopted does 
not  harmonise  important  areas  of  consumer  contract  law.  For  instance,  sales  remedies  and  unfair 
contract terms would remain fragmented across the EU.  In addition, the CRD does not cover the full 
life cycle of a B2C contract or B2B contract.  

Impact  on  SMEs:145  For  those  performing  B2B  contracts,  where  parties  are  of  a  similar  size, 
negotiating  the  applicable  law  is  a  time  consuming  factor  which  causes  opportunity  costs.  In  the 
SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important 
obstacle to cross border trade. 146  In addition, it is normally the stronger (usually larger) party which 

140 See problem definition and Annex III. 

141 See Annex VII on administrative costs. 

142 See Annex VII. 

143 Thereby not contributing towards the Commission policy towards increasing competitiveness 'An Integrated Industrial Policy for the Globalisation Era Putting 

Competitiveness and Sustainability at Centre Stage', COM (2010) 614.  

144 E.g. BEUC's response to the Green Paper consultation, p. 4; UEAPME's position on the EC Green Paper, p. 2; EuroCommerce's response to the EC consultation, p.1-2. 

145 Both Eurochambres and the European Association of crafts, small and medium-sized enterprises (UEAPME) felt the publication of the Expert group's work would be 

more beneficial from an academic perspective.   

146 According to EB 320, p. 15: respectively 5%, 10% and 15% of the respondents, also representing large companies, considered this was a barrier which impacts their 

decision to sell cross-border.  

28

 
 
 
 
 
 
 
 
 
 
 
                                                 
imposes their country’s law on the smaller party147 as the law applicable to the contract. The smaller 
party  then  has  to  bear  the  transaction  costs  of  finding  out  about  the  foreign  contract  law  which 
applies to their contract. If the SMEs concerned in both scenarios are micro or small enterprises, then 
these costs would weigh, in relative terms, more heavily upon them. 

Impact on law firms: No impact.   

Public authorities: MS:148 No impact.  

Judiciary:  Litigation  costs  which  result  from  the  need  for  courts  to  investigate  and  apply  different 
national  laws  than  their  own  which  are  relevant  for  cross-border  contracts  would  remain.  Judges 
would  either  need  to  investigate  the  foreign  applicable  law  themselves  or  obtain  the  necessary 
knowledge  through  the  advice  of  legal  experts  or  the  evidence  submitted  by  lawyers.  In  these 
instances, time of the judges and experts/lawyers would be taken to research the foreign applicable 
law.  The cost of this time and research would be borne by either the courts or parties involved.  

Analysis of provisions of instrument:149 No impact.  

Social impacts: No impact.   

Environmental impacts: No impact. 

Online environment: With no EU action, the  trend of  domestic sales being far greater than cross 
border ones would continue. 

Overall assessment: This option would not remove the additional transaction costs for cross-border 
trade  identified  in  the  problem  definition.  The  subsequent  opportunity  costs  would  continue;  the 
level  of  legal  complexity  for  businesses  wishing  to  trade  cross  border  would  not  be  reduced.  This 
option would also mean that the complexity consumers experience regarding their rights in a cross-
border context would remain and the practice of refusal to sell across border would not decrease.  

Even though this option takes account of full harmonisation of some consumer protection rules due 
to the adoption of the CRD, this harmonisation is restricted to only a few selected areas of consumer 
contract law. Most aspects of this law such as sales remedies and unfair contract terms would remain 
fragmented across the EU. This fragmentation would not give consumers the full confidence on all 
their consumer rights for when they purchase across border.  

5.2. MAIN IMPACTS OF POLICY OPTION 2 

5.2.1.   2a: Toolbox as a Commission Document   

The  toolbox  itself  would  only  have  an  indirect  impact  upon  businesses  and  consumers  because 
concepts from the toolbox would be used for the development of future contract law legislation or 
the revision of existing EU legislation. The legislation itself would have the direct impact.  As such a 
Commission instrument would not be agreed by the Council and EP, the EU legislator could always 
deviate  from  the  parts  on  Commission  proposals  implementing  the  toolbox.  Because  of  the 
uncertainty of its implementation, the impact of this option would not only be indirect but also very 

147 It is recognised that SMEs are not always in a weaker bargaining position; this example only applies to those who are. 

148 In their Green Paper responses, most Member States endorsed the publication of the work of the Expert Group. 

149 This analysis is only applicable to those options which describe the impacts of a legal instrument. 

29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
limited.150  For  this  reason  it  is  difficult  to  quantify  what  this  impact  would  be.  In  addition,  there 
would  not  be  any  immediate  impact  of  this  option  upon  businesses  as  negotiations  for  new 
legislation or an amendment to existing legislation would take time to achieve.  

Economic impacts  

Transaction costs: In the longer term this option could lead to a small  reduction in the transaction 
costs, but the extent of this is unknown as one cannot predict when and how the toolbox concepts 
would be used. 

Administrative  costs  (included  in  the  overall  figure  of  transaction  costs):  This  option  could  create 
indirect  administrative  costs  associated  with  future  contract  law  requirements.  For  example  if  a 
future law based upon the toolbox obliged a trader to provide information not previously required, it 
could mean that the trader would have to bear the associated administrative costs.  

Competition in internal market and impact on consumer prices: There would be little changed from 
the BS. 

Impact on consumer protection: Where rules from the toolbox (which are not in the current acquis or 
domestic legislation) are adopted in EU legislation, they could raise the level of consumer protection 
in the laws of some MS.  

Impact on SMEs: Very little change compared to the BS. 

Impact on law firms: No change from the BS. 

Public authorities: MS: Very little change compared to the BS. 

Judiciary:  Very  little  change  compared  to  the  BS.  A  limited  indirect  impact  could  be  felt  by  the 
judiciary who, depending on the extent of the change would need to train for new concepts in future 
legislation. 

Analysis of provisions of instrument:151 No impact. 

Social impacts: No change from the BS. 

Environmental impacts: No change from the BS. 

Simplification  potential:  This  option  could  create  some  convergence  of  the  relevant  contract  law 
legislation  and  result  in  a  small  level  of  simplification  as  national  laws  would  in  time  begin  to 
develop similarities to each other. 

Online environment: No change from the BS. 

Overall assessment: Compared to the BS this option may to a very small extent help to facilitate the 
expansion of cross-border trade in the internal market. It may also to a small extent indirectly lead to 
an increased level of consumer protection in national contract laws.  

150 European Small Business Alliance response to the Green Paper, p2 also supports that the Toolbox does not have the substance 'to deliver real benefits to businesses 

engaged in transactions across the wider European market.' 

151 This analysis is only applicable to those options which describe the impacts of a legal instrument. 

30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
However,  since  the  contract  law  related  transaction  costs  would  largely  remain  unchanged,  the 
positive impacts of this option on businesses and consumers would be minimal and in turn so would 
any subsequent impacts upon trade, competition and the internal market. Moreover, any impacts of 
this  option  would  not  be  felt  immediately  as  negotiations  for  new  legislation  or  amendments  to 
existing legislation would take time to achieve. Overall, as there is no way of knowing whether and 
how  widely  this  option  would  be  used  and  accepted  by  the  Council  and  EP,  the  impacts  of  this 
option would not differ greatly compared to the BS and any impacts felt would be very small and 
would take place in the longer term. 

5.2.2.  Main Impacts of Policy Option 2b: Toolbox as an Inter-Institutional Agreement  

As per policy option (PO) 2a, the toolbox itself would not have a direct impact upon businesses and 
consumers. As an inter-institutional agreement would bind the three EU institutions to make use of 
the  toolbox  concepts  when  drafting  and  negotiating  legislative  proposals  related  to  contract  law 
(except  when  overriding  sector-specific  reasons  would  lead  to  another  result)  there  would  be  less 
deviation  from  the  use  of  the  toolbox  concepts  compared  to  PO2a  and  more  certainty  in  its 
implementation.  

However, despite this increased certainty, the impacts of this option would remain indirect. For this 
reason  it  is  difficult  to  quantify  what  these  impacts  would  be.  In  addition,  there  would  not  be  any 
immediate impacts of this option upon businesses as negotiations for agreeing new legislation or an 
amendment to existing legislation would take time to achieve.  

Economic impacts 

Transaction costs: In the longer term this option could lead to a limited reduction in transaction costs 
due to the convergence of certain contract law concepts. There is a greater likelihood of this taking 
place as all three EU Institutions would agree on application of the toolbox concepts rather than just 
the Commission as would be the case in PO2a.  

Administrative  costs  (included  in  the  overall  figure  of  transaction  costs):  This  option  could  create 
indirect administrative costs associated with future contract law requirements as set out under PO2a. 

Competition in internal market and impact on consumer prices: There would be little changed from 
the BS. 

Impact  on  consumer  protection:  Where  rules  from  the  toolbox  are  adopted  in  EU  legislation,  they 
could raise the level of consumer protection in the laws of some MS.  The impact would be the same 
as set out under PO2a with one difference. As under this option there the toolbox concepts would be 
accepted by the Council and EP, the impacts would be felt to a greater extent than those felt under 
PO2a. 

Impact on SMEs: Very little change compared to the BS. 

Impact on law firms: No change from the BS. 

Public authorities: MS: Very little change compared to the BS.  

Judiciary:  Very  little  change  compared  to  the  BS.  A  limited  indirect  impact  could  be  felt  by  the 
judiciary who, depending on the extent of the change would need to train for new concepts in future 
legislation. 

31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Analysis of provisions:152 No impact. 

Social impacts: No change from the BS. 

Environmental impacts: No change from the BS. 

Simplification  potential:  This  policy  option  could  create  a  greater  convergence  of  the  relevant 
contract  law  legislation  than  PO2a  and  result  in  a  small  level  of  simplification  as  national  laws 
would in time begin to develop similarities to each other.   

Online environment: No change from the BS. 

Overall  assessment:  As  this  option  involves  all  three  Institutions  agreeing  to  make  use  of  the 
toolbox, this option would, to a somewhat greater extent compared to PO2a, reduce the differences 
between national contract laws which would help to facilitate the expansion of cross-border trade in 
the internal market. This option could to a limited, but greater extent than PO2a indirectly lead to a 
higher level of consumer protection and legal certainty about consumer rights.  

However,  since  the  toolbox  would  only  be  used  for  the  amendment  of  existing  or  preparation  of 
future sectoral legislation, contract law related costs stemming from differences of national contract 
laws would largely remain and in turn so would any subsequent impacts upon trade, competition and 
the  internal  market.  Moreover,  there  would  not  be  any  immediate  impacts  of  this  option  upon 
businesses and consumers as negotiations for new legislation or an amendment to existing legislation 
would  take  considerable  time  to  achieve.  As  this  option  would  only  concern  national  contract  law 
rules which are modified following revised or new EU legislation and would only have an impact at 
the earliest at a medium term, the overall positive impacts of this option would be, albeit greater than 
PO2a, still rather limited. 

5.3. MAIN IMPACTS OF POLICY OPTION 3: RECOMMENDATION OF A COMMON 

EUROPEAN SALES LAW153  

This  option  would  encourage  MS  to  incorporate  voluntarily  into  their  domestic  law  a  Common 
European Sales Law instrument as a 'second regime'. This second regime would not replace existing 
legal  traditions,  but  sit  alongside  a  relevant  specific  national  regime.  The  rules  of  the  Common 
European Sales Law could be voluntarily chosen by the parties as the law applicable to their cross-
border contracts. Therefore businesses would have the choice to continue to use their national law in 
their cross border transactions or to use the Common European Sales Law.  

This  option  would  only  be  effective  if  the  Common  European  Sales  Law  was  incorporated  by  a 
number  of  MS  entirely  and  without  amendment  to  the  original  version  attached  to  the 
Recommendation. If this occurred,154 the transaction costs for cross border trade would be reduced, 
there would be more trade and competitiveness in the internal market and consumers would benefit 
by  having  an  increase  in  choice  of  products  at  a  lower  price  as  well  as  an  increased  level  of 
consumer protection when they buy abroad using the Common European Sales Law.  

152 This analysis is only applicable to those options which describe the impacts of a legal instrument. 

153 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concerning the scope of application and the material 

scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 

154 In order to estimate the impacts of PO3 assumptions on the number of exporting companies taking up the optional Common European Sales Law have been made. EB 

320 and 321 show that 70% of businesses would be likely to use a new European contract law instrument.  Businesses would however need to agree this choice with their 

business partners. Therefore the more conservative assumptions i.e. 25% and 50% of companies using the European contract law are applied  throughout in the report. This 

allows demonstrating a range of possible economic impacts. 

32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
However, it is highly unlikely that this option would be incorporated entirely or without amendment. 
This would not greatly affect traders performing a B2B contract (as they would have the freedom to 
decide  on  the  law  applicable  to  their  contract)  and  therefore,  these  traders  would  have  the 
opportunity to reduce their transaction costs by using the Common European Sales Law of one MS 
which  has  best  implemented  it.  The  same  would  not  be  the  case  for  traders  performing  B2C 
contracts, as they would have to research whether and where MS have changed the drafting of the 
Common European Sales Law with regards to mandatory consumer protection rules.  

This means that businesses would not be able to sell across borders to consumers on the basis of one 
single law and would therefore incur transaction costs of the type indicated in the BS. Consequently 
this option would only to a limited extent remove the hindrances to cross-border trade identified in 
the  problem  definition.  The  voluntary  nature  of  the  incorporation  would  mean  that  the  instrument 
would  not  be  legally  binding  and  there  would  be  no  jurisprudence  mechanism  to  ensure  its 
coherence. 

Overall,  because  of  the  piecemeal  way  in  which  the  Common  European  Sales  Law  could  be 
incorporated,  if  at  all,  this  option  would  further  complicate  the  regulatory  environment  for  both 
consumers and businesses as both parties in B2C contracts would be subject to differing degrees of 
the  Common  European  Sales  Law  in  different  MS  and  the  divergences  in  national  contract  laws 
would  remain.    Many  respondents  to  the  Green  Paper  consultation  (business  groups,  consumer 
organisations  and  legal  practitioners  rejected  this  option).  Because  this  option  would  add  to  the 
issues set out in the problem definition it is highly unlikely to be suitable as a solution, and therefore 
is only summarised here. The full text of the analysis of this option can be found in Annex V.   

5.4. MAIN  IMPACTS  OF  POLICY  OPTION  4:  REGULATION/DIRECTIVE  SETTING 

UP AN OPTIONAL COMMON EUROPEAN SALES LAW155 

An optional Common European Sales Law would insert a set of clear and practical rules into each of 
the  different  national  laws  of  a  MS  as  a  'second  regime'.  This  second  regime  would  not  replace 
existing legal traditions, but sit alongside a relevant specific national regime. These rules could be 
voluntarily  chosen  by  the  parties  as  the  law  applicable  to  their  cross-border  contracts.  Therefore 
businesses  would  have  the  choice  to  continue  to  use  their  national  law  in  their  cross-border 
transactions or to use the optional Common European Sales Law.  

Economic impacts 

Transaction  costs:  This  option  would  greatly  reduce  transaction  costs  because  it  would  allow 
businesses to use one set of rules for cross border trade irrespective of the number of countries they 
trade with. In practice, this means that businesses using the optional Common European Sales Law 
may  only  have  to  pay  one  transaction  cost  for  trade  with  multiple  MS.  For  example,  a  business 
exporting to between 1 and 26 MS may only have to pay on average €9,800 for B2B and €9,100 for 
B2C  (plus  €2,900  for  e-commerce  oriented  enterprises  selling  to  consumers  that  face  additional 
contract law related IT costs) (see BS).  

For businesses that already export and decide to expand their sales but decide not to use the optional 
Common European Sales Law, the transaction costs for exporting to 5 MS could amount to €49,100 
for B2B and €45,600 for B2C if the business applied the law of the country traded to in each case. A 
company applying the optional Common European Sales Law to the same contracts with all 5 MS 
would save €39,300 and €36,500 respectively. Transaction costs for exports to 10 MS using the law 
of the country traded to could amount to €98,300 for B2B and €91,100 for B2C. If the trader used 

155 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concerning the scope of application and the material 

scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 

33

 
 
 
 
 
 
 
 
 
                                                 
the  optional  Common  European  Sales  Law  the  costs  saved  would  be  €88,500  and  €82,000 
respectively.  

Assuming  that  initially  only  25%156  of  current  exporters  decide  to  use  the  optional  Common 
European  Sales  Law,  the  instant  one-off  implementation  costs  would  amount  to  €1.89  billion.157 
However a business stakeholder noted, the initial cost of the optional Common European Sales Law 
would be acceptable when compared to continuing potentially high transaction costs.158 The estimate of 
transaction  costs  does  not  include  the  potential  higher  compliance  costs  for  companies  in  some 
Member  States  where  the  level  of  consumer  protection  would  increase  (see  section  on  analysis  of 
provisions of instrument).  

These costs would however be outweighed on the one hand by costs savings for new exporters and 
on the other by potential savings for current exporters who would expand their cross-border sales to 
new countries. Using an assumption of 25% of new exporters using the optional Common European 
Sales Law and the current average level of exports, the annual savings159 for new exporters would be 
€150-400  million.160 In  addition, for the  current exporters  which declared an interest in expanding 
their  activity  cross-border  and  deciding  to  use  the  optional  Common  European  Sales  Law  to  start 
trading with additional EU countries, the potential saving would be between €3.7bn and €4.3 bn.161  

These  cost  savings  would  have  the  biggest  impact  upon  SMEs  (in  particular  on  micro  and  small 
companies) and this is where the optional Common European Sales Law would add the most value 
for such traders.  However the optional Common European Sales Law would also save costs (albeit 
on a relatively lesser scale)162 for big businesses who want to use the optional Common European 
Sales Law to trade with other big businesses.  

The  reduction  in  transaction  costs  would  also  facilitate  intra  EU  trade  by  removing  obstacles  for 
those  companies  which  currently  experience  difficulties  in  either  conducting  cross-border  trade  or 
transferring,  for  example,  property  by  way  of  cross  border  sales  and  would  therefore  facilitate  the 
exercise  of  these  rights  in  line  with  Articles  16  (Freedom  to  conduct  a  business)  and  17  (Right  to 
property) of the Charter on Fundamental Rights of the EU, respectively.163   

Administrative costs (included in the transaction costs): This option would require traders to provide 
consumers with information about the choice of using the optional Common European Sales Law. 
This  would  cost  a  business  approximately  €500.164  The  application  of  the  optional  Common 
European Sales Law would be voluntary and need only be used by contractual parties if it offered 
them a commercial advantage compared to the BS. This is one of the instances where the optional 

156 EB 320 and 321 show that 70% of businesses would be likely to use a European contract law for cross border  sales. 38% of all the companies surveyed would prefer to 

use a single European contract law as an alternative to their national law. To use the European contract law, businesses would need to agree its choice as the applicable law 

with their business partners. Assuming that some business partners would not wish to use the European contract law, a more conservative assumption i.e. 25% of companies 

using the European contract law is applied throughout the report. 

157 25% of current exporters in B2B and B2C multiplied by the respective costs-see Annex III. 

158 ESBA response to the Green Paper consultation, p. 2. 

159 Number of new exporters annually multiplied by the average saving – see Annex III. 

160 In a longer term, these annual savings could be discounted to €3.9-€10 bn and the net benefit for the EU economy would be €2-€8.11bn  (€3.9-€10 bn minus €1.89bn), 

See Annex III. 

161  Number of current exporters that decide to use the optional Common European Sales Law (25%) multiplied by the saving depending on the number of additional 

countries they would make cross-border sales to  i.e. costs if they were to expand their sales to new countries under the BS €5.6- €6.2 minus the one-off cost of €1.89 bn. See 

Annex III.  

162 The amount a big business spends to trade to the whole of the EU is 0.06% of their average annual turnover (see problem definition). 

163 See Annex VI.  

164 Explained further in Annex VII. 

34

 
 
 
 
 
 
 
                                                 
Common European Sales Law safeguards the principle of 'freedom of contract', which was a concern 
raised by business representatives in response to the Green Paper.  

Exporters could achieve cost savings if trading with more than 1 MS as they would be able to use 
one  set  of  information,  available  in  all  EU  languages,  If  a  business  used  the  optional  Common 
European  Sales  Law  the  administrative  costs  would  amount  to  (on  average)  for  B2C  contracts 
€3,000 and for B2B contracts €1,500. Compared to the BS, if a company traded with 2 MS the cost 
saving per company would amount to €1,500 in B2B and €2,000 in B2C transactions. 165  

Competition  in  internal  market  and  impact  on  consumer  prices:  This  option  would  increase 
competition  in  the  internal  market  and  lead  to  a  decrease  in  prices.  For  competition  to  increase 
businesses  would  need  to  trade  more  (both  export  and  import).  For  B2C  contracts  40%166  of  the 
businesses surveyed said that if they were able to choose a single European contract law they would 
increase  their  cross  border  trade  in  the  internal  market.  For  those  performing  B2B  contracts,  this 
figure was 34%.167 These surveys have also indicated that 14% of those performing B2B contracts 
would  trade  with  6  or  more  additional  countries  if  they  were  able  to  choose  a  single  European 
contract law, 34% said they would trade with 3-5 new countries and 35% said they would trade with 
1–  2  new  countries.  For  those  performing  B2C  contracts  these  figures  were:  18%,  32%  and  32% 
respectively.  

An increase in cross border trade would therefore lead to a rise in imports, which would be likely to 
increase  the  competition  in  the  importing  MS.  To  be  able  to  compete  in  the  market,  businesses 
would be encouraged to either by improve the quality of their products or reduce prices. This would 
contribute  towards  the  Commission  policy  on  increasing  competitiveness168  and  would  be  of 
particular  relevance  in  B2B  transactions  which  include  the  manufacturing  industry.  Consumers 
would benefit from an increased choice of product at a lower price. Prices are expected to decrease 
around 0.04-0.07% if 25% of EU companies used the optional Common European Sales Law.169  

If non EU businesses could choose to  use the optional Common European  Sales  Law, they would 
have easier access to the internal market.  Consumers would again benefit from an increased choice 
of  product  at  a  lower  price  and  competition  for  businesses  would  be  stronger  as  they  would  be 
competing against non EU businesses as well as those in the internal market.  

Impact  on  GDP:  Overall  EU  GDP  is  expected  to  increase  by  €5-  €10  billion  (0.04-0.08%)  (see 
Annex IV).  

Impact on third countries: if third countries could choose the optional Common European Sales Law, 
they would benefit from an easier access at lower transaction costs to the whole EU market and may 
be  able  to  expand  exports  to  more  EU  countries.  If  they  could  not  use  the  optional  Common 
European  Sales  Law,  some  negative  impact  could  be  felt  as  trade  would  grow  more  between  EU 
countries at the expense of potential partners from third countries.  

Impact on consumer protection: This option would provide a high level of consumer protection (in 
line  with  Article  38  of  the  Charter  of  Fundamental  Rights  of  the  EU)170  by  increasing  consumer 
protection in certain areas which are currently harmonised at minimum level, by creating a high level 
of consumer protection in areas in which the Union has not previously acted by integrating the fully 

165 See Annex VII for more details on how these costs are calculated. 

166 EB 321, p. 36. 

167 EB 320, p. 33. 

168 'An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage,' COM (2010) 614. 

169 See Annex IV. 

170 See Annex VI. 

35

 
 
 
 
 
 
 
 
 
 
 
                                                 
harmonised provisions of the CRD and by taking the other minimum harmonisation provisions of the 
acquis as a benchmark.  

The  optional  Common  European  Sales  Law  would  strengthen  rights  on  some  points  of  particular 
concern  to  consumers  compared  to  the  existing  or  to  be  transposed  acquis.  For  instance,  the 
consumer  could  choose  the  type  of  remedy  if  the  goods  did  not  conform  to  the  contract;  these 
remedies would also be available to consumers who bought digital content products which also did 
not conform to the contract. These and other consumer protection provisions would give consumers 
confidence that they would have a very high level of consumer protection whenever they used the 
optional Common European Sales Law. 

To  strengthen  certainty  about  their  rights  and  thereby  consumer  confidence,  businesses  would 
provide consumers with a standardised information notice whenever the optional Common European 
Sales  Law  was  chosen  for  use.  This  information  notice  would  explain  that  a  Common  European 
Sales Law applied and would set out information about the key rights consumers would enjoy under 
the  optional  Common  European  Sales  Law.  The  provision  of  this  information  responds  to  some 
concerns  (i.e.  increase  of  the  legal  complexity,  inability  for  the  consumer  to  make  an  informed 
choice  for  the  application  of  the  optional  Common  European  Sales  Law)  raised  by  consumer  and 
legal  practitioner  representatives  in  their  responses  to  the  Green  Paper.  Within  this  setting  the 
optional Common European Sales Law could encourage more consumers to shop across-border, as 
they would have the same rights at a high level of protection everywhere in the EU, whenever the 
optional  Common  European  Sales  Law  would  apply.  Moreover,  the  information  notice  would  be 
beneficial for the large percentage of consumers who do not always read terms and conditions, as it 
would present their key rights in a concise and prominent way before they agree to the contract.171 If 
this  information  is  not  provided  to  the  consumer,  then  the  consumer  would  have  the  right  to 
terminate the contract without bearing any costs. In addition, the agreement would only be valid if 
the  consumer  consented  -  in  a  separate  statement  -  to  using  the  optional  Common  European  Sales 
Law.  A  business  would  therefore  not  be  allowed  to  include  the  choice  of  the  optional  Common 
European Sales Law as only a term in its standard terms and conditions. 

The  optional  Common  European  Sales  Law  could  become  a  'trust  mark'  for  consumers:  once  they 
have become familiar with their rights under the optional Common European Sales Law, they would 
become  more  certain  and  therefore  confident  in  purchasing  products  across  the  EU  under  the 
optional  Common  European  Sales  Law's  uniform  rules.  Additionally,  the  optional  Common 
European Sales Law could be of an advantage to the economic interests of consumers, as they could 
gain access to more and better offers at a cheaper price, which would not have been made available 
by foreign businesses if the optional Common European Sales Law had not existed. 

Thus, the information notice and the explicit separate statement of consent the consumer will have to 
provide  would  also  eliminate  the  fears  of  several  MS  and  consumer  associations  who  have  some 
concerns  about  the  optional  Common  European  Sales  Law,  as  they  think  businesses  could  take 
advantage  of  the  weaker  position  of  the  consumers,  as  the  latter  would  not  be  fully  able  to 
understand the consequences of choosing an optional Common European Sales Law. 

Impact on SMEs: There would be a positive impact upon SMEs trading with more than 1 MS. Micro 
and small companies would benefit in particular as the cost savings of using the optional Common 
European Sales Law would be disproportionately high compared to the BS.  

171 According to data from EB 342, p. 122-125, most consumers either do not read the terms and conditions (27%) or do not read them carefully and completely (30%). 

According to Allen and Overy, Online consumer research, 2011: 52% of the consumers in the 6 largest EU MS never (5%) or only occasionally (47%) read the terms and 

conditions when purchasing online. 

36

 
 
 
 
 
 
 
 
 
                                                 
For B2C contracts, if the optional Common European Sales Law were chosen, it would be the only 
applicable  law in  the area covered by its scope. Therefore, the trader would have to consider only 
one  set  of  rules  –  those  of  the  optional  Common  European  Sales  Law.  It  would  no  longer  be 
necessary  to  consider  other  national  mandatory  provisions  as  they  would  normally  have  to  when 
concluding a contract with a consumer from another MS. Businesses would also not be required to 
provide individual explanations of the consequences of the use of the optional Common European 
Sales  Law  to  the  consumer,  as  the  information  notice  would  fulfil  this  purpose.  Businesses  could 
also  use  optional  Common  European  Sales  Law  as  a  mark  of  quality,  ensuring  the  high  level  of 
protection  consumers  would  enjoy  under  its  rules.  As  consumers  increasingly  use  the  optional 
Common  European  Sales  Law  and  become  more  certain  about  their  rights  and  more  confident  in 
cross  border  purchases,  they  could  seek  to  contract  with  it  more  and  more,  thereby  increasing  a 
businesses customer base.  

There  would  be  some  administrative  costs  where  provision  of  information  would  be  required.172 
However these costs would be unlikely to outweigh the cost savings, especially for those companies 
trading in multiple MS. For SMEs performing B2B contracts, the negotiation of an applicable law 
between similar sized companies are likely to become easier.173 

Impact on law firms: There would be a new demand for legal advice from new exporters, as well as 
from  existing  exporters  who  would  need  to  become  familiar  with  the  optional  Common  European 
Sales Law. This would create an opportunity for law firms to tap into the new market and expand 
their business on giving advice on contract law.  

In their responses to the Green Paper several practitioner representatives mentioned that there would 
be a cost for law firms to train and familiarise themselves with the optional Common European Sales 
Law,  as  with  all  new  legislation.  However  unlike  the  BS,  some  of  these  costs  would  be  relieved 
given that the optional Common European Sales Law would be user-friendly, clear and available in 
all official languages in the EU, and would therefore be more accessible. Moreover there would be 
public funding available for training on new EU legislation.174  

In  time,  there  could  be  a  chance  that  law  firms  could  advise  less,  which  would  mean  less  billable 
hours for them. However this would be mitigated by the increased flow of new businesses entering 
the 'cross-border-trade' market and the expansion of existing client advice to a wider range of cross-
border transactions covering all MS.  

The simultaneous application of the optional Common European Sales Law by national courts would 
allow case law to build up quickly. The uniform application would be ensured firstly by the ultimate 
interpretation of the optional Common European Sales Law through the ECJ. A database, accessible 
to  judges  and  legal  practitioners  and  containing  translated  summaries  of  national  rulings  applying 
optional  Common  European  Sales  Law  provisions  would  ensure  transparency  and  de-facto 
convergence of relevant case-law.  This would alleviate concerns related to legal certainty raised by 
some Green Paper respondents.  

172 See Annex VIII. 

173 In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important obstacle to cross border trade. In response to a similar 

question in the EB 320 (p.16) 25% of respondents said that difficulties on agreeing on the foreign applicable contract law had an impact on their decision to trade cross-

border. However, as the sample in the EB also included large companies, the results of the SME Panel survey are more relevant for the SME test.  

174 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser extent) to train on EU new legislation. The 

cost per trainee was about €1,400. The Commission will continue to finance training and will publish a Communication on this topic by the end of 2011 in which the training 

on a Common European Sales Law instrument will be mentioned as a priority. 

37

 
 
 
 
 
 
 
 
 
                                                 
Legal  stakeholders  were  mostly  positive  towards  this  option.  Some  stakeholders  from  the  UK 
expressed views175 that this option would make the UK, and in particular London, a less attractive 
place  for,  in  particular,  large  companies  (who  are  advised  to  use  common  law  as  their  preferred 
choice  of  law  for  international  transactions)  to  obtain  legal  advice  from  English  law  firms.  These 
stakeholders  maintain  that  as  a  result,  the  expenses  for  legal  advice176  made  by  these  businesses 
would be lost to the UK as companies would obtain legal advice in the US. While these submissions 
are relevant for PO5/6, they do not really apply to PO4.  

An  optional  Common  European  Sales  Law  would  not  replace  national  laws.  It  would  become  a 
second regime existing alongside domestic legislation, which could be chosen as an alternative to the 
national law, only when businesses see fit. Since English law is chosen by companies because of its 
specificities, compared to other legal systems it is unlikely that companies which already choose it 
for these reasons would cease to do so.  

Thus  companies  could  continue  to  use  common  law  and  the  services  of  English  law  firms  if  they 
choose to do so. In this context it is important to note that the number of EU exporting companies 
using the law of a 3rd country (for instance English law or Swiss law) is at any rate only 0.6% of EU 
exporters.177 SME from non Common law practising countries would not be likely to apply Common 
law to their contracts (e.g. a Swedish SME trading with an Italian SME would be more likely to use 
Swedish or Italian law). However a UK based SME trading with a non-Common law country would 
still have the choice to use common law. 

Public  authorities:  There  would  be  a  cost  concerning  a  data-base  which  would  be  created  and 
maintained by the Commission. This database would contain summaries of rulings of the application 
of the optional Common European Sales Law provisions (as submitted by national courts). This cost 
would fall upon the Commission and would be broken down as follows: 

- one-off approximately €100,000178 for creating the website and database; 
- annually approximately €100,000179 for maintaining the website and database; 
- €160.56 for summarising a ruling submitted by a MS' court (assuming that it will take 4 hours to 
read and summarise one ruling and a documentalist is paid €321.12180 a day), and  
-  €117  for  the  translation  of  a  summary  into  English,  French  and  German  (assuming  that  each 
summary will be one page and the translation cost will be €39181 per page).  

MS:  The  national  laws  of  MS  would  not  be  affected.  However,  MS  would  bear  the  costs  which 
would  accompany  the  implementation  of  EU  legislation  (such  as  consultation  of  stakeholders, 

175 Law Society of England and Wales Response to the Green Paper, p.17 – 20; Bar Council of England and Wales response to the Green Paper p.20 and p.21; COMBAR 

response to the Green Paper p.3; City of London Law Society response to the Green Paper on contract law p. 2. 

176 According to the Bar Council of England and Wales Response to Green Paper p.20 and p.21  "Currently the annual fee income of the 100 largest law firms is 

approaching £15bn, with over half of that revenue being generated by London – based law firms." According to the Law Society of England and Wales Response to the 

Green Paper  p.18. "The City Business series Report on Legal Services in 2007 valued the contribution of legal services to the UK economy at £14.9bn in 2004". However it 

would need to be noted that the income mentioned above seems to refer to the contributions of all legal services, not just on contract law. Therefore income solely due to the 

areas of contract law as defined under section 4.2.3. of the IA report in a cross border scenario would be a relatively small percentage of this overall income. 

177 EB 320, p. 57. 

178 In 2002 a database (JURE data-base) was created for summaries of judgements concerning the Brussels I Regulation no 44/2001 of 22 December 2000 on jurisdiction 

and the recognition and enforcement of judgements in civil and commercial matters, the Brussels II Regulation no 1347/2000 of 29 May 2000 on jurisdiction and the 

recognition and enforcement of judgements in matrimonial matters and in matters of parental responsibility for children of both spouses, the new Brussels II Regulation no 

2201/2003 of 27 November 2003 on jurisdiction and the recognition and enforcement of judgements in matrimonial matters and in matters of parental responsibility for 

children of both spouses, repealing Regulation no 1347/2000 and the Convention of 16 September 1988 on jurisdiction and the enforcement of judgements in civil and 

commercial matters (Lugano Convention). The creation of this database cost at that time less than €80,000. 

179 In the past four years the maintenance of the JURE data-base has cost on average €117,500. As the new data-base will likely be linked with the system of an existing 

data-base – e.g. the data-bases on the e-justice portal – the cost will assumable be lower. 

180 Annex 1 of amendment №4 to Framework contract no JLS/2008/A5/01/lot 21 "Websites, web content management systems and other computer services". 

181 Price list in the Framework contract no JLS/2008/A5/01/lot 21 "Websites, web content management systems and other computer services". 

38

 
 
 
 
 
 
 
 
 
                                                 
printing  of  new  legislation,  educating  the  public  about  the  new  law,  time  and  cost  of  legislative 
process, etc.) 

Judiciary: As raised in the Green Paper consultation, there would be a need for some initial training 
for judiciaries to familiarise themselves with a new system. However this cost would be mitigated by 
public funding available for training on the new EU legislation.182  All legal practitioners across the 
EU  would  have  access  to  a  database  containing  summaries  of  rulings  on  the  application  of  the 
optional  Common  European  Sales  Law.  This  would  allow  them  to  view  the  application  of  the 
optional Common European Sales Law and ensure the consistency of its application. The use of this 
option, i.e. a single body of rules, would remove the necessity for judges to investigate foreign law 
and  compare  several  laws  decreasing  litigation  costs  compared  to  the  BS.  In  the  longer  term,  this 
would alleviate the administrative load on a MS judicial system. Moreover, the database would also 
reduce the risk of a different application and interpretation of the optional Common European Sales 
Law mentioned by several respondents to the Green Paper.   

European  Court  of  Justice  (ECJ):  In  the  first  instance  national  courts  would  rule  upon  cases  and 
submit summaries which would be entered into the Commission created database. These summaries 
are likely to lead to a de facto convergence of rulings by national courts which national judges would 
be able to access when needing to refer to how provisions of the optional Common European Sales 
Law have been ruled upon. There may be a limited number of cases which may need to be referred 
to  the  ECJ,183  which  would  increase  the  caseload.  There  would  be  a  financial  cost  of  referral  of  a 
case which would need to be borne by the parties to the trial. 

Analysis of provisions of instrument:  
The  tables  below  present  some  key  proposed  consumer  and  SME  protection  provisions184.  They 
analyse their impact on the level of protection in a representative sample of MS. They also reflect the 
related potential additional compliance costs for businesses as well as their likely impact on the take-
up of the optional Common European Sales Law.   

CONSUMER PROTECTION PROVISIONS 
Provision 

Compliance costs for businesses 

for 
Remedies 
breach 
of 
information  duty 
doorstep/off-
in 
premises 
and 
distance contracts 

to 

ensure 

Duty 
information 
supplied is correct 

Mistake  

on 

Impact 
consumer 
protection 
+  
BE,NL,LU,  HU, 
UK 
= 
DE,  EE,  FI,  ES, 
FR,  IT,  PL,  PT, 
RO 

++ 
PL, FI 
+  
IT,  LU, 
BE,ES, 
PT,  UK  (mostly 
for remedies) 
= 
EE 
++ 
FI, IT, RO, UK 
+ 

No direct compliance costs. 

Any  additional  costs  would  relate  to  any 
potential  claims  for  damages  for  traders 
who do not fulfil their obligations in NL, 
BE, HU, LU, UK 

the 

to  ensure 

Businesses  might  face  some  additional 
costs 
information 
that 
supplied  is  correct  and  not  misleading; 
these costs are considered as minor as the 
required  standard  would  correspond  to 
normal business practices. 

Some  businesses  might  face  a  minor 
result  of 
increase  of  costs  as 
the 
strengthened 

concerning 

rules 

the 

Impact  on  take-up  of  optional  Common 
European Sales Law 

= 
In  most  MS, 
the  general  provisions 
regarding  the  rights  to  damages  currently 
already  apply.    The  Common  European 
Sales Law would confirm or further clarify 
these  obligations  but  not  create  any 
additional obligations that could impact on 
the 
the  optional  Common 
take-up  of 
European Sales Law. 
= 
Ensuring  that  the  information  supplied  is 
correct  is  normal  business  practice  and 
does  therefore  not  create  any  burden  that 
could impact on the take-up of the optional 
Common European Sales Law. 

= 
Any  potential  costs  would  impact  on  the 
in 
small  number  of 

traders  who  act 

182 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser extent) to train on EU new legislation. The 

cost per trainee was about €1,400. The Commission will continue to finance training and will publish a Communication on this topic by the end of 2011 in which the training 

on an European contract law instrument will be mentioned as a priority. 

183 This increase of caseload would form a minor part of the ongoing overall institutional and budgetary discussion of the of the resources and responsibilities of the ECJ. 

184 See more detailed analysis in Annex VIII. 

39

 
 
 
 
 
 
 
 
 
                                                 
Fraud 

FR, PL, PT 
= 
AT,  EE,  ES,  HU, 
LU, NL 
- 
DE 
+ 
NL, PL, UK 
= 
AT,  BE,    EE,  ES, 
FR,  HU,  IT,  LU, 
PT, RO 
- 
DE 

situations  in  which  a  contract  might  be 
avoided  in  UK,  PT,  IT,  PL,  FR,  FI,  RO. 
These  costs  are  considered  as  minor  as 
pointing  out  a  mistake  is  fair  business 
practice. 

No  additional  costs  for  businesses  as  in 
most  MS  the  current  rules  provide  for 
avoidance  of  a  contract  for  fraud.  Any 
potential costs would only arise for rogue 
businesses which use fraudulent practises 
possibly  in  countries  where  the  present 
rules are not so clear (e.g. UK, NL, PL). 

contrary  to  fair  trading  principles  and 
conclude  a  contract  not  pointing  out  a 
mistake. 

= 
The  provision  does  not  introduce  any  new 
obligations  but  rather  clarifies  the  existing 
law. 

Unfair exploitation  + 

BE, ES, UK 
= 
AT,  DE,  EE,  FI,  
FR,  HU,  IT,  LU, 
NL, PL, PT, RO 
++ 
DE,  EE,  ES,  FI, 
NL,  PL,  PT,  RO, 
UK 
+ 
AT 
= 
FR,  HU,  IT,  LU, 
MT 
+ 
 ES,  IT,  HU,  PL, 
UK 
= 
BE,EE, LU, PT 

+ 
BE,  DE,  ES,  FI, 
FR,  HU,  NL,  PL, 
PT, RO, UK 
= 
AT, IT, LU 
++ 
DE,  ES,  FI,  FR, 
HU,  IT,  NL,  PL, 
PT 
+ 
UK 
= 
EE 

+ 
BE,  EE,  ES,  HU, 
IT,  LU,  PL,  PT, 
UK 

= 
BE,  DE,  EE,  ES, 
FR,  HU,  IT,  MT, 
NL, PL. RO, UK 
= 
BE,  DE,  EE,  ES, 
HU,  NL  LU,  IT, 
PL, RO 
- 
FR, UK 
++ 
EE,  FI,  HU,  IT, 
MT,NL,PL,PT 
+ 

Interpretation 
favour 
consumers 

in 
of 

Terms  unfair  as 
sufficiently 
not 
drawn 
the 
to 
consumer's 
attention 

Merger clauses 

Method 
payment 

of 

Place of delivery 

Right  to  damages 
for 
non- 
performance 

of 
Length 
prescription period 

Period 
for 
notifying  the  seller 
of non-conformity 

No  additional  costs  for  businesses  as  in 
most MS the current rules provide for the 
same  level  of  consumer  protection.  Any 
increase of costs would affect only rogue 
traders. 

= 
The  provision  does  not  introduce  any  new 
obligations.  Any  costs  would  affect  only 
rogue traders. 

 Some  additional  costs  for  companies  in 
case  of  doubts  about  the  meaning  of  a 
contractual  term  which  has  not  been 
individually negotiated.  

- 
The  interpretation  most  favourable  to  the 
consumer  is  likely  to  be  more  costly  for 
businesses.  Businesses  would  however  be 
able  to  avoid  potential  costs  by  making 
sure that the contractual terms do not raise 
any doubts. 

Some additional costs for traders as  when 
supplying  the  terms  to  a  contract  they 
would be obliged to take reasonable steps 
to  draw  consumers'  attention  to  them, 
before  or  when 
the  contract  was 
concluded in ES, IT, HU, PL, UK. 
Some  additional  costs  for  businesses  to 
adjust their contracts in order to eliminate 
merger  clauses  in  BE,  DE,  ES,  FI,  FR, 
HU,NL, PL, PT, RO, UK 

- 
The  additional  costs  are  considered  as 
minor as the reasonable steps to inform the 
other  party  about  inserted  terms  would  in 
practice be relatively easy to implement. 

- 
Any potential costs are likely to be one-off 
and  only  affect  companies  which  use 
merger clauses in their contracts. 

 Any  potential  additional  compliance 
costs  would  only  affect  traders  which  do 
not  provide  information  on  the  accepted 
method of payments to consumers. In this 
case, they would be obliged to accept the 
usual and appropriate payment methods. 

= 
Businesses  would  be  able  to  avoid  any 
additional  compliance  costs  as  they  would 
have the possibility to indicate the accepted 
method payments to consumers. 

Additional  costs  for  distance  and  off-
premises  traders  to  deliver  the  goods  to 
consumers'  place  of  residence  in  most 
MS. 

No  additional  compliance  costs 
businesses. 

for 

the 

and 

proposed 

No  additional  costs  for  businesses  as  in 
practice  the  current  2-years  substantive 
period  which  applies  in  most  MS  at 
present 
2-year 
prescription  period  provide  for  a  similar 
level of consumer protection. 
The  compliance  costs  for  businesses 
could 
the  number  of 
consumers  now  legitimately  relying  on 
for 
lack  of  conformity  claims 
the 

increase  as 

= 
These  additional  costs  would  depend  on 
the delivery distance and would occur only 
where the place of delivery was not agreed 
between the parties.  
= 
No  additional  costs  as  in  most  MS  the 
current rules provide for the same level of 
consumer protection. 
= 
No  additional  compliance  costs  for 
companies  as  in  most  MS  the  current 
rules  provide  for  the  same  or  even  higher 
level of consumer protection. 

- 
The compliance costs in those MS where a 
2 month deadline for notification exists are 
likely  to  increase  only  marginally  as  the 

40

 
 
 
ES 
= 
FR, LU, RO, UK 

remedies  made  later  than  2  months  after 
the  consumers  discovered  the  lack  of 
conformity could slightly increase.  

Remedies  in  case 
of 
lack 
of 
conformity 

++ 
AT,  BE,  BG,  CY, 
CZ,  DE,  DK,  EE, 
ES,  FI,  HU,  IT, 
MT,  NL,  PL,  RO, 
SK, SE  
+ 
IE, LV, SI, UK 
= 
EL,  FR,  LU,  LT, 
PT  

The  compliance  costs  for  businesses 
would  increase  due  to  increased  requests 
from  consumers  to  rescind  the  contract 
and refund the price. In the case of refund 
after  termination  of  the  contract,  the  loss 
is  the  sale  price  (plus  returns  handling) 
minus  the  remaining  value  of  the  goods 
the  case  of 
returned.  The 
replacement 
the 
to  be 
is  considered 
production  cost  of  the  replacement  good 
concerned  (plus  returns  management) 
minus  the  remaining  value  of  the  goods 
returned.  

loss 

in 

DIGITAL CONTENT PRODUCTS 
'Cost-free' 
products 

+ 
DE,FR,  HU,IT, 
NL, PL 

Businesses  providing  'cost-free'  products 
would  have  additional  costs  as  at  present 
there  are  cases  of  defective  cost-free 
products.  

Sales  remedies  for 
content 
digital 
products 

+ 
DE,FR,  HU,IT, 
NL, PL 

Businesses  would  have  to  bear  some 
additional costs as  their  customers  would 
be  able  to  freely  choose  the  remedy  they 
prefer which is not the case in most MS at 
present. 

Conformity in long 
term contracts 

+ 
DE,FR,  HU,IT, 
NL, PL 

This  provision  does  not  involve  a  direct 
burden  and  cost  but  nevertheless  might 
imply  a  burden 
for  digital  content 
providers.  This  burden  would  stem  from 
the  increased  liability  of  digital  content 
providers which as a result could increase 
the cost of after-sales services. 

SME PROTECTION PROVISIONS 

Provision 

Duty 
to  disclose 
information  about 
goods and services 

Duty to ensure that 
information 
supplied is correct 

Impact on the level 
of protection 

+ 
BE,  ES,  FI,FR,  IT, 
NL, PL 
= 
EE, HU, PT, DE 

+ 
BE,  ES,  FI,  IT,PL, 
PT, UK 
= 
EE 

Compliance costs for businesses 

incur  some  minor 
Businesses  might 
administrative 
providing 
costs 
information  on  their  products.  It  could 
however,  be  expected 
similar 
information  is  already  provided  in  the 
usual course of business. 

that 

for 

Some additional costs may be incurred by 
information 
businesses 
materials 
the 
information supplied is correct and is not 
misleading.  In  the  case  of  breach  of  this 

to  adapt 
to  make 

the 
sure 

that 

risk  of  consumers  discovering  faults  and 
claiming redress after the previous deadline 
of  2  months  is  not  high,  considering  that 
most  faults  are  likely  to  occur  once  the 
consumer starts operating the product after 
buying it.   
-- 
SMEs  which  currently  rely  on  (multiple) 
repair can be more disadvantaged and may 
be  more  cautious  to  sell  abroad  using  the 
optional Common European Sales Law, as 
distance consumers might be more likely to 
ask  for  a  termination  of  the  contract 
resulting  in  a  refund  (not  accepting  the 
inconvenience of lengthy repairs or waiting 
for a replacement). 

- 
Providers  of  'cost-free'  products  might  be 
unwilling  to  use  the  optional  Common 
European  Sales  Law  due  to  increased 
compliance  costs.  On  the  other  hand  they 
could benefit as more consumers would be 
'cost-free' 
more  confident  to  download 
products  and  as  a  result 
they  would 
increase  their  profits  (e.g.  advertisements 
linked with cost- free products). 
- 
The  additional  compliance  costs  might 
deter  companies  selling  digital  content 
products from using the optional Common 
European  Sales  Law.  However, 
these 
potential additional costs could be offset by 
savings  due  to  expansion  of  cross-border 
trade  and  economies  of  scale  (digital 
content  products  can  easily  be  sold  on  the 
internet  irrespective  of  national  borders, 
therefore  the  expansion  of  cross-border 
trade  in  digital  products  is  likely  to  be 
higher than for tangible goods). 
- 
The 
increase  of  costs  for  after-sales 
services  might  have  a  negative  impact  on 
the 
the  optional  Common 
European  Sales  Law.  The  impact  is  not 
expected to be significant as in contrary to 
tangible products, repair or replacement of 
digital products are not so costly. 

take-up  of 

Impact  on  take-up  of  the  optional 
Common  European  Sales  Law  by 
SMEs 
+ 
In  general,  businesses  would  be  in  a 
better position to judge the characteristics 
of the products they purchase in advance 
of  concluding  a  deal.  This  information 
would enable them to select the products 
that mostly suit their needs. 
= 
Businesses  would  receive  complete  and 
correct  pre-contractual  information  that 
would  facilitate  the  business'  decision 
making  process.  The  potential  costs  for 

41

 
 
 
 
 
 
Unfair exploitation 

Unfairness  control 
of standard terms 

+ 
BE, ES, IT, PL, UK 
= 
EE, FI, PT 

+ 
BE,ES, FI, FR, HU, 
IT, PL,UK 
= 
NL, DE 

if 

Terms  which  are 
unfair 
not 
sufficiently  drawn 
to 
buyer's 
the 
attention 

right 

to 
Seller's 
cure 
for 
fundamental  non-
performance 

+ 
BE, DE, FI , IT, PL, 
PT,UK 
= 
ES, EE 
- 
HU 
+ 
BE, 
ES,HU,IT,PL,PT, 
UK 
= 
FI 

EE, 

duty  the  business  would  be  liable  for 
damages. 

Businesses  which  exploit 
the  other 
party’s  situation  by  taking  an  excessive 
benefit or unfair advantage would need to 
change  their  businesses  practices.  These 
costs  are  considered  as  minor  as  the 
required  standard  would  correspond  to 
normal business practice. 
Businesses  would  no  longer  be  reliant 
that  their  standard  terms  and  conditions 
(which  include  some  unfair  terms)  could 
be  enforced  and  might  be  faced  with 
some legal uncertainty. However the risk 
and  costs  are  considered  minor  as 
including terms which deviate from good 
commercial  practices  or  which  are  in 
contrary to good faith and fair dealing do 
not  correspond 
to  normal  business 
practices. 
Some  additional  costs  as  businesses 
supplying  the  terms  to  a  contract  would 
be  obliged  to  take  reasonable  steps  to 
draw  the  other  party’s  attention  to  them, 
the  contract  was 
before  or  when 
concluded.  

There could be some additional costs for 
buyers as the sellers would have the right 
to  cure  for  non-performance  whereas  at 
present  in  some  Member  States  a  buyer 
can  refuse  the  cure  and  opt  for  the 
recession of the contract. 

information 

compensating damages would only affect 
traders  providing  incorrect  or  incomplete 
to  other 
pre-contractual 
parties. 
+ 
SMEs would be particularly interested in 
taking up the optional Common European 
Sales  Law  as  they  are  often  the  weaker 
party and are more likely to fall victim of 
unfair exploitation. 

+ 
SMEs would be particularly interested in 
taking up the optional Common European 
Sales  Law,  as  they  usually  have  less 
market  power  to  oppose  unfair  terms  or 
legal  resources  to  identify  them  in  a 
contract. 

= 
Any  additional  costs  are  considered  as 
minor  as  the  reasonable  steps  to  inform 
the  other  party  about  inserted  terms 
would  correspond  to  normal  business 
practice. 

-/ + 
The  provision  would  be  beneficial  for 
sellers as they would have the opportunity 
to  cure  for  non-performance  and  thus 
avoid  additional  costs  if  a  buyer  opts  for 
the 
the  contract  and 
compensation  for  damages.  For  buyers, 
the  provision  might  have  a  negative 
impact  on  the  take-up  of  the  optional 
Common European Sales Law.  

recession  of 

Legend for table: Impact of substantive provisions 
++  positive impacts 
+  limited positive impacts 
= neutral, no impacts expected 

- -  negative impacts 
-  limited negative impacts 

While most of the provisions lead to an increase in the level of protection compared to the existing 
acquis and the national laws of a representative selection of MS, the analysis found that they strike a 
reasonable balance. Traders from those MS where the level of protection is overall lower, may face 
moderate  additional  compliance  costs.  For  some  provisions  such  as  remedies  in  cases  of  lack  of 
conformity  or interpretation in favour of  consumers,  the  additional  compliance costs might impact 
negatively  on  the  take-up  of  the  optional  Common European  Sales  Law  in  MS  where  the  level  of 
consumer  protection  is  lower.  However,  the  optional  Common  European  Sales  Law  would  be 
voluntary  and  companies  would  use  it  only  if  the  benefits  (e.g.  lower  transaction  costs)  outweigh 
possible higher compliance costs.  

Social impacts: Compared to the BS, this option would help to facilitate cross border trade and as a 
result  would  create  159,300-315,900  new  jobs  in  the  EU  if  25%  of  companies  used  the  optional 
Common European Sales Law.185 With regard to impacts on fundamental rights, this option would 
not lead to discrimination, as it would apply across the EU without any distinction on the basis of 
nationality, in line with Article 21(2) of the Charter of Fundamental Rights of the EU.  

185 See Annex IV. 

42

 
 
 
 
 
 
 
                                                 
Environmental  impacts:  This  would  be  dependent  upon  the  number  of  businesses  who  use  the 
optional Common European Sales Law, as an increase in use of transport for delivery would lead to 
an increase in CO2 and other vehicle emissions and would increase the cost to control pollution due 
to the binding EU rules. 

Simplification  potential:  For  businesses,  this  option  would  simplify  the  regulatory  environment, 
eliminating the need for research of different national laws as only one regulatory framework need 
be  used.  Consumer  representatives  voiced  the  concern  that  consumers  could  be  subject  to  a  new 
unfamiliar system.186 To aid the consumers' understanding of the optional Common European Sales 
Law,  a  standardised  information  notice  would  be  presented  to  them  alerting  them  of  the  use  and 
implications of an optional Common European Sales Law. 

Online  environment:  Compared  to  the  BS,  this  would  be  a  more  simple187  way  to  conclude  a 
contract  and  give  a  trader  cost  savings.  The  additional  transaction  costs  would  no  longer  apply: 
Businesses would not need to adapt their terms and conditions and IT platforms to take into account 
the  laws  of  all  Member  States  they  trade  with.  This  could  provide  an  incentive  to  businesses  to 
increase  their  online  cross  border  sales  (or  in  some  cases  to  commence  them).  If  there  were  an 
increase in the number of businesses who used this instrument to trade cross border, then compared 
to  the  BS,  this  option  would  help  towards  narrowing  the  gap  between  domestic  and  cross  border 
online sales. 

However,  an  instrument  dedicated  only  to  e-commerce  could  lead  to  increased  legal  complexity. 
Companies  using  distribution  channels  other  than  e-commerce  would  have  to  apply  different  legal 
rules depending on the distribution channel used. This would create a fragmentation of the market 
and distort competition. Furthermore, as mentioned by business representatives in their Green Paper 
consultation  responses,188  it  would  not  be  technologically  neutral  and  thus  may  generate  legal 
uncertainty should new forms of distance sales occur in addition to e-commerce, for instance mobile 
telephony  commerce.  A  scope  limited  to  cross-border  online  sales  only  could  however  also  create 
additional  legal  complexity  for  consumers  who  could  be  subject  to  different  rules  depending  on 
whether they make a purchase online, at a distance using another method (i.e. post or telephone) or 
face-to-face. 

Impact if this option is applied in a domestic and cross border contract as well as cross border 
only 

Domestic  and  cross  border:  An  optional  Common  European  Sales  Law  would  facilitate  the  legal 
environment for businesses which trade both cross-border and domestically, if they chose to operate 
under the optional Common European Sales Law for all contracts. On the one hand, if the optional 
Common European Sales Law also applied in a domestic context it would go beyond what would be 
necessary  to  resolve  the  problem  of  additional  transaction  costs  and  legal  complexity.  It  would 
therefore not be a proportionate solution to the problem. On the other hand, several respondents to 
the Green Paper favoured this scope.189 However as many respondents who favoured this scope, also 
favoured a cross border only scope. Therefore a more pragmatic solution may be to allow MS the 
choice  as  to  whether  they  would  also  like  the  optional  Common  European  Sales  Law  to  apply  in 
domestic contracts too. 

186 BEUC's response to the Green Paper, p. 15. 

187 Allen and Overy, Online Consumer Research, found that a relative majority of 46% of the surveyed consumers in the 6 largest MS would be more likely to buy online 

from another EU country if an EU-wide contract law was put in place. 

188 Eurochambres response to the Green Paper, p.3, European Small Business Alliance response to the Green Paper, p.4. 

189 Member States: EE, LT and NL.  Stakeholders (business): BIPAR, EMOTA, UPSI, Eurochambres, EFBS, ICAEW, UEL,  I.A.N.U.S., Allianz SE, Audi AG, LVMH, 

Nokia. Legal practitioners: CCBE, Bundesrechtsanwaltskammer, Scottish Law Commission,  Ordre des Barreaux Francophones et Germonophone de Belgique, Deutscher 

Richterbund, Scottish Law Commission, Law Society of Scotland,  Law Society of Ireland.   

43

 
 
 
 
 
 
 
                                                 
Cross border only: Traders could use one contract law (the optional Common European Sales Law) 
for  cross  border  trade  with  multiple  MS  (both  in  B2C  and  B2B  transactions).  Thus,  they  could 
reduce  transaction  costs  and  legal  complexity.  Businesses  could  continue  to  use  their  national 
contract laws for domestic trade, whilst at the same time they would also be able to export using the 
optional Common European Sales Law if they wish to do so. Therefore, business could save costs 
when  trading  cross  border  and  continue  to  enjoy  their  current  arrangements  under  domestic 
legislation. A cross border only scope is in accordance with the  principle of proportionality as the 
instrument does not go beyond what is necessary to achieve the objectives. Several respondents to 
the  Green  Paper,190  who  commented  on  this,  favoured  an  instrument  which  was  limited  to  cross 
border contracts (in some cases as a first step).  

Overall assessment: This option would not replace existing domestic regimes, but complement the 
national law of MS, as it would be inserted into their national laws as an optional set of contract law 
rules which could be used for trading across borders. It need only be chosen by parties voluntarily 
only when it suits their interests.  

The main advantage of this option is that it would eliminate the transaction costs which are incurred 
by  businesses  when  trading  with  more  than  one  MS.  On  a  relative  scale  in  comparison  to  annual 
turnover, this advantage would benefit trade for businesses performing B2C contracts and those B2B 
contracts which are between SMEs.  As it would also offer cost savings to large businesses which 
contract with other large businesses, this combination for the application of the scope of the optional 
Common European Sales Law should not be ruled out.  It could be left to MS to decide upon. The 
decrease in costs would provide incentives to increase trade which would result in more competition 
in  the  internal  market.    The  increase  in  trade  and  competition  would  benefit  consumers  by  giving 
them more product choice at a lower price.  

There  could  be  some  administrative  costs  which  arise  from  the  need  for  businesses  to  provide 
information to consumers not previously required. These costs are however by far outweighed by the 
savings and the potential savings which are made from not paying the additional transaction costs for 
when  a  business  trades  with  more  than  1  MS.  This  option  would  create  opportunities  for  legal 
practitioners to cater for new clients as law firms would experience an increase in demand by those 
expanding  their  cross-border  trade  and  existing  exporters  wishing  to  use  the  optional  Common 
European Sales Law.  

Overall, this policy option meets the policy objectives as it reduces costs for businesses and offers a 
less complex legal environment for those who wish to trade cross border to more than one MS and at 
the  same  time  it  provides  a  high  level  of  consumer  protection,  whilst  simplifying  the  regulatory 
environment.   

5.5. MAIN IMPACTS OF POLICY OPTION 5a AND 6191 

5.5.1.  Policy Option 5a: Directive on a mandatory Common European Sales Law (full 
harmonisation)  and  Policy  Option  6:  Regulation  establishing  a  mandatory 
Common European Sales Law 

190 Member States: AT, BG, EL, FI,  DE, PL. Stakeholders (business): AMICE, FEDSA, APCMA, BdB, EuroCommerce, FAEP, CCIP, Bundesverband der Deutschen 

Industrie. Legal practitioners: CLLS, CNUE, Bundesnotarkammer, Österreichische Notariatskammer, DBF,  Association of Spanish Property and Commercial Registrars, 

ELRA, UNCC. Stakeholders (consumer): VZBV, Belgian Consumer Organisation.  

191 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concerning the scope of application and the material 

scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 

44

 
 
 
 
 
 
 
 
 
 
 
                                                 
The  end  result  of  a  full  harmonisation  Directive  (once  it  has  been  implemented)  and  a  Regulation 
replacing  national  laws  would  be  very  close  in  their  outcome  (although  not  exactly  the  same); 
therefore both these options are assessed together.192 The instrument would allow businesses to use 
one set of rules in B2B and B2C contracts for both domestic and cross border trade193 irrespective of 
the number of countries they trade with in the EU. It would also remove the necessity for businesses 
to investigate, compare and possibly adapt to several foreign laws.  

Transaction  costs:  The  instrument  would  considerably  increase  costs  as  it  would  also  affect 
companies  which  do  not  wish  to  trade  cross  border.  Companies  that  trade  only  domestically 
(17,136,213 in B2B and 4,420,563 in B2C) would face a one off instant cost of implementation of 
€208.8 billion194 to use the new legislation. They would be required to pay these costs with no real 
financial gain, as the advantages would only be realised for those companies trading across a border.   

All current exporters would face a one-off cost of implementation of €8.18 billion in order to use the 
new law.195 The estimate of transaction costs do not include the potential higher compliance costs for 
companies  in  some  Member  States  where  the  level  of  consumer  protection  would  increase.  There 
would not be an additional cost if a business were to export to more than 1 MS.     

For example, the cost for a micro retailer to enter the whole of the EU market would be on average 
only 6.5% of its turnover196 which would be the same as it would have cost to trade with only 1 MS 
in the BS. This option would result in costs savings for new exporters and for current exporters who 
would expand their cross-border sales to new countries. The annual savings for new exporters would 
be between €0.63-1.6 bn.197 In addition, similarly as under option 4 the current exporters that would 
start trading with  additional  countries would save at least between €3.7 billion and €4.3 billion.198 
The potential benefits of this option would however not outweigh the initial one-off adaptation cost 
even over a longer time span. 

The  reduction  in  transaction  costs  would  also  facilitate  intra-EU  trade  by  removing  obstacles  for 
those  companies  which  currently  experience  difficulties  in  either  conducting  cross-border  trade  or 
transferring,  for  example,  property  by  way  of  cross  border  sales  and  would  therefore  facilitate  the 
exercise  of  these  rights  in  line  with  Articles  16  (Freedom  to  conduct  a  business)  and  17  (Right  to 
property) of the Charter on Fundamental Rights of the EU, respectively.199   

Administrative costs (these are included in the transaction costs above): The instrument would create 
an additional cost for 22 million companies (including for those who trade only domestically) in the 
EU  with  an  average  one-off  cost  per  company  amounting  to  €2,500  for  those  performing  a  B2C 
contract and €1,500 for those performing a B2B contract. Compared to the BS, to trade with 2 MS 
the cost saving per company would amount to €1,500.200  

Competition  in  internal  market  and  impact  on  consumer  prices  (B2B  and  B2C):  The  instrument 
would increase competition in the internal market and lead to a decrease in prices. For B2C contracts 
40%201  of  the  above  mentioned  businesses  surveyed  said  that  if  they  were  able  to  choose  a  single 

192 For simplicity the Directive and Regulation are referred to collectively as the 'instrument'. 

193 Article 16 of the Charter of Fundamental Rights of the EU. See Annex IV. 

194 Businesses who trade only domestically, multiplied by the relative individual one off costs for B2B and B2C.  

195 All exporters in B2B and B2C multiplied by the respective costs. Per business this would be €9,100 for B2C (plus €2,900 for e-commerce oriented enterprises selling to 

consumers that face additional contract law related IT costs) and €9,800 for B2B as in the BS. 

196 See section 2.3.2 on problem definition. 

197 Number of new exporters annually multiplied by the average saving – see Annex III.  

198 -See Annex III. 

199 See Annex VI.  

200 See Annex VII for more details.  

201 EB 321, p. 36. 

45

 
 
 
 
 
 
 
 
 
 
                                                 
European contract law they would increase their cross border trade in the internal market. For those 
performing  B2B  contracts,  this  figure  was  34%.202  These  surveys  have  also  indicated  that  14%  of 
those performing B2B contracts would trade with 6 or more additional countries if they were able to 
choose a single European contract law, 34% said they would trade with 3-5 new countries and 35% 
said  they  would  trade  with  1–  2  new  countries.  For  those  performing  B2C  contracts  these  figures 
were: 18%, 32% and 32% respectively.  

An increase in cross border trade would lead to a rise in imports, which would be likely to increase 
the competition in the importing MS. The higher competition would encourage businesses to become 
more  innovative  and  improve  the  quality  of  their  products  or  to  reduce  prices  in  order  to  stay 
competitive. This would contribute towards the Commission policy on increasing competitiveness203 
and would be of particular relevance in B2B transactions which include the manufacturing industry. 
Consumers would benefit from an increased choice of product at a lower price. The reduction for the 
average consumer price level would range between 0.14% - 0.28%.204 

Impact on GDP: Overall EU GDP is expected to increase by €20- €40 billion (0.17-0.33%).205 (See 
Annex IV).  

Impact  on  third  countries:  Third  countries  trading  with  the  EU  would  bear  some  one-off 
implementation  costs,  but  could  benefit  from  an  easier  access  to  the  EU  market  as  a  whole  in  the 
long term. Third countries may be able to expand exports to more EU countries.  

Impact on consumer protection:  The instrument would provide a high level of consumer protection 
(in line with Article 38 of the Charter of Fundamental Rights of the EU)206 and would also increase 
consumer  certainty  and  therefore  confidence,  as  consumers  would  have  the  same  rights  when 
shopping cross border.207However, it would also replace national laws and could lead to changes to 
the level of protection consumers in certain MS enjoy. While the consumer would benefit from an 
increase  in  the  protection  for  a  number  of  provisions,  some  consumers  could  lose  protection  in 
specific  cases  compared  to  their  existing  national  law  as  their  national  law  would  have  to  be 
changed.  

Impact  on  SMEs:  For  businesses  trading  cross  border,  this  impact  would  be  the  same  as  PO4.  
However  the  instrument would also place administrative  costs  on  domestic  businesses  who  do  not 
wish to trade cross border. This would have a particular impact upon micro and small enterprises and 
comparative to their turnover, would weigh more heavily (compared to the BS).  These SMEs would 
be required to pay these costs with no real financial gain, as this advantage would only be realised 
for those companies trading across a border. 

Impact  on  law  firms:  There  would  be  an  increase  in  the  demand  for  legal  services,  as  more 
businesses would need to understand how to use the instrument even for those advising on domestic 
transactions.  There  would  be  training  costs  for  law  firms  as  they  familiarise  themselves  with  the 
changes in their national law. The concerns highlighted by legal stakeholders in the UK in PO4 are 
most  relevant  here  as  the  contract  laws  among  MS  would  be  harmonised  and  comparative 
advantages  of  a  specific  law  like  common  law  as  a  popular  option  for  choice  of  law  would  be 
fundamentally diminished. 

202 EB 320, p. 33. 

203 'An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage,' COM (2010) 614. 

204 See Annex IV. 

205 See Annex IV. 

206 See Annex VI. 

207 Allen and Overy, Online Consumer Research, found that a relative majority of 46% of the surveyed consumers in the 6 largest MS would be more likely to buy online 

from another EU country if an EU-wide contract law was put in place.  

46

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Impact  on  Public  authorities:  MS:  The  national  laws  of  MS  would  be  affected  as  this  instrument 
would  require  a  complete  overhaul  of  the  domestic  legislation.  MS  would  bear  the  costs  which 
would  accompany  the  implementation  of  EU  legislation  (such  as  consultation  of  stakeholders, 
printing  of  new  legislation,  educating  the  public  about  the  new  law,  time  and  cost  of  legislative 
process, etc.) MS' governments are likely to find the instrument (to change domestic legislation for 
contract law in such a fundamental way) to be politically sensitive. In the Green Paper consultation, 
almost all MS responses to the Green Paper consultation rejected both options 5 and 6, stressing that 
to solve the problem of differences in contract laws, this type of instrument was not consistent with 
principle of subsidiarity or proportionality. 

Judiciary: The judiciary of MS would need to familiarise themselves with the new instrument, this 
would  mean  a  substantive  financial  cost  for  training.  A  single  body  of  rules  would  remove  the 
necessity  for  judges  to  investigate  foreign  law  and  compare  several  laws.  This  would  decrease 
litigation  costs  (compared  to  the  BS)  and  could  in  time  alleviate  the  administrative  load  on  a  MS 
judicial system.   

ECJ: In the first instance national courts would rule upon cases and submit summaries which would 
be  entered  into  the  Commission  created  database.  These  summaries  are  likely  to  lead  to  a  defacto 
convergence  of  rulings  by  national  courts  which  national  judges  would  be  able  to  access  when 
needing  to  refer  to  how  provisions  of  the  optional  Common  European  Sales  Law  have  been  ruled 
upon. There may be a limited number of cases which may need to be referred to the ECJ,208 which 
would increase the caseload. There would be a financial cost of referral of a case which would need 
to be borne by the parties to the trial. 

Analysis  of  provisions  of  instrument:  The  same  impacts  as  PO4  but  in  contrary  to  PO4,  the 
additional compliance costs would affect all 22 million EU companies.  

Social impacts: The instrument is expected to create between 650,000 and 1.3 million new jobs.209 
However this positive impact of job creation is likely to be counteracted by the costs incurred by all 
companies and may lead to some initial decrease in employment, which only at a later time would be 
compensated due to the positive effects on the economy stemming from the rise in intra-EU trade. 
With  regard  to  impacts  on  fundamental  rights,  this  option  would  not  lead  to  discrimination,  as  it 
would apply across the EU without  any distinction on the  basis of nationality, in line with Article 
21(2) of the Charter of Fundamental Rights of the EU.  

Environmental impacts: The instrument would have an adverse impact upon the environment as an 
increase in trade would increase the use of transport for delivery.  This would lead to an increase in 
CO2 and other vehicle emissions and would increase the cost to control pollution due to the binding 
EU rules. 

Simplification  potential:  Compared  to  the  BS,  this  instrument  would  simplify  the  regulatory 
environment as the differences between the contract laws of MS would be eliminated.   

Online environment: If the instrument applied to an online cross border and domestic environment 
only, it would give a trader cost savings as the additional transaction costs would no longer apply. 
Businesses would not need to adapt their terms and conditions and IT platforms to a great degree to 
trade  in  another  country.  This  could  provide  an  incentive  to  businesses  to  increase  or  commence 
online  cross  border  sales.  However,  legal  complexity  for  businesses  and  for  consumers  could 
increase  as  different  rules  would  apply  to  differing  distribution  channels.  This  would  not  be 

208 This increase of caseload would form a minor part of the ongoing overall institutional and budgetary discussion of the of the resources and responsibilities of the ECJ. 

209 GTAP model, see Annex IV. 

47

 
 
 
 
 
 
 
 
 
 
 
                                                 
technologically  neutral  and  could  distort  competition  if  new  forms  of  distance  sales  were  used  in 
addition to e-commerce.  

Impact  if  the  instrument  is  applied  cross  border  only:  Traders  could  use  one  contract  law  for 
cross  border  trade  with  multiple  MS  (both  in  B2C  and  B2B  transactions)  and  reduce  transaction 
costs. With a cross border scope only, the instrument would comply with the subsidiarity principle as 
the problem of additional transaction costs arises when businesses export.  

However, the instrument would not comply with the proportionality principle as it would go beyond 
what is necessary to solve the problem. The instrument would replace all national contract laws in 
relation to cross border contracts.  All exporting firms would have to use the instrument in their cross 
border  contracts  (rather  than  having  a  choice  to).  Those  firms  who  are  already  exporting  would 
mandatorily have to adapt their contracts to the new instrument – even if they have no desire to enter 
a new market - and incur once again the additional transaction costs. These transaction costs (€8.18 
billion  for  all  current  exporters)  above  would  apply  to  all  exporting  firms.  In  the  Green  Paper 
consultation, almost all MS responses to the Green Paper consultation rejected both options 5 and 6, 
stressing that to solve the problem of differences in contract  laws, this type of instrument was not 
consistent with principle of subsidiarity or proportionality. 

Overall assessment: Compared to the BS, the instrument would remove obstacles to  cross border 
trade in the internal market as the transaction costs for cross border trade would be diminished. The 
instrument would facilitate trade and could make it easier for businesses to expand across borders, as 
they would only need to use one set of rules. There would be an increase in the level of consumer 
protection  allowing  consumers  to  have  more  confidence  to  purchase  across  border  and  give  them 
increased  access  to  goods.  In  the  longer  term,  legal  practitioners  would  benefit  as  they  would 
experience an increase in demand by new clients who would need to understand the instrument for 
domestic  and  cross-border  contracts.  However,  it  is  likely  to  lead  to  a  loss  of  income  for  UK  law 
firms in the area of provision of legal advice on Common law to businesses if these companies chose 
to obtain legal advice in the United States.  

The instrument would have very substantial costs attached to it: Although the transaction costs for 
cross  border  trade  would  no  longer  exist,  businesses  which  only  trade  domestically  would  face  a 
very substantial cost to use the new instrument without an added value. A cross border only scope 
would not be a proportionate solution as businesses who do not want to use it would have to adapt 
their  contracts  and  incur  transaction  costs.  MS  would  be  likely  to  find  this  option  politically  very 
difficult  to  agree  and  to  implement  as  it  would  eliminate  domestic  laws  and  legal  traditions.    The 
majority of MS who responded to the Green Paper consultation rejected this option outright. Overall, 
although the instrument would harmonise existing contract law legislation and eliminate transaction 
costs,  it  would  create  other  substantive  costs  –  which  would  not  only  be  of  monetary  value. 
Therefore from a holistic perspective, taking all the costs (monetary or otherwise) into account, these 
costs outweigh by far the benefits of the instrument.  

5.5.2.  Main  Impacts  Of  Policy  Option  5b:  Directive  on  a    mandatory  Common 

European Sales Law (minimum harmonisation)210 

As this option is in the form of a minimum harmonisation Directive, MS could implement legislation 
beyond  the  consumer  protection  level  of  the  Directive.  As  experience  with  existing  minimum 
harmonisation Directives shows, the level of implementation could maintain a considerable number 
of differences in national contract laws.  

210 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concerning the scope of application and the material 

scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 

48

 
 
 
 
 
 
 
 
 
 
                                                 
 
This  option  would  to  a  certain  extent  reduce  transaction  costs  and  increase  the  level  of  consumer 
protection. However, as set out in PO 5a and 6, there would be a very substantial one-off cost borne 
by all traders (both domestic and cross border) as they would have to adapt their contracts to use the 
new law. This cost would affect all companies, irrespective of their desire to trade cross-border. In 
addition,  due  to  the  nature  of  minimum  harmonisation,  there  would  still  be  some  extra  costs  for 
businesses when trading cross border to consumers, these would arise from the necessity to research 
the  levels  of  consumer  protection  in  other  MS.  Therefore,  whilst  there  may  be  a  worthwhile 
investment for B2B cross border transactions, those performing B2C cross border contracts as well 
as trading only domestically would have to pay very substantial additional costs without a clear or 
even no added value. There would also be administrative costs which would arise from the need for 
businesses to comply with the Directive, these costs would affect all companies. Because this option 
would  add  to  the  issues  set  out  in  the  problem  definition  it  is  highly  unlikely  to  be  suitable  as  a 
solution, and therefore is only summarised here.  The full text of the analysis of this option can be 
found in Annex V.   

6. COMPARATIVE ASSESSMENT OF OPTIONS 

The  'comparison  of  policy  options'  table  below  provides  a  comparative  overview  of  the  policy 
options,  showing  the  extent  to  which  each  of  the  options  is  expected  to  contribute  to  the  policy 
objectives and their key impacts. These impacts are described below. 

Policy option 1 - Baseline Scenario 
This does not remove additional transaction costs for businesses trading cross-border, or reduce the 
level  of  legal  complexity  experienced  by  them.    This  option  would  also  mean  that  the  uncertainty 
consumers experience about their rights in a cross-border context would remain and the practice of 
refusal  to  sell  across  border  would  not  decrease.    Even  though  this  option  takes  account  of  full 
harmonisation  of  some  consumer  protection  rules  due  to  the  adoption  of  the  CRD,  this 
harmonisation is restricted to only a few selected areas of consumer contract law. Some key aspects 
of  consumer  contract  law,  such  as  sales  remedies,  would  remain  fragmented  across  the  EU.  This 
fragmentation would not give consumers the full confidence on all their consumer rights for when 
they purchase across border. As MS implement EU legislation and retain different national laws in 
the non harmonised areas for the whole life cycle of a contract, with no EU action these differences 
between MS would continue. 

Policy option 2a – Toolbox as a Commission document 
Compared to the BS this option may to a very small extent help to facilitate the expansion of cross-
border trade in the internal market. It may also to a small extent indirectly lead to an increased level 
of consumer protection in national contract laws. However, since the contract law related transaction 
costs  would  largely  remain  unchanged,  the  positive  impacts  of  this  option  on  businesses  and 
consumers would be minimal. In turn, so would any subsequent impacts upon trade, competition and 
the  internal  market.  Moreover,  any  impacts  of  this  option  would  not  be  felt  immediately  as 
negotiations  for  new  legislation  or  amendments  to  existing  legislation  would  take  time  to  achieve. 
As there is no way of knowing whether and how widely this option would be used and accepted by 
Council  and  EP,  the  impacts  of  this  option  would  not  differ  greatly  compared  to  the  BS  and  any 
impacts felt would be very small and would take place in the longer term. 

Policy option 2b – Toolbox as an inter institutional agreement 
As this option involves all three Institutions agreeing to make use of the toolbox, this option would, 
to a limited, but somewhat greater extent compared to PO2a, reduce the differences between national 
contract  laws  which  would  help  to  facilitate  the  expansion  of  cross-border  trade  in  the  internal 
market. This option could to a limited, but greater extent than PO2a indirectly lead to a higher level 
of consumer protection and legal certainty about consumer rights. However, since the toolbox would 
only be used for the amendment of existing or preparation of future sectoral legislation, contract law 

49

 
 
 
 
 
 
 
related costs stemming from differences of national contract laws would largely remain and in turn 
so would any subsequent impacts upon trade, competition and the internal market. Similar to PO2a, 
there  would  not  be  any  immediate  impacts  of  this  option  upon  businesses  and  consumers  as 
negotiations for new legislation or an amendment to existing legislation would take time to achieve.  
As this option would only concern national contract law rules which are modified following revised 
or new EU legislation and would only have an impact at the earliest at a medium term, the overall 
positive impacts of this option would be, albeit greater than PO2a, still rather limited. 

Policy option 3 – Recommendation 
This  option  would  only  be  effective  if  the  Common  European  Sales  Law  was  incorporated  by  a 
number  of  MS  entirely  and  without  amendment  to  the  original  version  attached  to  the 
Recommendation. Only if all the MS did this, would it achieve a result like PO4. However, for both 
alternatives – for the latter even more than the former - it is highly unlikely that this would occur.  
This would not greatly affect traders performing a B2B contract as they would have the freedom to 
decide on the law applicable to their contract. Therefore, these traders would have the opportunity to 
reduce their transaction costs by using the Common European Sales Law of one MS which has best 
implemented it. The same would not be the case for traders performing B2C contracts, as they would 
have to research whether and where MS have changed the drafting of the Common European Sales 
Law with regards to mandatory consumer protection rules. This means that businesses would not be 
able  to  sell  across  borders  to  consumers  on  the  basis  of  one  single  law  and  would  therefore  incur 
transaction costs of the type indicated in the BS. Consequently this option would only to a limited 
extent remove the hindrances to cross-border trade identified in the problem definition.  

Because of the piecemeal way in which the Common European Sales Law could be incorporated if 
at  all,  this  option  would  further  complicate  the  regulatory  environment  for  both  consumers  and 
businesses. Both parties would be subject to differing degrees of the Common European Sales Law 
in  different  MS  and  the  divergences  in  national  contract  laws  would  remain.  In  addition,  the 
voluntary nature of the incorporation would mean that the instrument would not be legally binding 
and there would be  no  jurisprudence  mechanism to ensure  its  uniform application.   As this option 
would  add  to  the  issues  set  out  in  the  problem  definition  it  is  highly  unlikely  to  be  suitable  as  a 
solution.   

Policy option 4 – Optional Common European Sales Law  
This option would not replace existing domestic regimes, but complement the national law of MS: It 
would  be  inserted  into  their  national  laws  as  an  optional  set  of  contract  law  rules  which  could  be 
used for trading across borders. It need only be chosen by parties voluntarily only when it suits their 
interests.  The  optional  Common  European  Sales  Law  would  very  considerably  reduce  the 
transaction  costs  for  businesses  and  offer  a  less  complex  legal  environment  for  those  who  wish  to 
trade cross border to more than one MS. The decrease in costs would provide incentives to increase 
trade  which  would  result  in  more  competition  in  the  internal  market.  The  increase  in  trade  and 
competition would benefit consumers by giving them more product choice at a lower price. It would 
increase  the  level  of  consumer  protection  thereby  increasing  confidence  to  shop  abroad  whilst 
simplifying the regulatory environment.  

This option would mainly be of benefit for businesses who perform B2C contracts and SMEs who 
perform B2B contracts as: 
 - For B2C contracts, the optional Common European Sales Law would be the only applicable law in 
the area covered by  its scope.  Therefore, for across  the  EU,  the  business  would  no  longer  have  to 
consider  other  national  mandatory  provisions  as  they  would  normally  have  to  when  concluding  a 
contract with a consumer from another MS. 
 -  For  B2B  contracts,  the  cost  savings  –  in  particular  for  micro  and  small  companies  -  would  be 
disproportionately  high.  In  addition,  for  SMEs,  the  negotiation  of  an  applicable  law  between  a 
similar sized company may not be so relevant. 

50

 
 
 
  
 
 
Cost savings may also be made for those large businesses that contract with other large business. To 
ensure all businesses have the opportunity to take full advantage of the optional Common European 
Sales Law, it may be opportune to allow MS to make the choice as to whether large businesses could 
use the optional Common European Sales Law to contract with other large businesses. 

This option does not replace existing domestic regimes and is therefore less politically sensitive. If it 
applied in a cross border only context it would be a proportionate solution to the problems identified; 
those businesses who wished to continue to use their national contract laws for domestic trade would 
be  free  to  do  so;  whilst  at  the  same  time  they  would  also  be  able  to  export  using  the  optional 
Common  European  Sales  Law.  However  this  option  would  also  further  facilitate  the  legal 
environment for businesses if it applied to both domestic and cross border contracts. As Green Paper 
respondents  were  mixed  in  their  responses  to  the  scope  of  the  optional  Common  European  Sales 
Law (domestic and cross border or cross border application only), a proportionate solution, could be 
to  allow  MS  the  choice  as  to  whether  they  would  also  like  the  optional  Common  European  Sales 
Law to apply in their domestic contracts too. 

Some  administrative  burdens  could  arise  from  the  need  for  businesses  to  provide  information  to 
consumers not previously required. However, they are by far outweighed by cost savings. Contrary 
to PO5a and 6 it would only affect those companies who choose to use the instrument and not all 
enterprises.  This  option  meets  the  policy  objectives  as  it  reduces  costs  for  businesses  and  offers  a 
less complex legal environment for those who wish to trade cross border to more than one MS. At 
the  same  time  it  provides  a  high  level  of  consumer  protection  and  reduces  uncertainty  about 
consumer rights in cross-border shopping , whilst simplifying the regulatory environment.   

Policy  option  5a  –  Full  harmonisation  Directive  and  policy  option  6  -  Regulation  establishing  a 
mandatory Common European Sales Law 
Compared to the BS, transaction costs for cross border trade would be diminished as there would be 
no differences in contract laws and no legal complexity. The instrument would facilitate trade and 
could make it easier for businesses to expand across borders, as they would only need to use one set 
of rules. Consumers would have more access to goods, be more certain of their rights and feel more 
confident to shop cross border.  

Compared to PO4 the instrument would however have substantial costs attached to it: Although the 
transaction  costs  for  cross  border  trade  would  no  longer  exist,  businesses  which  only  trade 
domestically would face a substantial cost to use the new instrument without an added value. The 
instrument  would  not  comply  with  the  proportionality  principle  as  it  would  go  beyond  what  is 
necessary  to  solve  the  problem.  The  instrument  would  replace  the  national  contract  law  both  in 
relation to domestic and/or cross border contracts.  All domestic firms and/or those who are already 
exporting would mandatorily have to adapt their contracts to the new instrument – even if they have 
no desire to enter a new market.  This would mean they would incur the additional transaction costs 
once again.  

MS would be likely to find this option politically very difficult to agree and to implement as it would 
eliminate domestic laws and legal traditions.  The majority of MS who responded to the Green Paper 
consultation  rejected  both  options  5  and  6,  stressing  that  to  solve  the  problem  of  differences  in 
contract  laws,  this  type  of  instrument  was  not  consistent  with  the  principles  of  subsidiarity  and 
proportionality. Overall, although the instrument would harmonise existing contract law legislation 
and  eliminate  transaction  costs,  it  would  create  compared  to  PO4  -  other  substantive  costs  which 
would  not  only  be  of  monetary  value.  Therefore  from  a  holistic  perspective,  taking  all  the  costs 
(monetary or otherwise) into account these cost outweigh by far the benefits of the instrument. 

51

 
 
 
 
 
 
 
 
 
Policy option 5b – Minimum harmonisation Directive establishing a mandatory Common European 
Sales Law 
Compared to the BS, this option would to a certain extent reduce transaction costs and increase the 
level  of  consumer  protection.  However,  as  set  out  in  options  5a  and  6,  there  would  be  a  very 
substantial one off cost borne by all traders (both domestic and cross border) as they would have to 
adapt their contracts to use the new law. This cost would affect all companies, irrespective of their 
desire to trade cross-border. In addition, due to the nature of minimum harmonisation, there would 
still be some extra costs for businesses when trading cross border to consumers, these would arise 
from the necessity to research the levels of consumer protection in other MS.  

Therefore,  whilst  there  may  be  a  worthwhile  investment  for  B2B  cross  border  transactions,  those 
performing B2C cross border contracts as well as trading only domestically would have, compared 
to  PO4,  to  pay  very  substantial  additional  costs  without  a  clear  added  value.  There  would  also  be 
administrative costs which would arise from the need for businesses to comply with the Directive; 
these  costs  would  affect  all  companies.  Similar  to  PO5a,  MS  would  be  likely  to  find  this  option 
politically  very  difficult  to  agree  and  to  implement  as  it  would  eliminate  domestic  laws  and  legal 
traditions.  It could also lead to a loss of income for law firms in the area of provision of legal advice 
of  a  specific  law  if  companies  chose  to  obtain  legal  advice  elsewhere.  The  majority  of  MS  who 
responded to the Green Paper consultation rejected this option outright. Although this option would 
minimally  harmonise  existing  contract  law  legislation  and  civil  codes  and  reduce  transaction  costs 
for  some  traders,  it  would  add  to  the  issues  set  out  in  the  problem  definition  as  some  costs  for 
researching  the  law  would  still  remain.  Therefore  from  a  holistic  perspective,  taking  all  the  costs 
(monetary or otherwise) into account the costs outweigh by far the benefits of the instrument. 

Comparative assessment 

The  comparative  assessment  shows  that  that  PO4  (optional  Common  European  Sales  Law),  PO5a 
(full  harmonisation  Directive)  and  PO6  (Regulation)  both  establishing  a  mandatory  Common 
European Sales Law) would best meet the policy objectives. Transaction costs and legal complexity 
in cross-border trade would be reduced for business. Consumers would be more certain about rights 
due to the high level of consumer protection available under these options. Therefore, they would be 
more confident to shop cross-border and would benefit from better choice and prices.  

However, PO5a and PO6 create a substantial burden for businesses as all companies would need to 
adapt to a new legislative framework. The costs for the one off implementation for companies are 
particularly significant when compared to the other policy options because they would be felt by all 
traders  (22  million  companies)  in  the  EU.  These  costs  in  total  would  amount  to  €217  bn.  In 
particular, they would create a financial burden which will not be compensated by any benefits for 
the  companies  who  only  trade  domestically  and  for  whom  cross  border  transactions  costs  do  not 
create  a  problem.  Taking  account  of  the  costs  compared  to  the  benefits,  PO5a  and  PO6  are  not 
proportionate solutions to the contract law related obstacles to cross-border trade. In addition to the 
monetary  costs,  MS  would  be  likely  to  find  these  policy  options  politically  very  difficult  to  agree 
and  implement  as  they  would  eliminate  domestic  laws  and  legal  traditions.  Almost  all  MS  who 
responded to the Green Paper consultation rejected these options outright. 

52

 
 
 
 
 
 
Preferred policy option 
The preferred policy option is therefore option 4 which would meet the policy objectives in terms of 
reducing  legal  complexity  and  transaction  costs,  it  would  also  simplify  the  current  legal 
environment.  The  current  legal  framework  is  patchy  and  does  not  contain  a  comprehensive  set  of 
uniform  rules  for  B2B  and  B2C  contracts.  An  optional  Common  European  Sales  Law  would 
introduce such a set of rules for both types of contract without interfering with national laws. This 
option  would  also  ensure  a  high  level  of  consumer  protection  which  would  increase  consumer 
certainty  and  confidence  about  rights  in  cross-border  shopping.  It  would  contribute  to  the  cross-
border  trade  and  competitiveness  of  the  EU  economy  and  would  benefit  the  consumer  by  greater 
choice  of  products  and  better  prices.  As  this  option  would  be  chosen  voluntarily  by  businesses,  it 
would  not  impose  additional  burdens  but  bring  significant  cost  savings  for  companies  extending 
their trade cross-border. In comparison to PO5a and PO6, the one off implementation cost would be 
much lower: €1.89 - €3.78 bn for PO4 compared to €217 bn for PO5a and PO6. 

Scope of application of the preferred policy option 

The  problems  of  transaction  costs  and  legal  complexity  have  a  particular  impact  upon  businesses 
who  perform  B2C  contracts  (as  they  would  have  to  consider  the  different  national  mandatory 
provisions when concluding a contract with a consumer from another MS) and SMEs who trade with 
other SMEs (as the costs to trade to more than 1 MS are high in relation to turnover, in particular for 
micro and small companies). As the optional Common European Sales Law would be of a distinct 
benefit to businesses performing B2C contracts and SMEs performing B2B contracts, this would be 
the  preferred  scope  of  application.  However,  large  businesses  that  contract  with  other  large 
businesses may want to have the choice of using the optional Common European Sales Law if they 
can also make cost savings. Therefore MS ought to have the choice as to whether large businesses 
could use the optional Common European Sales Law to contract with other large businesses. 

In  addition,  the  preferred  scope  would  also  be  for  the  optional  Common  European  Sales  Law  to 
apply to cross-border only situations as this is where the problems of additional transaction costs and 
legal  complexity  arise.  This  would  correspond  closest  to  the  principles  of  subsidiarity  and 
proportionality  as  it  would  address  the  problem  of  lowering  barriers  to  cross-border  trade  without 
interfering  in  national  rules.  However  to  address  the  issue  of  this  option  also  facilitating  the  legal 
environment for businesses if it applied to both domestic and cross border contracts (taking account 
of mixed responses to the Green Paper), and ensuring proportionality, MS ought to have the choice 
to apply the optional Common European Sales Law in their domestic contracts if they wish to. 

Legend for tables: Comparing policy options & Effectiveness in meeting the objectives and key impacts: 
+++ : very positive impacts 
  ++ : considerable positive impacts 
     + : limited positive impacts 
     0 : no impacts expected 

- - - : very negative impacts 
  - - : considerable negative impacts 
     - : limited negative impacts 

  53 

 
 
 
 
 
 
 
 
Effectiveness in Meeting the Policy Objectives and Key Impacts 

PO1 Baseline 
Scenario (BS) 

PO2a 
Commission's 
toolbox 

PO2b 
Inter-
institutional 
agreement 

PO3 
Recommendation 

PO4 
optional Common 
European Sales Law 

PO5b Minimum 
harmonisation 
Directive 

PO5a full harmonisation 
Directive& PO6 Regulation 

-- 
Baseline 
transaction costs 
in B2C: €8,695- 
€9,565 per 
company per 
MS. Baseline 
transactions 
costs in B2B: 
€9000- €10,568 
per company per 
MS. 

-- 

-- 

- 

Reduce 
transaction costs 
for cross-border 
trade 

Reduce legal 
complexity  in 
cross-border 
trade 

Reduce 
uncertainty 
about consumer 
rights in cross-
border shopping 

Increased  
consumer 
protection 

Business Objectives 

-- 
Very little change 
compared to the BS. 

- 
Little change 
compared to the 
BS. 

0 

Very limited, highly 
unlikely 

+++ 
Elimination of 
transaction costs for 
cross-border trade. 
One-off costs for 
familiarising and 
compliance with a new 
legal regime. 

+ 
Positive, but limited 
effect depending on 
variances in 
implementation. One-
off costs for 
familiarising and 
compliance with a new 
legal regime. 
Positive effect by far 
outweighed by 
substantial increase in 
costs for domestic 
traders. 

+  
Elimination of transaction costs for 
cross-border trade. One-off costs for 
familiarising and compliance with a 
new legal regime. 
Positive effects outweighed by 
substantial increase in costs for 
domestic traders. 

- 
Very little change 
compared to the BS. 

0/+ 
Little change 
compared to the 
BS. 

0/- 
Very limited, highly 
unlikely 

+++ 
Positive impact, one 
legal regime that could 
be chosen for all cross-
border transactions. 

+ 
Positive, but limited 
effect depending on 
variances in 
implementation. 

+++ 
Positive impact, the same law 
applicable in the whole of the 
internal market. 

- 
Very little change 
compared to the BS. 

0 
Little change 
compared to the 
BS. 

Consumer Objectives 

0/+ 
Very limited, highly 
unlikely 

++ 
Uniform optional rules 
for all cross-border 
transactions with clear 
rights for consumers. 

+ 
Positive, but limited 
effect depending on 
variances in 
implementation 

+++ 
Uniform, mandatory rules applicable 
to all cross-border transactions. 

0 
Very little change 
compared to the BS. 

0/+ 
Little change 
compared to the 
BS. 

+ 
Very limited, highly 
unlikely 

++ 
Consumer protection 
increased compared to 
BS. 

+++ 
Consumer protection 
increased compared to 
BS.  MS could go 
beyond the minimum 
rules. 

++ 
Consumer protection increased 
compared to BS. 

54 

 
 
 
 
 
 
 
 
 
PO1 Baseline 
Scenario (BS) 

PO2a 
Commission's 
toolbox 

PO2b 
Inter-institutional 
agreement 

PO3 
Recommendation 

PO4 
optional Common 
European Sales Law 

PO5b Minimum 
harmonisation Directive 

Comparison of Policy Options 

-- 
In B2C €10,000 
average per 
company and 
€11,664 additional 
for a company 
selling via e-
commerce) In B2B 
€6,000 average per 
company 
-- 
Competition in the 
internal market 
remains limited. 
Businesses 
deterred from 
trading cross-
border. 
--Transaction costs 
weigh, in relative 
terms, more 
heavily on micro 
and small 
businesses. 

Administrative 

costs 

Competition in 
internal market 
and impact on 
consumer prices 

Impact on 
SMEs 

Same as BS. 

Same as BS. 

- 
Very little change 
compared to the 
BS. 

0 
Little change 
compared to the BS. 

- 
Very little change 
compared to the 
BS. 

0 
Little change 
compared to the BS. 

No impact 

No impact 

No impact 

No impact 

No impact 

No impact 

Key Economic Impacts 
0/+ 
Positive, but very limited 
impact depending upon the 
number of MS who 
incorporate the Common 
European Sales Law and 
variances in 
implementation. 

0/+ 
Positive, but very limited 
impact depending upon the 
number of MS who 
incorporate the Common 
European Sales Law and the 
number of businesses who 
use it. 
0/+ 
Positive, but very limited 
depending upon the number 
of MS who incorporate the 
Common European Sales 
Law and variances in 
implementation. 

Social Impacts 
0/+ 
Positive, but very limited 
impact depending upon the 
number of MS who 
incorporate the Common 
European Sales Law and the 
number of businesses who 
use it. 
Environmental Impacts 
0/- 
Very little change compared 
to the BS. 

55 

- 
In B2C €3,000 average 
per company. In B2B € 
1,500 average per 
company. Number of 
companies affected: 
571,685 (B2C) and 
240,737 (B2B) 

-- 
In B2C € 2,500 average per 
company. In B2B €1,500 
average per company. All 
traders affected (22 million 
companies) and additional 
costs for companies exporting 
(as under the BS) 

PO5a full harmonisation 
Directive & PO6 
Regulation 

-- 
In B2C € 2,500 average per 
company. In B2B €1,500 
average per company. All 
traders (22 million 
companies) affected. 

+++ 
Positive impact due to 
an increase of cross-
border trade. Increased 
competition is likely to 
decrease consumer 
prices. 

+++ 
Positive impact due to 
elimination of cross 
border transaction costs 
that weigh heavily on 
SMEs 

+ 
Little change compared to the 
BS as the differences between  
contract laws are likely to 
remain. 

++ 
Cross-border trade is likely 
to increase but the positive 
effect on competition is 
reduced due to additional 
costs on business when 
trading domestically. 

+ 
Positive, but limited impact as 
transaction costs only reduced 
for B2B contracts. For B2C 
transaction costs would still 
occur, plus domestic SMEs 
would face substantive cost to 
use new law. 

0 
Positive impact of 
elimination of transaction 
costs for cross-border trade 
is outweighed by costs 
incurred by all companies 
that will need to adapt to a 
new legal framework. 

++ 
Positive impact due to 
an increase in cross-
border trade that would 
result in increased 
employment 

+ 
Limited positive impact as the 
cross-border trade would only 
slightly increase. 

- 
Positive impact for cross-
border trade is outweighed 
by costs incurred by all 
companies that may lead to 
some initial decrease in 
employment. 

- 
Some impact upon 
environment due to 
increase in transport. 

-- 
Adverse impact upon 
environment due to increase 
in transport. 

-- 
Adverse impact upon 
environment due to 
increase in transport. 

 
 
 
 
 
Table 4: Cost/benefit comparison of Policy Options 

Table  4  summarises  the  costs/benefits211  of  policy  options  1,  4  and  5a  and  6.212  The  estimates  are 
based on the low and medium scenarios of the cross-border trade increases as described in Annex 
IV.213 

Due to  a substantial  one-off  cost imposed on all existing companies, the results  of  PO5a  and  PO6 
would be dependent upon future GDP growth and may result either in a benefit of €105 bn or a loss 
of up to €57 bn. PO4 would be the most beneficial for the economy over the next 10 years as there 
would be a benefit in a range between €32 bn and €149 bn. 

Annual GDP 
increase 

Employment 
effect 

0 

€ 5 - 20 bn 

€ 20 - 40 bn 

0 
160 000 - 
640000 
640,000 - 
1,300,000 

Option 
1 
Option 
4 
Option 
5a/6 

Annual 
transaction  
costs214 

€ 1 - 2 bn 

€ 0.85 - 1.2 bn 

One-off 
implementation 
cost for 
companies 

Costs/ Benefits (10 
years) 

0 
€ 1.89 - 3.78 
bn 

€ (-16) to (-8) bn 

€ 32 to 149 bn 

€ 0.3 bn 

€ 217 bn 

€ (-57) to 105 bn 

7. MONITORING AND EVALUATION ARRANGEMENTS  

MS will be required to send to the Commission notification measures. These measures will set out 
the  text  of  the  adopted  legislation  by  the  MS.  The  Commission  will  monitor  these  measures  to 
ensure compliance with the preferred option.  

The  Commission  will  launch  a  monitoring  and  evaluation  exercise  to  assess  how  effectively  the 
Common European Sales Law will achieve its objectives. This exercise will take place 4 years after 
the  date  of  application  of  the.  The  intention  is  for  the  exercise  to  precede  and  feed  into  a  review 
process which will examine the effectiveness of the Common European Sales Law instrument.  

211 The calculations of the costs/benefits are based on the net present value (i.e. the value of future benefits evaluated in the present) of the difference between the annual 

GDP increase (calculated with the GTAP model, see Annex IV) and the annual transaction costs, minus the one-off implementation cost for current exporters (or for the 

whole economy for PO5a and PO6). This calculation takes place over a time span of 10 years, using a discount rate of 4% as indicated in the IA Guidelines, Annex XI.  For 

example, if the GDP increase is €5 bn, the annual transaction costs €0.85 bn, the one-off cost €1.89 bn, and the discount rate 4%, the benefit for the society in 10 years is 

computed with the following mathematical formula: (5-0.85)/1.04 + (5-0.85)/1.042+(5-0.85)/1.043+…+(5-0.85)/1.0410 – 1.89 = 32. 

212 The impacts of PO2a and PO2b are difficult to quantify as they would not have a direct impact.  Concepts from the toolbox would be used for the development of future 

contract law legislation or the revision of existing EU legislation. The legislation itself would have the direct impact.  The impacts of PO3 and PO5b could not be quantified 

due to several possible variants of implementations and their subsequent impacts. 

213 In the low and the medium scenarios, it is assumed that intra-EU trade increases based on the replies of the businesses (EB 320 and 321) who were asked about the 

impact of an European contract law on their exports. In the low scenario intra-EU trade increases by 0.76% and in the medium one it increases by 1.53%.  For PO4 low and 

high assumptions, of respectively 25% and 50%, of exporting companies using the optional Common European Sales Law are also considered.  The break-even point for 

PO4, i.e. the moment in which the take-up of the optional Common European Sales Law starts to bring positive benefits to the economy, is just above 5%. This means that a 

minimum of 5% of current exporters would have to use the optional Common European Sales Law in order for this option to bring benefits to the economy. However, even 

in the case of a lower 'take up' rate of the optional Common European Sales Law, any loss would be smaller than the loss forecasted for PO1 as PO1 is equivalent to PO4 in 

the  circumstances  where  nobody  uses  the  optional  Common  European  Sales  Law.  (This  is  computed  setting  the  benefits  to  zero  and  checking  the  relative  take-up 

percentage).   

214 Administrative costs are included in the transaction costs for PO1 and one-off implementation costs for PO4 and PO5a/6. 

  56 

 
 
 
 
 
 
 
 
 
 
 
  
                                                 
  
The  comprehensive  statistics  on  cross-border  trade  in  the  EU  and  cross-border  purchases  by 
consumers are available in the Eurostat database which should be a primary source of data for the 
evaluation. Other suitable data collection tools could be in-depth interviews, surveys and a mystery 
shopper exercise. Depending on the cost-efficiency of the available monitoring options, these tools 
could  be  combined  within  a  comprehensive  market  monitoring  study.215  Alternatively,  the 
Commission may launch separate data collection initiatives on different indicators. For instance, the 
indicators for the achievement of business objectives could be assessed by means of Eurobarometer 
and  the  more  specific  SME  Panel  and  European  Business  Test  Panel  surveys.  The  indicators  for 
consumer objectives could be addressed by means of Eurobarometer surveys and a possible mystery 
shopper  exercise  examining  the  ease  of  access  to  cross-border  offers.  Based  on  the  data  on  the 
indicators and information obtained from MS the Commission will assess the progress achieved and 
will evaluate the effectiveness of the Common European Sales Law instrument.  

General business objective  
•  Facilitate  the  expansion  of  cross-border  trade 

Indicators 
•  Variation  in  number  of  enterprises  trading 

in the internal market 

cross-border 

Operational  business objectives 
•  Reduce  transaction  costs  for  cross-border 

trade 

•  Reduce  legal  complexity    in  cross-border 

trade  

•  Variation in average number of EU countries 

companies export to 

•  Change  in  transaction  costs  per  company 
trading in more than 1 MS under a Common 
European Sales Law  

•  %  of  companies  using 

the  Common 

European Sales Law 

•  Change  in  aggregate  transaction  costs  of 

exporting companies within the EU 

•  Rate of importance that businesses assign to 
contract law related obstacles in cross-border 
trade 

General consumer objective 
•  Facilitate 
cross-border 

purchases 

by 

•  Variation of % of consumers shopping cross-

consumers in the internal market 
Operational  consumer objectives  
•  Reduce  level  of  uncertainty  about  consumer 

border 

•  Variation  in  consumer  confidence  in  cross-

rights in cross-border shopping 

border shopping 

•  Ensure high level of consumer protection 

•  %  of  consumers  who  experienced  refusal  of 

cross-border offers 

215 http://ec.europa.eu/consumers/strategy/facts_en.htm#In-depth (last visited: May 2011). 

57

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
ANNEX I: PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

1.1. 

Policy Background  

its  2001  Communication  on  European  contract 

With 
the  European  Commission 
(Commission)  launched  a  process  of  extensive  public  consultation  on  the  problems  arising  from 
differences between Member States' contract laws and on potential actions in this field. As a follow-
up, the Commission issued an Action Plan in 2003217, with the intention among others to improve 
the quality and coherence of European contract law by establishing a Common Frame of Reference 
(CFR)  containing  common  principles,  terminology  and  model  rules  to  be  used  by  the  Union 
legislator when making or amending legislation.  

law,216 

Via a grant under the 6th Framework Programme for Research, the Commission financed the work 
of an international academic network which carried out the preparatory legal research in view of the 
adoption of the CFR. This research work was finalised at the end of 2008 and led to the publication 
of the Draft Common Frame of Reference (DCFR)218 as an academic text.219   
The Stockholm Programme for 2010-2014220 states that the European judicial area should serve to 
support  the  economic  activity  in  the  internal  market.  The  Programme  invited  the  Commission  to 
examine further the issue of contract law. The Commission Work Programme 2010 provided for a 
communication  on  European  contract  law.  Consequently,  a  'Green  Paper  on  policy  options  on 
progress  towards  a  European  contract  law  for  consumers  and  businesses'  (Green  Paper)  was 
published  in  July  2010.  Following  the  publication  of  the  Green  Paper,  the  Commission's  Work 
Programme  for  2011  provided  for  a  legal  instrument  of  European  contract  law  as  a  strategic 
initiative to be proposed in the last quarter of 2011. 221 

1.2.  Organisation and timing  
The Commission adopted a Decision222 on 26 April 2010 to establish an Expert Group (EG). Its role 
was to produce a feasibility study of a 'user-friendly' instrument covering the life-cycle of a contract. 
The  EG  was  composed  of,  former  judges,  academics,  legal  practitioners  and  representatives  of 
consumer and business organisations (who acted in their personal capacity). The EG members also 
reflected  the  main  legal  systems  and  traditions  within  the  EU.  The  EG  feasibility  study  was 
completed at the end of April 2011. It supported the Commission's work in developing its proposal 
for a legal instrument of a Common European Sales Law for the EU.  

An  Impact  Assessment  Steering  Group  (IASG)  was  set  up  in  May  2010.  The  participating 
Commission services included: the Secretariat General, the Legal Service, Directorate-General (DG) 
Competition,  DG  Communication,  DG  Economic  and  Financial  Affairs,  DG  Internal  Market  and 
Services,  DG  Enterprise  and  Industry,  DG  Health  and  Consumers,  DG  Information  Society  and 
Media,  DG  Mobility  and  Transport,  DG  Trade.  The  IASG  met  5  times  and  was  consulted  on  the 
draft Green Paper on European contract law, on the impact assessment (IA) report as well as on the 
provisions of the Expert Group and the possible instrument of a Common European Sales Law for 
the EU.   

216 COM(2001) 398, 11.7.2001. 

217 COM(2003) 68, 12.2.2003. 

218 Von Bar, C., Clive, E. and Schulte Nölke, H. (eds.), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference  

(DCFR), Munich, Sellier, 2009. 

219 Although financed by the Commission, the text is not an official Commission document. 

220 Council Act, Stockholm Programme -  AN OPEN AND SECURE EUROPE SERVING AND PROTECTING CITIZENS , (2010/C 115/01) of 2.12. 2009, 

No 17024/09. 

221 Commission's Work Programme for 2011, COM(2010) 623 final of 27.10.2010. 

222 Commission Decision 2010/233/EU , OJ 105 of 27.4.2010 

  58 

 
 
 
 
 
                                                 
1.3. 

Consultation and expertise 

1.3.1. 

Public consultation  

The  Commission  organised  several  general  and  targeted  public  consultations  throughout  the  IA 
process. 

•  General consultations  

- The Green Paper opened an EU wide public consultation on 7 policy options. It was launched on 
1 July 2010 and closed on 31 January 2011.  

The  Commission  received  320  responses  from  all  categories  of  stakeholders  from  across  the  EU. 
The responses came from most Member States' governments (20), some Member States' parliaments 
(5), senates (2) and other government bodies (4); the European Economic and Social Committee; a 
large  number  of  business  organisations  (137),  several  consumer  organisations  (18)  and  a  Catholic 
NGO; many associations of legal practitioners (52); a considerable amount of academics (66) and a 
few  individual  businesses  and  citizens  (14).  Most  responses  came  from  respondents  based  in 
Germany (96), UK (47), Brussels (31), France (29) and Italy (25).  

The number of responses shows a widespread interest for European contract law at all levels. While 
many  respondents  wanted  to  participate  in  the  discussion,  some  felt  unable  to  provide  in  depth 
comments given the rhythm of the progress of the work and that they did not know the detail of the 
policy options. A large number of respondents stressed the importance of the outcome of the impact 
assessment for their ultimate position. 

With  regard  to  the  policy  options  set  out  in  the  Green  Paper,  many  respondents  saw  value  in  the 
Green  Paper  option  1  (publication  of  the  results  of  the  Expert  Group)  and  supported  green  Paper 
option 2 (a 'toolbox' for the EU legislator). However, there was little support for Green Paper option 
3 (a Commission Recommendation).   

With regard to Green Paper option 4 (an optional instrument of European contract law) the responses 
were  more  varied.  Several  Member  States  and  a  considerable  number  of  other  respondents  – 
particularly business representatives, legal practitioners and academics – said they could support an 
optional  instrument,  provided  that  it  fulfilled  certain  conditions  (for  example:  had  a  high  level  of 
consumer  protection,  a  clear  and  user-friendly  nature,  was  clear  about  its  link  with  the  proposed 
Consumer  Rights  Directive  and  other  EU-legislation).  A  large  number  of  Member  States  and 
business representatives did not want to take a position at that time, because they did not know the 
detail of this option and the work of the Expert Group. Some respondents expressed a preference for 
Green Paper option 6 (a Regulation establishing a European contract law that would replace Member 
States' national contract laws). There was very little support for Green Paper options 5 (a minimum 
harmonisation Directive) and 7 (a Regulation establishing a European civil code).  

Of those respondents to the Green Paper who commented on the scope of a European contract law 
instrument  most  only  expressed    opinions  on  a  toolbox  (Green  Paper  option  2)  and  an  optional 
instrument  (Green  Paper  option  4).  Out  of  those  respondents  who  made  explicit  comments 
concerning the scope of the toolbox, the majority believed it should be as comprehensive as possible, 
i.e. should not be restricted to certain types of contract and should have a rather broad scope. Out of 
those respondents who made explicit comments concerning the scope of the optional instrument, the 
majority  seemed  in  favour  of  an  instrument  which  focused  on  cross-border  business  to  consumer 
(B2C) sales contracts.  

59

 
 
 
 
 
 
 
 
 
 
Based on the stakeholder responses to the Green Paper several specific and general concerns relating 
to the creation of a European contract law could be identified.  Different categories of stakeholders 
raised  specific  concerns.  A  number  of  Member  States  were  concerned  about  business  taking 
advantage  of  the  weaker  position  of  the  consumer/SME,  the  reduction  of  the  level  of  consumer 
protection  and  legal  uncertainty.  Some  business  representatives  raised  concerns  relating  to  the 
increased  legal  uncertainty  and  an  unbalanced  high  level  of  consumer  protection  which  would  be 
burdensome  for  business.  On  the  other  hand,  consumer  representatives  insisted  that  any  new 
regulatory or non-regulatory tool in the field of consumer policy should have a clear added value for 
consumers,  as  they  feared  a  reduction  of  consumer protection levels in their Member States. They 
also expressed a specific concern relating to an optional instrument (Green Paper option 4), which 
they  thought  would  lead  to  uncertainty  and  confusion  for  consumers.  Associations  of  legal 
practitioners  were concerned  about an increase of legal complexity and uncertainty, largely due to 
the lack of accessible case law. 

The  Commission  addressed  all  the  abovementioned  concerns.  With  regards  to  the  concern  of 
Member  States  and  consumer  representatives  about  a  decrease  in  consumer  protection,  the 
Commission created a special sub-group within the Expert Group focusing on ensuring a high level 
of  consumer  protection.  However,  the  Commission  also  took  care  that  the  level  of  consumer 
protection  would  be  balanced  with  the  needs  of  business.  It  invited  both  consumer  and  business 
representatives  as  part  of  the  key  stakeholders  expert  group  (described  in  the  paragraph  below)  to 
comment on a continuous basis on the work carried out by the Expert Group. This would ensure that 
the  different  views  would  be  taken  into  account  in  the  development  of  the  substantive  rules. 
Furthermore,  the  advice  of  the  key  stakeholder  expert  group  was  taken  into  account  in  order  to 
ensure that the rules the Common European Sales Law for the EU proposal were user-friendly and 
practical. For this purpose, for instance a distinction between the rules for B2C and B2B was made. 
The  Commission  also  addressed  the  specific  concern  by  consumer  organisations  that  an  optional 
instrument  (Green  Paper  option  4)  would  create  uncertainty  and  confusion  for  consumers,  as  they 
would not be able to assess the implications of an optional instrument when it applied to a contract 
instead  of  their  national  law.  If  this  option  were  chosen  for  the  Commission  proposal,  the 
Commission  would  develop  a  standardised  information  notice,  which  businesses  would  have  to 
provide  to  consumers  when  they  used  the  optional  instrument.  This  information  notice  would  be 
available in all official languages of the EU, but would have the same content. It would inform the 
consumers in their own language that the Common European Sales Law applied and what their key 
rights  under  this  law  would  be.  At  the  same  time,  the  information  notice  would  reduce  the 
administrative  burden  for  businesses,  as  it  will  remove  the  need  for  each  trader  to  individually 
explain  the  implications  of  the  Common  European  Sales  Law  for  the  EU  to  consumers.  The 
Commission  also  examined  ways  to  minimise  the  legal  uncertainty  which  would  accompany  the 
introduction of a Common European Sales Law for the EU. One solution could be the creation of a 
data-base  on  relevant  future  European  and  national  case-law  which  would  be  accessible  by  legal 
practitioners  from  all  Member  States  (i.e.  judges,  notaries,  lawyers  and  legal  advisors).    For  this 
purpose  the  Commission  would  explore  the  suitability  of  comparable  databases  (e.g.  the  JURE 
Database) and systems linking national authorities (e.g. the Internal Market Information System223, 
European e-Justice Portal). 

- A key stakeholder experts group was set up in September 2010. It included representatives of the 
(Businesseurope,  UEAPME,  Eurocommerce, 
main  European  organisations  of  business 
Eurochambres and the International Chamber of Commerce),  consumers (BEUC), representatives of 

223 Commission Staff Working Paper, Background information related to the strategy for expanding and developing the Internal Market Information System (‛IMI’), 

Brussels,  

21.2.2011, SEC(2011) 206 final, p. 9: European contract law is indicated as a potential area which could benefit from an extension of IMI  to cooperation of national judicial  

authorities.   

60

 
 
 
                                                 
 
the  legal  professions  of  lawyers  and  notaries  (CCBE  and  CNUE)  and  representatives  from  the 
banking and insurance sectors (EBIC and CEA). 

The first role of the stakeholder group was to provide a practitioner's perspective on the work of the 
Expert  Group,  thereby  ensuring  the  instrument  developed  was  user-friendly  and  practical.  The 
Commission organised 10 meetings during which the stakeholder group were continuously consulted 
on the draft chapters of the instrument developed by the Expert Group.  

Once the concrete work on the preparation of the IA was launched, the stakeholder group discussed 
IA  related  matters  at  5  of  its  meetings.  The  Commission  presented  the  developments  and  asked 
stakeholders  to  comment  on  the  main  issues  concerning  the  methodology  of  the  IA  study  and  the 
approach to the data collection, problem definition and the analysis of impacts of policy options in 
the IA report. The stakeholders' suggestions contributed to refining the methodology of the IA study, 
the development of the problem definition and the analysis of the impacts in the IA report.  

• 

Specific consultations targeting main stakeholder groups  

- A workshop with business stakeholders on potential benefits of a European contract law instrument 
from the perspective of large businesses and SMEs was organised in November 2010.  

-  Several  surveys  consulted  businesses  on  their  attitudes  and  experiences  with  problems  related  to 
contract law, and the impacts of an instrument of European contract law. Two Flash Eurobarometer 
surveys (EB 320/2011 and 321/2011) enquired about contract law related experiences of companies 
involved or interested in cross-border trade with businesses and consumers. The SME Panel survey 
conducted  within  the  Enterprise  Europe  Network  gathered  responses  from  1,047  micro,  small  and 
medium  sized  businesses,  while  a  European  Business  Test  Panel  attracted  responses  from  378 
companies of all sizes at the end of 2010.   

-    Targeted  meetings  with  consumer  stakeholders:  took  place  between  October  and  January  2010. 
Commission  officials  met  representatives  of  BEUC  and  attended  two  meetings  of  the  European 
Consumer Consultative Group (ECCG) to discuss the Green Paper and how it addressed consumer 
problems.   

- A consumer survey (Flash Eurobarometer 299) enquired about consumer experiences with cross-
border shopping and in particular problems related to contract law.  

The  survey  results  were  used  as  data  sources  on  business  and  consumer  attitudes  to  contract  law 
related problems and the assessment of policy options in the IA report. The Commission ensured that 
the  specific  concerns  expressed  by  representatives  of  business,  consumers  and  legal  practitioner 
stakeholders  during  the  consultation  process  were  taken  into  account  in  the  development  of 
substantive  provisions  of  the  text  drafted  by  the  EG  and  in  the  IA.    In  particular,  the  comments, 
questions and suggestions of the stakeholder group were discussed and followed up by the EG.  

1.3.2.  Outside expertise  

In November 2010 the Commission awarded a public tender to IBF International Consulting to carry 
out a study in the context of preparing the IA. The aim of the study was to assist the Commission in 
gathering further evidence on the problems identified and to carry out an economic analysis of the 
impacts of the main policy options set out in the Green Paper. The contractor carried out economic 
analysis  and  modelling,  supplemented  by  in-depth  interviews  with  representatives  of  business  and 
consumer organisations and legal professionals.  The draft final report of the study was submitted on 
16 March 2011 and the final report was submitted in spring 2011. 

61

 
 
 
 
 
 
ANNEX II: THE CURRENT LEGAL FRAMEWORK 

1.  Overview  

The current legal framework in the area of contract law in the EU is characterised by the differences 
between the respective national laws of the Member States (MS).  

The EU developed uniform conflict of law rules, which help determine which substantive laws apply 
to  cross-border  contracts.  However,  when  it  comes  to  the  substantive  laws,  the  current  legal 
framework does not contain a single set of uniform substantive contract law rules which would cover 
a life cycle of a cross-border contract comprehensively. A patchwork of European and international 
rules  has  led  to  a  limited  approximation  of  national  laws  only  in  a  few  areas  of  contract  law,  as 
described in sections 2 and 3 below.  

As  a  result,  substantial  differences  between  MS  contract  laws  remain  under  the  current  legal 
framework. These differences in contract law are seen as a barrier to cross-border trade by business 
with a slightly higher impact on B2C transactions than in B2B transactions. 224 

•  Conflict of law rules 

The  EU  put  in  place  uniform  conflict  of  law  rules  on  contractual225  and  non-contractual 
obligations226  in  order  to  improve  legal  certainty  for  cross-border  contracts.  Conflict  of  law  rules 
allow  contracting  parties  within  certain  limits  to  choose  which  law  applies  to  their  contract  and 
which law applies in the absence of choice.  

However,  due  to  the  nature  of  conflict  of  law  rules,  even  uniform  conflict  of  law  rules  cannot 
remove  the  differences  between  substantive  contract  law.  They  only  lead  to  the  application  of  a 
given substantive national law in cross-border transactions when otherwise several different national 
laws could potentially apply. This means that, no matter what the choice is, at least for one of the 
parties to a contract the applicable law is a foreign law. This party is therefore disadvantaged by the 
need to familiarise itself with a different legal system. This situation disadvantages both businesses 
and consumers who have to deal with unfamiliar foreign laws in cross-border transactions.  

•  Substantive rules  

The  EU  has  partially  reduced  the  differences  by  harmonsation  measures  in  some  areas  of  contract 
law.  The  legal  framework  applicable  to  B2C  contracts  has  been  characterised  by  minimum 
harmonisation legislation at EU level. While the consumer acquis has led to an increase of consumer 
protection to the advantage of consumers, it does not completely eliminate the differences in national 
contract laws. MS still have the possibility to go beyond the minimum standards established by the 
consumer  acquis.  They  can  also  legislate  freely  in  the  areas  of  contract  law  where  no  European 
legislation has been adopted.  

The  legal  framework  applicable  to  B2B  contracts  has  been  characterised  by  very  limited 
harmonsation  measures  at  European  level.  Uniform  rules  of  a  wider  scope  have  been  introduced 
through  an  instrument  of  international  law,  the  1980  UN  Convention  on  the  International  Sale  of 
Goods (Vienna Convention), which applies by default to cross-border B2B transactions. However, 

224 See, for example, Eurobarometers 320 on European contract law in business-to-business transactions (EB 320) and 321 on European contract law in consumer  

transactions of 2011(EB 321): 32% in B2B and 36% in B2C of exporting businesses said that contract law difficulties were a barrier to cross border trade and were  

almost equally cited as other practical barriers such as language and delivery. See also the SME Panel, the EBTP, 2010 surveys, presented in Annex 3 and the Clifford  

Chance Survey in European Contract Law (2005). 

225 Regulation (EC) No 593/2008 of the European Parliament and of the Council on the law applicable to contractual obligations (the Rome I Regulation). 

226 Regulation (EC) No  864/2007 of the European Parliament and of the Council on law applicable in non-contractual obligations (Rome II Regulation). 

62

 
 
 
 
 
 
 
 
 
 
                                                 
as described below the instruments of international law are not comprehensive and have a number of 
other limitations. They are not widely used in practice, with less than 1 in 10 businesses saying that 
they frequently apply them in B2B cross-border transactions.227 

2.  Legal framework for business-to-consumer (B2C) contracts 

While  the  overall  legal  framework  for  B2C  contracts  ensures  an  adequate  level  of  protection  for 
consumers  who  shop  in  their  own  country,  it  creates  increased  complexity  and  confusion  for  pro-
active  consumers  who  shop  cross-border.  Thus,  it  does  not  encourage  consumers  to  seek  better 
opportunities  in  the  internal  market.  It  mostly  does  not  provide  a  uniform  set  of  rules  thereby 
creating  the  necessary  consumer  confidence.  It  also  creates  increased  complexity  and  costs  for 
businesses interested in selling to consumers across border.  

a)  Conflict-of-law  rules.  The  Union  put  in  place  uniform  conflict-of-law  rules  which  cover  B2C 
contracts.  These  rules  aim  to  protect  consumers  in  situations  where  the  business  pursues  its 
commercial activities or directs this activity to the country of habitual residence of the consumer. In 
practice, whether the business directs its activity to the consumer's country has to be determined on a 
case-by-case basis.228 This is particularly relevant for e-commerce transactions where it may not be 
obvious to which countries a business advertises and markets through its web-site. 

Thus, in the absence of a choice of law, in a situation described in the paragraph above, the law of 
the consumer's country of habitual residence applies (Article 6(1), Rome I Regulation). If the parties 
choose a law other than the law of the country of the habitual residence of the consumer – in practice 
mostly  the  seller's  law  -  according  to  Article  6(2)  of  the  Rome  I  Regulation,  the  contract  cannot 
deprive the consumer of the mandatory protection afforded by his or her country. Thus, consumers 
can  be  confident  that  they  will  benefit  from  at  least  the  same  level  of  protection  as  guaranteed  in 
their country of residence. 

Practically,  the  Rome  I  Regulation  does  not  provide  an  appropriate  level  of  protection  to  the  pro-
active  consumer  who  shops  cross-border  as  it  only  grants  the  consumer  the  protection  of  the 
mandatory rules of his own national law in cases where the trader directs its activities229 to the MS 
where  the  consumer  is  domiciled.  If  the  trader  does  not  envisage  doing  business  with  consumers 
from another MS, but agrees to contract with them if they contact him on their own initiative, the 
consumers do not benefit from the protection rules of their national law. These consumers fall under 
the  general  choice-of-law  rules  according  to  which  parties  are  free  to  choose  the  applicable  law, 
which will lead in practice mostly to the application of the seller's law. In the absence of choice, the 
law  of  the  seller  applies  anyway.  This  means  that  consumers  who  want  to  take  advantage  of  the 
internal  market  and  want  to  buy  something  in  another  country  out  of  their  own  initiative  are 
disadvantaged  compared  to  those  consumers  who  are  contacted  by  a  foreign  trader  in  their  own 
country.  

227 EB 320, p. 27. 

228 In the recent  Pammer & Alpenhof judment of 7 December 2010 (Joined cases C-585/08 and C-144/09) the Court of Justice established criteria for assessing whether a  

business directs its  country of residence.  However,  as these criteria require a case-by-case analysis a degree  of uncertainty about the level of consumer protection in cross- 

border trade remains. 

229 The concept of "commercial or professional activities directed to the consumer’s domicile", has been clarified by the Cort of Jutsice in the Pammer/Alpenhof judgment 

of 7 December 2010 (Joined cases C-585/08 and C-144/09). 

63

 
 
 
                                                 
b)    EU  consumer  acquis:  The  consumer  contract  acquis  consists  of  a  number  of  Directives230 
mostly based on the principle of minimum harmonisation. The Directives on consumer contract law 
cover  the  areas  of  doorstep  selling,231  unfair  contract  terms,232  distance  selling233  and  sales  and 
commercial  guarantees.234  As  these  Directives  were  harmonised  at  a  minimum  level,  MS,  in 
implementing their provisions into national laws, were allowed to go beyond them (only) in favour 
of the consumer. As MS used this possibility to differing extents, the result was an improvement of 
consumer  protection  in  the  EU,  but  also  a  patchy  legal  landscape.235  As  this  legal  situation  was 
fragmented along national frontiers, it did not achieve the internal market integration that was also 
intended. 

The Commission addressed the differences in the MS consumer contract laws by its 2008 proposal 
for a Consumer Rights Directive (CRD).236 The CRD proposal was aimed at facilitating cross-border 
shopping and sales and up-grading core consumer rights by consolidating the existing legislation in 
the  area  of  consumer  contract  law.    This  would  have  been  achieved  on  the  basis  of  a  fully 
harmonised  set  of  key  consumer  contract  provisions  of  interest  for  the  functioning  of  the  internal 
market. To this end the initial proposal of 2008 aimed at revising the Directives on doorstep selling, 
unfair  terms,  distance  contracts  and  consumer  sales  and  commercial  guarantees.  These  four 
Directives would be merged into a single horizontal instrument regulating the common aspects in a 
systematic fashion, removing inconsistencies and closing gaps. 

However,  two  years  of  intense  negotiations  in  the  Council  and  European  Parliament  led  to  a 
considerable  reduction  of  the  scope  of  the  CRD.  Firstly,  its  application  was  generally  limited  to 
distance  and  off-premises  contracts.  Secondly,  two  out  of  the  four  areas  included  in  the  initial 
proposal were ultimately excluded from the Directive's scope, namely the rules on sales and unfair 
terms. The impossibility to agree on fully harmonised rules on sales and unfair terms highlighted the 
limits of a full harmonisation approach in core areas of national contract law.  

In any case, even with these fully harmonised provisions in the CRD, there will be a need to apply 
them in conjunction with other national provisions of general contract law, for example on remedies 
for breach of information duties. Consequently, differences between the contract laws of the MS will 
remain even after the adoption of the CRD.  

The Directive on electronic commerce limits itself to some contract law provisions,237 which ensure 
that  contracts  concluded  by  electronic  means  are  valid,  that  consumers  are  given  certain  pre-
contractual  information  and  that  providers  acknowledge  receipt  of  the  orders  placed  by  electronic 
means.  

230 Council Directive 85/577/EEC of 20 December 1985 on contracts negotiated away from business premises, Council Directive  90/314/EEC on package travel, package 

holidays and package tours , Council Directive 1993/13/EEC of 5 April 1993 on unfair terms in consumer contracts; Directive 97/7/EC of the European Parliament of and 

the Council of 20 May 1997 on the protection of consumers in respect of distance contracts distance contracts; of the European Parliament and of the Council of 25 May 

1999 on certain aspects of the sale of consumer goods and associated guarantees; Directive 2002/65/EC of the European Parliament and of the Council of 23 September 

2002 concerning the distance marketing of consumer financial services; Directive 2008/122/EC of the European Parliament and of the Council of 14 January 2009 on the  

protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts; Directive 2008/48/EC of the European  

Parliament and of the Council of 23 April 2008 on credit agreements for consumers.  

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

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

233 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. 

234 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 

235 The "EC Consumer Law Compendium"(up-dated version of 2007 covering all 27 MS) shows to what extent MS have made use of minimum clauses and options when 

transposing consumer acquis. The Consumer Law Compendium is a comparative study on the implementation of 8 consumer Directives in the legislation of MS, carried out 

by the University of Bielefeld, on request by the European Commission. The Green Paper  on the Review of the Consumer Acquis, COM (2006) 744 final of 08.02.2007, 

acknowledges that the minimum harmonisation directives have led to a fragmentation of national laws, p.6.  

236 Proposal for a Directive of the European Parliament and of the Council on consumer rights,  COM(2008) 614, 8.10.2008. 

237 Article 9, 10 and 11 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society  

services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'). 

64

 
 
 
                                                 
3.  Legal framework for business-to-business (B2B) contracts 

The  legal  framework  for  B2B  contracts  lacks  a  comprehensive  set  of  uniform  rules  and  is 
characterised  by  the  need  to  negotiate  applicable  law  in  cross-border  contracts.  The  negotiations 
often  disadvantage  SMEs,  which  frequently  have  to  apply  an  unfamiliar  law  of  their  business 
partner.  Even  though  the  Vienna  Convention,  introduced  a  uniform  set  of  rules,  it  is  not 
comprehensive and has several limitations which have led to its limited use.  

a)  Conflict-of-law  rules.  For  B2B  contracts,  uniform  choice  of  law  rules  stipulate  that  the  parties 
are free to choose the applicable law, with a very limited number of exceptions. In practice however, 
where there is a considerable difference in bargaining power between the parties to a contract (e.g. 
often between a big company and an SME) the applicable law is generally imposed by the party with 
more bargaining power. If both parties have a comparable negotiating power, for instance two small 
companies in a cross-border region, the negotiations may be difficult for both of them. In contracts 
between SMEs of comparable bargaining power the need to negotiate the applicable law may be a 
significant obstacle for both parties, as none of them may be familiar and willing to accept the law of 
the  other  partner.238  One  in  two  respondents  to  the  SME  panel  survey  indicated  that  they  saw 
negotiations on applicable law as an obstacle to cross-border trade. 239 

a.  EU  acquis  substantive  rules  The  Directive  on  electronic  commerce  contains  some  pre-
contractual information requirements for contracts concluded online.   
The Directive on combating late payments240 applies only in B2B transactions and harmonises the 
rules  on  the  default  interest  rate  which  apply  in  cases  of  late  payment.  It  also  contains  a  test  of  
unfairness  of  contractual  terms  relating  to  stipulated  interest  rates.  However,  MS  may  continue  to 
maintain or to bring into force rules which are more favourable to the creditor than the provisions of 
the new Directive. Experience with the predecessor Directive on combating late payments has shown 
that  MS  made  use  of  the  possibilities  to  depart  from  the  miniumum  standards  established  and  by 
consequence the implementing rules across the EU were not uniform.241 Thus, even though there are 
harmonised  rules  on  late  payments  at  the  EU  level,  businesses  still  have  to  familiarise  themselves 
with potential differences in the respective national laws.  

c.  International  substantive  law.  The  Vienna  Convention  is  an  international  convention  which 
most of the MS have ratified. It is by default the applicable law in B2B cross-border sales contracts 
whenever the parties have not excluded its application.  

However, the Vienna Convention does not apply uniformly in the EU. Firstly, it has not been ratified 
by Ireland, Malta, Portugal and the UK. Secondly, there is no single court which would ensure its 
uniform  interpretation.  Furthermore,  the  Vienna  Convention  covers  only  some  issues  of  general 
contract  law,  notably  the  rules  on  formation  of  contracts,  as  well  as  sale-specific  provisions. 
Therefore,  it leaves many potential disputes relating to other matters of general contract law to be 
solved by the national law applicable according to conflict of law rules.    

The  UNIDROIT  Principles  of  International  Commercial  Contracts  can  be  incorporated  into  B2B 
contracts.  However,  the  non-binding  nature  of  these  principles  as  well  as  the  absence  of  a 

238 See response to the Green Paper by the Scottish Law Commission, p. 5 

239 55% of the respondents to the SME Panel Survey indicated that "Difficulties in negotiating with the other contractual party on applicable contract" were an obstacle in 

cross-border trade.  

240 The Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast)  

241 An analysis of the implementation of Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late payments in commercial 

transactions showed that some Member States have gone beyond the minimum standards established by the Directive. For instance,  on the implementation of Article 3(1)(d) 

on the interest for late payment,  see: Study on the effectiveness of EC legislation on combating late payment (2006), p.140-143 available at 

http://ec.europa.eu/enterprise/policies/single-market-goods/files/late_payments/doc/finalreport_en.pdf  and Impact Assessment accompanying the Proposal for a Directive of 

the European Parliament on combating late payment in commercial transactions (recast) SEC(2009) 315, p. 6.  

65

 
 
 
 
 
                                                 
mechanism  of  uniform  interpretation  contribute  to  its  limited  success  in  day-to-day  commercial 
transactions.  

Among  others,  the  abovementioned  difficulties  lead  to  a  situation,  where  in  practice  these 
instruments are not frequently applied.242  

4.  Limitations of the current legal framework 

The current legal framework in the EU does not contain a single set of uniform and comprehensive 
contract law rules which could be used by consumers and businesses in cross-border trade.  

As illustrated in Table 1 , the current legal framework consists of a patchwork of contract law rules, 
introduced  via  different  instruments  limited  only  to  some  of  the  key  areas  of  contract  law.  They 
include some fully harmonised rules, but also a number of minimum standards and gaps in the EU 
acquis which allow for differences in the laws of MS to evolve. 

Table 1 illustrates key areas of contract law covering the life-cycle of a contract.243 It shows that the 
existing acquis and international rules are limited in scope: out of the 13 key contract law areas they 
only cover six for B2C (one only partially) and eight areas for B2B contracts (one only partially). As 
demonstrated by Table 1 the current legal framework lacks a uniform set of rules that would cover 
the whole life cycle of a contract both for B2C and B2B cross-border transactions comprehensively. 
The remaining differences in contract laws continue to generate obstacles to the smooth functioning 
of the internal market both on the demand and supply side.  

242 In EB 320,  2011: only 9% of respondents said that their cross-border contracts are mainly covered by international instruments such as the Vienna Convention and  

UNIDROIT Principles.  

243 The Expert Group created by the Commission identified these areas as key areas of contract law for cross-border contracts.   

66

 
 
 
 
 
 
                                                 
Table 1: EU legal framework in the area of contract law 

Contract  law 
area 

Consumer 
Rights 
Directive 

Other 
relevant  EU 
consumer 
legislation 

Directive 
electronic 
commerce  

on 

Directive  on 
electronic 
commerce 

Directive  on 
combating 
late 
payments 

YES 

YES 

YES 

YES 

NO 

Pre-
contractual 
information 
and 
negotiation 
Conclusion 
of contract 
Rights 
withdraw 
Defects 
consent 
Interpretatio
n 

to 

in 

NO 

YES 

NO 

NO  

NO 

YES 

NO 

NO with one 
exception 

NO 

NO 

NO 

NO 

Contents 
and effects  

NO 

NO 

YES (partially) 

NO 

Vienna 
Convention  
on the 
international  
sale of goods  
NO with 
 a few 
exceptions 

YES 

NO 

NO 

YES 

NO with  
a few 
exceptions 
NO 

NO 

NO 

NO 

NO 

NO 

YES 
(partially) 

NO 

YES 

NO 

NO 

YES 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

YES 

NO 

YES 

NO 

NO 

NO 

NO 

NO 

YES 

NO 

NO 

NO 

Unfair 
contract 
terms 
Obligations 
and 
remedies  of 
the  parties 
to  a  sales 
contract 
Delivery and 
Passing 
of 
Risk 
Obligations 
and 
remedies  of 
the  parties 
to  a  related 
service 
contract 
Damages, 
Stipulated 
payments for 
non-
performance 
and interest 
NO 
Restitution 
Prescription  NO 

NO 

NO 

NO 

NO 

YES 
(partially) 

YES 

NO 
NO 

NO 
NO 

NO 
NO 

NO 
NO 

YES 
NO 

5.  The added value of a Common European Sales Law  

A  Common  European  Sales  Law  would  add  value  to  the  current  legal  framework  as  it  would 
introduce  a  uniform  set  of  contract  law  rules  which  cover  the  life  cycle  of  a  contract 
comprehensively.  These  rules  would  be  the  same  for  all  economic  operators  in  the  EU  who  use 
them,  irrespective  of  the  MS  where  they  are  based.  Common  European  Sales  Law  rules  could  be 
used both for B2C and B2B transactions within its scope.  

67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-
contractual 
information 
and 
negotiation 
Conclusion 
of contract 

As these rules would cover the whole life cycle of a contract they would address the main problems 
which could practically affect a cross-border transaction.  

The feasibility study developed by the Expert Group the Commission created contains rules for the 
key  contract  law  areas.  They  cover  the  lifecycle  of  a  contract  and  the  main  contractual  problems 
which may occur within a cross-border transaction. The feasibility study could serve as a basis for 
developing the substantive rules of a Common European Sales Law instrument.  

Table  2  illustrates  how  a  Common  European  Sales  Law  (see  respective  columns)  fits  into  and 
completes  the  gaps  within  the  current  legal  framework.  It  shows  that  the  scope  of  a  Common 
European Sales Law will cover the whole life cycle of a contract comprehensively.  

Table 2: Common European Sales Law and the current legal framework 

B2C CONTRACTS 
Contract 
law area 

Consumer 
Rights 
Directive 

Other 
relevant 
EU 
consumer 
legislation 

Directive 
on 
electronic 
commerce 

YES 

YES 

YES 

Commo
n 
Europe
an 
Sales 
Law 
YES 

B2B CONTRACTS 
Directive 
on 
electronic 
commerce 

Commo
n 
Europea
n  Sales 
Law  

Directive 
on 
combating 
late 
payments 

YES 

YES 

NO 

Vienna 
Conventio
n on the 
internation
al sale of 
goods  

NO with a 
few 
exceptions 

NO with a 
few 
exceptions 
NO 

NO 

NO 

YES 
(partially) 

YES 

YES 

NO 

NO 

YES 

to 

in 

Rights 
withdraw 
Defects 
consent 
Interpretatio
n 

YES 

NO 

NO  

Contents 
and effects  

NO 

YES 

NO 

NO  with 
one 
exception 
NO 

NO 

NO 

NO 

YES 

YES 

YES 

YES 

YES 

YES 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

YES 

NO 

YES 

YES 

NO 

NO 

Unfair 
contract 
terms 
Obligations 
and 
remedies  of 
the  parties 
to  a  sales 
contract 
Delivery and 
Passing 
of 
Risk 
Obligations 
and 
remedies  of 
the  parties 
to  a  related 
service 
contract 
Damages, 
Stipulated 
payments for 

NO 

YES 

NO 

YES 

YES 

NO 

YES 
(partially) 

NO 

YES 

NO 

YES  

YES 

NO 

NO 

YES 

YES 

NO 

NO 

YES 

YES 

NO 

NO 

YES 

NO 

NO 

NO 

YES 

YES 

NO 

NO 

NO 

NO 

NO 

NO 

YES 

YES 

NO 

YES 
(partially) 

YES 

68

 
 
 
 
 
 
 
 
 
 
 
 
 
non-
performance 
and interest 
NO 
Restitution 
Prescription  NO 

NO 
NO 

NO 
NO 

YES 
YES 

YES 
YES 

NO 
NO 

NO 
NO 

YES 
NO 

6.  Consistency of the Common European Sales Law instrument with the existing legal 

framework  

A Common European Sales Law instrument would be consistent with existing European legislation 
in the areas it covers. Consistency is achieved by taking into account the relevant existing rules of 
the EU acquis in the legal areas a Common European Sales Law instrument would cover. 

Fully harmonised rules of the EU acquis are taken over completely. For instance, a Common 
European Sales Law instrument would take over the fully harmonised rules on pre-contractual 
information for distance and off-premises contracts from the CRD. The benefit of this approach is 
that businesses would have to comply with the same rules they anyhow have to observe according to 
their domestic legislation. In addition, a Common European Sales Law instrument could not be used 
to circumvent otherwise applicable national rules implementing the respective Directives.  

Rules of the EU acquis which have been harmonised at a minimal level are taken as a basis. 
However, in a number of cases the respective provisions of a Common European Sales Law 
instrument could go beyond the minimum standards of the acquis. For instance, the rules on sales 
remedies have been harmonised at a minimum level by the Consumer Sales Directive. A Common 
European Sales Law instrument could provide for a higher level of consumer protection by giving 
consumers a free choice of remedies for defective products (as opposed to the hierarchy of remedies 
established by the Consumer Sales Directive. However, as opposed to the differing MS laws 
implementing the Directive, the rules on sales remedies would be regulated in a uniform way under a 
Common European Sales Law instrument. Consumers would benefit from a higher level of 
consumer protection. The benefit for business would be that they could operate based on the same 
rules in all MS when using the Common European Sales Law instrument.  

Consistency of a Common European Sales Law instrument with all relevant legislative instruments 
would also be ensured in the long term. To this end, the review of the Common European Sales Law 
instrument would take into account the potential future changes in relevant European legislation.  

The existing instruments of international law have also been taken into account in the process of 
developing a Common European Sales Law instrument. For instance, the Vienna Convention and the 
UNIDROIT Principles were among the sources which inspired the work of the Expert Group created 
by the Commission. Based on the lessons learnt from the use of the Vienna Convention, as well as 
other existing instruments of international law, a Common European Sales Law instrument could go 
beyond or build upon the existing international standards, to the extent improvements are necessary.    

•  Relationship with the Consumer Rights Directive  

A number of stakeholders, in particular business representatives, have pointed out the importance of 
ensuring the consistency244 between a Common European Sales Law instrument and the Consumer 
Rights  Directive  (CRD)  and  that  the  two  instruments  work  in  tandem.245  Indeed,  a  Common 
European Sales Law instrument and the CRD are interlinked, as they address similar problems and 
largely pursue the same objectives for B2C transactions. Both instruments address the fragmentation 

244 Response to the Green Paper, for instance by UEAPME, p.2-3. 

245 Responses to the Green Paper, for instance by Business Europe, p. 2.    

69

 
 
 
 
 
 
 
 
 
 
                                                 
of the legal framework in the area of B2C contracts and the resulting problems of the business' and 
consumers' reluctance to engage in cross-border trade and reap the benefits of the internal market.  

However, a Common European Sales Law instrument and the CRD have a different scope. A major 
difference  is  that  the  CRD  only  covers  B2C  contracts,  while  a  Common  European  Sales  Law 
instrument would also contain rules on B2B contracts. Furthermore, the CRD only covers three key 
areas  of  consumer  contract 
information,  right  of  withdrawal  and 
delivery/passing of risk). While a Common European Sales Law instrument would also cover these 
areas, it would also contain rules in 10 additional areas of contract law. Finally, the CRD generally 
applies  to  distance  and  off-premises  contracts,  while  a  Common  European  Sales  Law  instrument 
would apply to all transactions, irrespective of the distribution channel.  

law  (pre-contractual 

Consistency  between  the  two  instruments  has  to  be  ensured  in  the  areas  where  the  two  of  them 
overlap, i.e. the two instruments largely overlap in the areas of pre-contractual information, right of 
withdrawal and delivery and passing of risk.  

70

 
 
 
 
ANNEX III: CALCULATION OF OPPORTUNITY AND TRANSACTION COSTS 

1.  Opportunity costs for intra-EU trade 

Eurobarometer surveys (EB) were used to find out if and to what extent companies were dissuaded 
from exports due to contract law related barriers. In response to the question "how often contract law 
related  obstacles  deterred  the  company  from  conducting  cross-border  transactions",  respondents 
could  answer  "always",  "often",  "not  very  often"  "never",  "do  not  know".246  The  percentage  of 
companies which were deterred from cross-border trade can be established based on these responses. 
However, in order to identify the frequency and number of failed transactions more precisely, some 
assumptions  need  to  be  made.  The  cumulative  amount  of  failed  transactions  can  be  expressed  as 
opportunity  costs.  It  represents  the  forgone  trade  for  the  EU  economy  due  to  contract  law  related 
barriers.  

The  calculation  of  opportunity  costs  in  the  main  IA  report  depends  on  the  assumptions  on  the 
weighting of the qualitative answers indicating the frequency as "often" or "not very often" of failed 
transactions of the surveyed enterprises which were dissuaded from trade due to contract law from 
various  degrees.  Table  1  presents  the  full  range  of  assumptions  to  quantify  "often"  and  "not  very 
often".  It shows the opportunity costs for intra-EU trade which does not take place due to contract 
law related problems.  In order to identify how often transactions fail due to this reason a frequency 
going  from  0  to  100%  is  attributed  to  a  "company  often  deterred  due  to  contract  law"  and  to  a 
"company not very often deterred due to contract law". 0% means that the potential opportunity cost 
generated by enterprises which are not deterred in every transaction, but only in some ("often" and 
"not very often"), are not taken into account. The table also reflects the theoretical values up to 100%  
as a weight (which would mean that all the trade of those companies who were deterred "often" or 
"not very often" is considered as a missed opportunity), even though this is not a realistic scenario.  

Table  1:  Opportunity  costs  for  businesses:  intra-EU  trade  not  made  -  different  weights  (€ 
billion) 

Weight for "not very 
often" ( β ) → 

Weight for "often" ↓( 
α) 
0% 
10% 
20% 
30% 
40% 
50% 
60% 
70% 
80% 
90% 
100% 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

26 
36.4 
46.8 
57.2 
67.6 
78 
88.4 
98.8 
109.2 
119.6 
130 

68.4 
78.8 
89.2 
99.6 
110 
120.4 
130.8 
141.2 
151.6 
162 
172.4 

110.8 
121.2 
131.6 
142 
152.4 
162.8 
173.2 
183.6 
194 
204.4 
214.8 

153.2 
163.6 
174 
184.4 
194.8 
205.2 
215.6 
226 
236.4 
246.8 
257.2 

195.6 
206 
216.4 
226.8 
237.2 
247.6 
258 
268.4 
278.8 
289.2 
299.6 

238 
248.4 
258.8 
269.2 
279.6 
290 
300.4 
310.8 
321.2 
331.6 
342 

280.4 
290.8 
301.2 
311.6 
322 
332.4 
342.8 
353.2 
363.6 
374 
384.4 

322.8 
333.2 
343.6 
354 
364.4 
374.8 
385.2 
395.6 
406 
416.4 
426.8 

365.2 
375.6 
386 
396.4 
406.8 
417.2 
427.6 
438 
448.4 
458.8 
469.2 

407.6 
418 
428.4 
438.8 
449.2 
459.6 
470 
480.4 
490.8 
501.2 
511.6 

450 
460.4 
470.8 
481.2 
491.6 
502 
512.4 
522.8 
533.2 
543.6 
554 

When 0% is the weight for both "often" and "not very often" the opportunity cost is considered to be 
only the one generated by the 0.96%247 of involved or interested in cross-border trade companies that 

246 EB 320, EB 321.  

247 EB 320 European contract law in business-to-business transactions, 2011: 3% of companies that consider contract law as a barrier in cross-border trade (out of 32 % of 

companies which see contract law as a barrier to B2B transactions = 0.96% of all companies) are always deterred from cross-border trade for this reason. It is assumed that 

71

 
 
 
 
 
 
 
 
 
                                                 
are "always" deterred from cross-border transactions due to contract law. The opportunity costs for 
this group of companies amount to €26 billion.  

However,  this  estimate  does  not  take  into  account  the  opportunity  costs  for  companies  who  are 
deterred by contract law obstacles "often" or "not very often". The highlighted weights in the table 
are  the  most  realistic  assumptions  for  the  values  of  "often"  and  "not  very  often".  Respectively, 
"often" is placed between 50% and 90%, of the cases and "not very often" between 0% and 40% of 
the cases. However, the table illustrates all possibilities between the minimum and maximum.   

The calculation of opportunity costs for intra-EU trade is based on the value of total intra-EU trade 
estimated by Eurostat at €2704 billion in 2008.248 The value of forgone intra-EU trade is calculated 
as a percentage of the actual trade value, as follows:  

€2704 billion (total trade in goods in tra-EU in 2008) * 32% of companies (exporting or interested in 
exporting)  who  see  contract  law  as  a  barrier  to  cross-border  trade  *  3%  of  companies  always249 
deterred from cross-border trade due to contract law (= €26 bn) 
+   
α250  €2704 billion * 32% of companies (exporting or  interested in exporting) who see contract law 
as  a  barrier  to  cross-border  trade  *  12%  of  companies  often251  deterred  from  cross-border  trade 
due to contract law (= α *  €104 bn)   
+ 
β252 € 2 704 billion *32% of companies (exporting or in terested in exporting) who see contract law 
as a barrier to cross-border trade * 49% of companies not very often253 deterred from cross-border 
trade due to contract law  (=β *  €424 bn) 

= opportunity costs  

Summarising the above: €26 billion +  α (€ 104 billion) +  β (€ 424 billion) = opportunity costs.  

Each  box  of  table  1  represents  this  formula  for  different  values  of  α  and  β254.  The  most  plausible 
ones are in bold.  

The assumptions on the values  of "often" and  "not  very  often" underlying  the  calculations used in 
the IA report are: 

•  For the high estimate:  α (the value for often) = 70% and β (the value for not very often) = 
20%.  
•  For the low estimate: α = 0 and β = 0, since only companies who were always deterred by 
contract  law  were  considered  and  those  who  were  deterred  partially  were  disregarded.  This 
estimate is very conservative.  

companies deterred from trade due to contract law would represent the same share in exports. That is, the calculations assume that the 0.96% of companies that are always 

deterred by contract law differences would, in the absence of these differences, account for 0.96% of exports. 

248 Eurostat Statistical Books, External and Intra-EU trade – a statistical yearbook, 2009 edition, p. 82. 

249 EB 320 European contract law in business-to-business transactions, 2011: 3% of companies that consider contract law as a barrier in cross-border trade (out of 32 % of 

B2B transactions) are always deterred from cross-border trade for this reason. 

250 Assumed numerical expression to quantify the frequency of "often", as illustrated by the figures in table 1. 

251 EB 320 European contract law in business-to-business transactions, 2011: 12% of companies that consider contract law as a barrier in cross-border trade (out of 32 % of 

B2B transactions) are often deterred from cross-border trade for this reason. 

252 Assumed numerical expression to quantify the frequency of "not very often", as illustrated by the figures in table 1.  

253 EB 320 European contract law in business-to-business transactions, 2011: 49% of companies that consider contract law as a barrier in cross-border trade (out of 32 % of 

B2B transactions) are not very often deterred from cross-border trade for this reason. 

254 The weight for "always" is implicitly equal to 100%. 

72

 
 
 
 
 
 
 
 
 
 
                                                                                                                                                                    
The  quality  of  the  results  does  not  change  significantly,  depending  on  whether  the  figures  of 
companies deterred from B2B or B2C trade are used.255 For simplicity in the calculations, only the 
figures for B2B are used, as they are the decisive variable for the estimate of opportunity costs.256 

These  opportunity  costs  show  the  lost  value  of  cross-border  trade  for  companies  which  were 
dissuaded from cross-border trade due to contract law. In part these costs will be reduced due to the 
domestic  transactions  which  may  take  place  instead  of  the  failed  cross-border  ones.257  It  is  hardly 
possible to quantify the value of the domestic transactions which compensate for failed cross-border 
trade. This data is not available. However, it is plausible that the compensatory domestic trade most 
likely  takes  place  at  a  higher  price  and  is  detrimental  to  consumers,  especially  when  they  cannot 
purchase certain products at a higher price.  

2.  Transaction costs at company level 

The  average  costs  per  company  concluding  a  transaction  under  a  foreign  applicable  law  are 
calculated  on  the  basis  of  the  results  of  about  1400  responses  to  two  independent  surveys:  the 
SME258  and  European  Business  Test  Panel259  surveys.  The  SME260  and  the  EBTP261  surveys  were 
the  most  suitable  data  collection  tools  for  obtaining  the  necessary  data,  as  they  allow  respondents 
sufficient  time  to  prepare,  before  giving  the  answers.  Therefore,  it  was  possible  to  ask  precise 
questions,  for  instance  on  monetary  ranges  of  costs  savings.  The  Eurobarometer  surveys  (EB  320 
and EB 321) which could provide more representative results than the SME and EBTP surveys, were 
not suitable for asking precise questions. Since the EB 320 and 321 were conducted over the phone, 
the  respondents  did  not  have  sufficient  time  to  prepare the answers in advance. Since, it was very 
likely that respondents would say they "did not know" the answer to a precise question, they were 
usually asked to give a general qualitative reply. 

Since the sample of responses to the SME panel was more representative than the one of the EBTP 
survey, the calculations of transaction costs were carried out based on the SME panel survey and the 
results were verified by calculations based on the EBTP. As indicated below, the findings of the two 
surveys are similar.   

2.1. Costs in B2B transactions 

The  results  of  the  SME  panel  survey  on  cost  ranges  are  summarised  in  Table  2.  Based  on  the 
responses of individual companies average transaction costs were estimated.  

There are 136 companies which indicate the costs of cross-border transactions due to differences in 
contract law  to  be lower than €5,000;  109 companies indicate these costs as being  in  the  range of 
€5,000  -  €10,000;  45  companies  in  the  range  of  €10,000-€15,000;  23  companies  in  the  range  of 
€15,000-€30,000 and 27 companies estimate the costs to be more than €30,000. 

255 Based on EB 320 (Q3) and EB 321 (Q3), the percentage of exporting of interested in exports companies deterred from cross-border trade can be identified; always 

deterred: 0.96% of total trade for B2B, 0.72% for B2C; often deterred: 3.84% B2B and 5.04% B2C; not very often: 15.68% B2B and 14.76% B2C.  

256 B2C cross-border  trade represents only 0.44% of the overall EU trade, calculated based on figure on cross-border shopping under EB 298: 211.7 million of households 

* 25% purchasing abroad * € 800 average yearly expenditure = € 42.3 billion. 72% of this is purchased on holidays, business or shopping trips. The pure cross-border 

distance trade is € 12.1 billion.  So, out of the € 2,705 billion of international trade, B2C represents 0.44%. 

257 The estimate does not reflect cross-border trade which failed for other reasons than contract law. It also does not take into account the domestic transactions which could 

compensate the failed cross-border trade.   

258 Results available at: http://ec.europa.eu/justice/policies/consumer/docs/report_sme_panel_survey_feb_2011_en.pdf 

259 Results available at: http://ec.europa.eu/yourvoice/ebtp/consultations/2010/european_contract_law/report_en.pdf 

260 The responses to the SME Panel survey are usually collected through face-to-face interviews or written questionnaires.   

261 The EBTP survey is conducted by means of a written questionnaire, which respondents are asked to fill in online; See brochure on EBTP at 

http://ec.europa.eu/yourvoice/ebtp/docs/brochure/ebtp-brochure-a4_en.pdf  

73

 
 
 
 
 
 
 
 
 
  
                                                 
Table 2: Businesses involved in B2B transactions – SME panel survey 

Question: If you could use a single European contract law in transactions across the EU, please estimate the cost savings 
from saved transaction costs (for example legal fees, research and translation of foreign law) for expanding your activity 
in one additional EU country?   

a. Less than € 5 000 
b. € 5 000-10 000 
c. € 10 000-15 000 
d. € 15 000-30 000 
e.  More than €30 000 
f. Don’t know 
Firms  that  gave  an  answer 
(other than "f") 
Number of firms 

Number  of firms involved 
only in B2B 
85 
65 
22 
16 
17 
159 
205 

Number of firms involved 
in both B2B and B2C 
51 
44 
23 
7 
10 
110 
135 

364 

245 

Total  businesses  involved 
in B2B transactions 

136 
109 
45 
23 
27 
269 
340 

609 

Based on these numbers the average costs associated with B2B transactions are calculated within a 
low and high estimate.  

•  The low estimate:   

The costs are estimated at the average value262 (i.e. €2,500, €7,500, €12,500, €22,500 and €30,000) 
of the indicated transaction costs by companies. 
(2 500*136 + 7 500*109 + 12 500*45 + 22 500*23 + 30 000*27)/340 = €8,963 
Thus, based on the low estimate the average transaction costs for firms involved in B2B transactions 
(all businesses involved in B2B transactions) amount to €8,963.  

•  The high estimate: 

As evident from Table 2, 27 firms indicate that transaction costs of entering one additional market 
are  more  than  €30,000.    For  the  calculation  of  a  high  estimate  it  is  assumed  that  these  costs  are 
€50,000:  
(2 500*136 + 7 500*109 + 12 500*45 + 22 500*23 + 50 000*27)/340 = €10,551  
Thus, based on the low estimate the average transaction costs for firms involved in B2B transactions 
amount to €10,551. 

Based  on  these  two  estimates  it  is  assumed  that  B2B  transaction  costs  range  between  €8,963  - 
€10,551.  These  costs  are  calculated  on  basis  of  the  fourth  column  in  Table  2  (Total  Businesses 
involved  in  B2B  transactions)  which  covers  all  firms  engaged  in  B2B  transactions.  Some  of  these 
firms  however  indicate  that  they  are  also  involved  in  B2C  transactions.  For  this  reason,  the  same 
calculation  of  transaction  costs  (as  described  above)  is  repeated  for  B2B  considering  only  B2B 
transactions  (column  2  in  Table  2).  For  firms  involved  only  in  B2B  transactions,  transaction  costs 
fall within a similar range of  €9,000 -  €10,658.  The latter range is used for the calculations in the 
report, as it reflects more accurately the costs for companies involved in B2B transactions.263 

2.2. Costs in B2C Transactions 

Transaction costs for B2C are estimated in a similar way. For B2C transactions (Table 3) transaction 
costs  amount  to  €8,876-€10,268.264  For  companies  involved  only  in  B2C  transactions  (Table  3, 
column 2) these costs are within a similar range and amount to €8,695 - €9,565 265. The latter range is 

262 €30,000 is taken as a conservative figure for the low estimate  

263 This estimate deviates only marginally from the range between €8,963 - €10,551, which is based on the larger sample. 

264  8,876 = (2 500 * 62 + 7 500 * 51+12 500 * 23 + 22 500 * 11 + 30 000 * 11) / 158 or 10 268 = (2 500 * 62 + 7 500 * 51 + 12 500 * 23 + 22 500 * 11+ 50 000 * 11) / 

158 

265  8 695 = (2 500 * 11+7 500 * 7 + 12 500 * 0 + 22 500 * 4 + 30 000 * 1) / 23 or 9 565 = (2 500 * 11 + 7 500 * 7 + 12 500 * 0 + 22 500 * 4 + 50 000 * 1) / 23 

74

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
used  for  the  calculations  in  the  report,  as  it  is  more  conservative  and  reflects  more  accurately  the 
costs for companies involved in B2C transactions.266 

Table 3: Businesses involved in B2C transactions – SME panel survey 

Question: If you could use a single European contract law in transactions across the EU, please estimate the cost savings 
from saved transaction costs (for example legal fees, research and translation of foreign law) for expanding your activity 
in one additional EU country?   

Number of firms 
involved only in B2C 

Number of firms involved in 
both B2C and B2B 

11 
7 
0 
4 
1 
24 
23 
47 

51 
44 
23 
7 
10 
110 
135 
245 

Total Businesses 
involved in B2C 
transactions 
62 
51 
23 
11 
11 
134 
158 
292 

a. Less than EUR 5 000 
b. € 5 000-10 000 
c. € 10 000-15 000 
d. € 15 000-30 000 
e.  More than €30 000 
f. Don’t know 
Firms that gave an answer 
(all rows except "f") 
Number 
interviewed 
(a+b+c+d+e+f) 

firms 

of 

2.2.1.  Specific IT related costs in B2C transactions 

Furthermore,  specific  contract  law  related  IT  costs  may  occur  for  businesses  selling  online  to 
consumers  in  other  EU  countries.  Business  representatives  assessed  that  the  IT  related  costs  stem 
from the need for a business to adapt its website to the legal requirements of each Member State it 
directs its activity towards.267 

This assessment can be verified by an estimate based on the SME Panel survey, which also shows 
that  the  transaction  costs  are  higher  in  B2C  transactions,  when  a  business  sells  online.  While  the 
average  transaction  costs  in  B2C  transactions  are  estimated  between  €8,695  and  €9,565  for 
companies selling online  the average costs are €11,875 - €13,541. Therefore, both in the high and 
low  estimate  the  additional  costs  for  e-commerce  amount  to  respectively  €2,917  and  €2,916.    The 
costs are estimated based on the formula:  
additional contract law related IT costs * % of retailers exporting through e-commerce *  
average number of EU countries exported to. 

•  The EBTP panel survey  

As already mentioned, the EBTP survey was used as an additional independent data source, in order 
to verify the results of the SME panel.   

The  average  transaction  costs,  based  on  Table  4,  are  similar  to  the  costs  calculated  based  on  the 
responses to the SME Panel survey and fall within the range of €11,132 – €14,704. However, since 
the EBTP survey attracted a smaller sample of responses, it is only used as an additional source in 
order to verify the reliability of the SME Panel figures.    

266 This estimate deviates only marginally from the range of €8,876-€10,268, which is based on the larger sample of companies (158) that declared doing business with 

both consumers and businesses. Furthermore it coincides with the estimates provided by the Federation of Small Businesses which estimated that for an SME engaged in 

cross-border  B2C  trade  the  transaction  costs  amount  to  €9,120  per  Member  State.  In  order  to  verify  the  accuracy  of  this  estimate,  the  statistical  standard  error  has  been 

computed using a bootstrap analysis. It allowed drawing multiple samples from the sample that is actually available in order to test the robustness of the estimate. Computing 

30,000 re-samples, bootstrap shows that, within a 95% level of probability, B2C transaction costs cannot be lower than €5,181 or higher than €1,4 292.  

267 The costs include adapting the web-site so that it can recognise the consumer's country of residence and retrieve the correct set of pages. See Federation of Small 

Businesses (FSB) in the UK, Response to the Green Paper on policy options for progress towards a possible European contract law for consumers and businesses, p.3; see 

FSB Position Paper on Rome I, p.3 for detailed breakdown of costs. 

75

 
 
 
 
 
 
 
 
 
 
 
                                                 
Table 4: Businesses involved in B2B and B2C transactions – EBTP panel survey 

Question: If you could use a single European contract law in transactions across the EU, please estimate the cost savings 
from saved transaction costs (for example legal fees, research and translation of foreign law) for expanding your activity 
in one additional EU country? 

Less than € 1 000 
€ 1 000 – 5 000 
€ 5 001 – 10 000 
€ 10 001 – 15 000 
€ 15 001 – 30 000 
More than € 30 001 
Other 
Don't know 

Number of firms involved in both B2B and B2C 
15 
42 
36 
9 
13 
25 
0 
69 

Firms that gave an answer 

140 

3.  Number of Member States EU companies export to 

Eurobarometers  320  and  321  provide  information  about  the  number  of  EU  countries  where  firms 
make cross-border transactions (EB 320, Q D6; EB 321, Q D5). It should be noted that the sample of 
EB 320 and 321 only includes companies with an interest or experience in cross-border trade. Table 
5 and 6 present the results respectively for B2B and B2C transactions.  

Approximately  26%  of  companies  involved  in  B2B  trade  are  engaged  in  cross-border  transactions 
with only one EU country; 38% with 2-3 EU countries and 36% with four or more EU countries. A 
similar  picture  emerges  from  Table  6  on  B2C  trade.  Approximately  86%  of  the  interviewed 
managers indicate to be involved in cross-border B2C transactions. Around 26% serve consumers in 
only one EU country, 35% in 2-3 EU countries and 39% in four or more EU countries. 

Table 5: Firms involved in B2B transactions. 
D.6 Besides (your country), in how many other EU countries do you currently make cross-border transactions? 
Number  of  all 
respondents  

all 

Share 
of 
respondents 
(number 
respondents / f) 

of 

all 

518 
a. Domestic transactions only 
1 489 
b. Trading with 1 other EU countries 
2 202 
c. Trading with 2-3 other EU countries 
d. Trading with at least 4 other EU countries  2 072 
e. Not answered 
f)  Total  number  of 
(a+b+c+d+e) 
g)  Total  number  of  firms  trading  cross-
border (b+c+d) 

interviewed  firms 

194 
6 475 

5 763 

8% 
23% 
34% 
32% 
3% 
100% 

89% 

Source: Flash Eurobarometer 320. 
Note: The survey is based on a random sample of 6,475 managers in 27 EU Member States. The sample includes only enterprises that are currently 
involved  in  cross-border  B2B  transactions  (sales/purchase  of  goods  or  services)  or  are  planning  to  do  this  in  the  future.  The  sample  is  randomly 
selected in each country within the following activity sectors: manufacturing; wholesale and retail trade; accommodation and food service activities; 
information and communication; financial and insurance activities.     

76

all 

Share  of  all  respondents 
exporting  to  a  number  of 
Member  States  (number 
respondents/g,, 
of 
except rows a and e) 
- 
26% 
38% 
36% 
- 
- 

100% 

 
 
 
 
 
 
 
 
 
 
 
 
 
Table 6: Firms involved in B2C transactions. 
D.5 Besides (your country), in how many other EU countries do you currently make cross-border transactions? 

Number  of  all 
respondents 

a. Selling only to domestic consumers 
b. Selling to consumers in 1 other EU country 
c. Selling to consumers in 2-3 other EU countries 
d. Selling to consumers in at least 4 other EU countries 
e. Not answered 
f) Total number of interviewed firms (a+b+c+d+e) 
g) Total number of firms trading cross-border (b+c+d) 

517 
1 422 
1 940 
2 198 
388 
6 465 
5 560 

Share  of  all 
respondents 
(number  of 
all 
respondents 
/ f) 

8% 
22% 
30% 
34% 
6% 
100% 
86% 

a 

of 

number 

all 
except 

Share 
all  
respondents  exporting 
of  
to 
Member States  
(number 
of 
respondents/g, 
rows a and e) 
- 
26% 
35% 
39% 
- 
- 
100% 

Source: Flash Eurobarometer 321.  
Note: The survey is based on a random sample of 6,465 managers in 27 EU Member States. The sample includes only enterprises that are currently 
involved  in  cross-border  B2C  transactions  (sales/purchase  of  goods  or  services)  or  are  planning  to  do  this  in  the  future.  The  sample  is  randomly 
selected in each country within the following activity sectors: manufacturing; wholesale and retail trade; accommodation and food service activities; 
information and communication; financial and insurance activities.       

An  estimate  of  the  number  of  Member  States  where  exporting  companies  conduct  cross-border 
transactions can be made on the basis of the above tables (considering points b, c and d.)   

Thus, on average, companies involved in B2B transactions trade with 2.7-4.8 Member States:  
(1489*1+2202*2.5+2072*4)  /  (1489+2202+2072)  =  2.7  (used  in  the  low  estimate)  and  
(1489*1+2202*2.5+2072*10) / (1489+2202+2072) = 4.8 (used in the high estimate) 

Companies involved in B2C transaction trade on average with 2.7-5.1 Member States.  
(1422*1+1940*2.5+2198*4)  /  (1422+1940+2198)  =  2.7  (used  in  the  low  estimate)  and 
(1422*1+1940*2.5+2198*10) / (1422+1940+2198) = 5.1(used in the high estimate) 

4.  Cumulative transaction costs for the EU economy 

In order to find out the total transaction costs due to differences in contract law for the EU economy, 
the cumulative transaction costs for all exporters must be identified. A distinction between sectors is 
made  in  order  to  take  into  account  the  differences  in  B2C  and  B2B  cross-border  transactions  for 
trade  in  goods.  B2C  transactions  occur  in  the  retail  trade  sector;  B2B  transactions  occur  in  the 
sectors of manufacturing and mining, agriculture and wholesale trade.  

For B2C transactions  

The aggregate transaction costs in B2C transactions are the costs incurred by companies exporting to 
consumers  (exporting  retailers)  in  other  EU  countries.  They  include  the  transaction  costs  (e.g.  for 
legal  advice  and  translation  of  foreign  laws),  but  also  the  additional  contract  law  related  IT  costs 
which occur in B2C cross-border e-commerce transactions.   

However, realistically not all exporters consult a lawyer on foreign law. EB 321 found that 17.6% of 
retailers  currently  involved  in  cross-border  trade  are  not  at  all  informed  about  the  consumer 
protection  provisions  in  the  contract  laws  of  the  EU  countries  where  they  sell  or  wish  to  sell  to 
consumers.  It  is  reasonable  to  assume  that  these  exporters  have  not  consulted  a  lawyer  on  foreign 
law at all. Hence, only 82.4% (100% - 17.6%) of B2C exporters are included in the computation of 
transaction costs.  

77

 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
The cumulative transaction costs can be calculated based on the following formula:  

82.4%  of  exporting  businesses  informed  about  foreign  law  *  (Transaction  costs  per  company  * 
number  of  exporting  retailers  in  the  EU  *  average  number  of  EU  countries  European  exporters 
trade with + contract law related IT costs for retailer exporting through e-commerce).  

To  compute  the  cumulative  IT  related  transaction  costs  for  B2C  traders,  the  number  of  retailers 
exporting  through  e-commerce  is  considered.  Eurostat  Information  Society  Statistics268  provide 
answers  to  the  question  "have  you  done  electronic  sales  to  other  EU  countries?"  for  companies 
having more than 10 employees (small, medium and large), as well as a detailed figure specific for 
small companies (10-49 employees). For retailers, these figures are respectively 4.5% and 2.4%.269 

However,  as  the  above  database  does  not  contain  data  on  micro  companies  (with  less  than  10 
employees) and this category of companies is notably the overwhelming majority of retailers270, the 
following  assumption  has  to  be  used.  It  is  assumed  that  the  ratio  among  micro  and  small  retailers 
exporting  through  e-commerce  is  proportional  to  the  ratio  of  all  exporting  micro  and  small  firms 
(7/13)271. As the figure for small retailers exporting through e-commerce is available (2.4%), the one 
for micro firms is assumed to be 1.3% (= 2.4% x 7/13). The figure for micro firms and the one for 
the rest of the companies are weighted by the total number of firms in the respective categories, and 
the result is that 1.46%272 of all retailers export through e-commerce, as it can be seen from table 7. 

Table 7: Contract law related IT costs in B2C transactions 

IT related costs 
in billion euro 

Average number of 
countries exported to 
= 2.7 * transaction 
costs per firm 
= € 2916 * 82.4% of 
informed exporters 

Average number 
of countries 
exported to 
= 5.1 * transaction 
costs per firm = € 
2917 * 82.4% of 
informed 
exporters 

Sector 
Retail 

Firms 
4 605 233 

Percentages exporting 
through e-commerce 
1,46% 

Exporters 

Low estimate 

High estimate 

67 230 

0.44 

0.82 

For B2B transactions  

For B2B transactions it should be taken into account that in the case where an exporting company 
negotiates the applicability of its own law to the contract it may have no transaction costs at all. In 
this  case,  the  company  would  not  have  to  deal  with  a  foreign  law  at  all  (as  opposed  to  B2C 
transactions  when  a  company  still  has  to  check  the  level  of  mandatory  consumer  protection 
provisions in the consumers' legislation even if it applies its own law). Therefore, it is assumed that 
in B2B trade transaction costs occur only when a company needs to apply a foreign law. EB 320, Q1 
asks exporting companies "Which contract law most often governs your business-to-business cross-
border transactions".  14.6% of the respondents said that most often they applied the national law of 
their business partner; 9% applied international legal instruments and 0.6% the law of a third country 
(0.6%). All these percentages are likely to be higher as 17% of the enterprises were not able (or did 
not want) to answer the related question. 

268 Comprehensive databases, statistics on ENT 2009_2010 (NACE Rev 2), variable e_aeseu, %ent. 

269 Comprehensive databases, statistics on ENT 2009_2010 (NACE Rev 2), variable e_aeseu, %ent. 

270 4 364 674 out of 4 605 233, Eurostat Structural Business Statistics. 

271 EB 196, 2007 Observatory of SMEs, p.45 

272 [4.5% of e-commerce exporting retailers with more than 10 employees * 240 559 (number of retailers with more than 10 employees) + 1.3% of estimated e-commerce 

exporting micro retailers * 4 364 674 (number of micro retailers)] / 4 605 233 (total number of retailers) = 1.46% (percentage of total retailers exporting with e-commerce).  

78

 
 
 
 
 
 
 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
For  the  purpose  of  calculating  the  total  transactions  costs  in  B2B  trade,  based  on  a  conservative 
assumption, only the companies applying the national law of their business partner are considered. 
The use of this figure also guarantees that all the costs that are considered are actually incurred, as 
companies had to become familiar with the foreign contract law. The costs for these companies are 
likely to grow proportionately to the number of EU countries they trade with.  

The estimate is conservative as it does not take into account the companies which apply the law of a 
third country or international legal instruments, as it is assumed that they bear the transaction costs 
only once even if they trade with multiple countries. Furthermore, a number of exporting companies 
may  not  even  have  consulted  a  lawyer  before  they  started  exports.  EB  320  found  that  14.9%  of 
companies  currently  involved  in  cross-border  B2B  transactions  did  not  even  know  which  contract 
law most often governs their transactions in the EU. However, this group of companies is excluded 
from the estimate based on the formula below:  

Transaction  costs  per  company  *  number  of  exporting  companies  in  B2B  sectors  (agriculture, 
manufacturing and mining, wholesale trade)* average number of EU countries exported to* 14.6% 
of cases when the national contract law of the business partner applies to the contract 

The number of exporters is estimated on the basis of a Eurostat database273 using data of 2007. More 
up-to-date  data  is  not  available  in  the  databases  of  Eurostat  as  of  2011.  In  order  to  calculate  an 
estimate  for  the  whole  EU,  the  average  share  of  exporters  for  each  sector  in  these  18  countries  is 
multiplied by the total number of enterprises in the EU-27 in each sector. 

273 DS-056329-1: Trade by activity and enterprise size class, that provides the number of enterprises exporting intra-EU in 2007 in a sample of 18 Member States, divided 

by sector of activity (Czech Republic, Denmark, Germany, Estonia, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Austria, Portugal, Romania, Slovenia, 

Slovakia, Finland and Sweden). In this database, data on wholesalers and retailers are not available for Luxembourg (estimate based on 17 countries), and data on agriculture 

are not available for Italy and Luxembourg (estimate based on 16 countries). 

79

 
 
 
 
 
 
                                                 
Table 8: Cumulative transaction costs for the EU economy 

Overall transaction costs (without IT related costs) in € billion  

Sector 

Agriculture 
Manufacturing and Mining 
Wholesale 
Retail  
Total 

IT related costs in € billion  
Sector 

Retail 

Total transaction costs in € billion  

Annual costs in € billion  278 

Number of 
Firms 

13 700 400 
2 344 213 
1 752 154 
4 605 233 
22 402 000 

Percentages of 
exporting 
firms 

Number of 
Exporters 

Low 
estimate274 

0.21% 
15.50% 
15.32% 
4.01% 
3.77% 

28 771 
363 353 
268 430 
184 670 
845 224 

0.10 
1.29 
0.95 
3.58 
5.92 

Number of 
Firms 

4 605 233 

Percentages of 
exporting 
firms 
1.46% 

Number of 
Exporters 
67 230 

Low 
estimate276 
0.44 

Low 
estimate 
6.36 

High 
estimate
275 

0.21 
2.71 
2.00 
7.42 
12.34 

High 
estimate
277 
0.82 

High 
estimate 
13.16 

0.93 

1.92 

Considering the agricultural sector, where the number of companies is higher than in all other sectors 
combined, the percentage of European firms exporting drops to 3.77%. If the agricultural sector is 
excluded from the estimate, the figure rises to 9.3%.  

•  Annual transaction costs for the EU economy 

Annual costs are based on the estimate that 14.6% of exporters enter cross-border trade in the EU 
every year.279 This is computed comparing the figures in Table 7 (2007) with the equivalent ones for 
2006 obtained from the same database. Both the total number of firms and the percentages of firms 
exporting are lower in 2006. The results are shown in Table 9. 

274 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the lower value of  €9,000 per company *  14.6% of companies applying 

a foreign law * 2.7 Member States companies export to * number of exporters; For B2C (retail) the costs are calculated using the lower value of €8,695 * 82.4% of informed 

exporting companies * 2.7 Member States companies export to * number of exporters 

275 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the higher value of  €10,658 per company *  14.6% of companies 

applying a foreign law * 4.8 Member States companies export to * number of exporters; For B2C (retail) the costs are calculated using the lower value of €9,565 * 82.4% of 

informed exporting companies * 5.1 Member States companies export to * number of exporters 

276 Average number of countries exported to = 2.7 * transaction costs per firm = € 2 916 * 82.4% of informed exporting companies * number of exporters in e-commerce 

277 Average number of countries exported to = 5.1 * transaction costs per firm = € 2 917 * 82.4% of informed exporting companies * number of exporters in e-commerce 

278 See Table 9, Table 10 and related explanation. 

279 Eurostat database DS-056329-1: Trade by activity and enterprise size class. Comparable data are only available for the period 2006-2007. Eurostat also contains 

statistics for the period of 2004-2005, but since a different methodology was used for collecting the data, the figures contain large discrepancies and are not comparable with 

the period 2006/2007. 

80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
                                                 
Table 9 – Number of exporting firms (2006-2007) and growth 

Manufacturing 
Wholesale 
Retail 
Total 
Annual increase in 
number of 
exporting firms 
2006-2007 

2006 
333 927 
239 439 
139 154 
712 520 

14.59% 

2007 
360 039 
268 430 
184 670 
813 139 

This figure does not take into consideration the fact that some of the new exporters may have already 
exported  in  the  past  and  previously  incurred  the  one-off  transaction  costs.  However,  this  may  be 
balanced by the fact that this estimate does not include companies which already export and want to 
expand their operations to more EU countries. Therefore, we consider that new exporters explore on 
average the same number of foreign markets (between 2.7 and 5.1 Member States) as exporters that 
are not new. Hence, in order to estimate the annual transaction costs, a growth rate of 14.59% in the 
number  of  companies  is  assumed  in  each  sector.  Table  10  shows  the  estimate  of  the  total  annual 
transaction costs. The low and high estimates are computed as above. 

Table 10: Annual transaction costs for the EU economy 

Annual transaction costs (without IT related costs) in € billion 

Sector 
B2B283 
B2C284 
Total 

Number of exporters 
(2007) 

Number of new exporters every 
year280 

660 554 
184 670 
845 224 

96 375 
26 943 
123 318 

Low 
estimate281 
0.34 
0.52 
0.86 

High 
estimate282 
0.72 
1.08 
1.80 

IT related costs in € billion 

Sector 
B2C288 

Number of exporters 
(2007) 

Number of new exporters every 
year285 

67 230 

9 809 

Low 
estimate286 
0.07 

High 
estimate287 
0.12 

Annual costs in € 
billion 

Low 
estimate 

High 
estimate 

  0.93 

1.92 

€1 to €2 billion  is therefore the estimate for the incurred one-off cost for new exporters every year.   

280 14,59% of number of exporters in 2007. 

281 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the lower value of  €9,000 per company *  14.6% of companies applying 

a foreign law * 2.7 Member States companies export to * number of exporters; For B2C (retail) the costs are calculated using the lower value of €8,695 * 82.4% of informed 

exporting companies *  2.7 Member States companies export to * number of exporters 

282 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the higher value of  €10,658 per company *  14.6% of companies 

applying a foreign law * 4.8 Member States companies export to * number of exporters; For B2C (retail) the costs are calculated using the lower value of €9,565 *  82.4% of 

informed exporting companies *5.1 Member States companies export to * number of exporters 

283 Agriculture, Manufacturing and Mining, Wholesale. 

284 Retail. 

285 14,59% of number of exporters in 2007. 

286 Average number of countries exported to = 2.7 *  82.4% of informed exporting companies * transaction costs per firm = €2,916 * number of exporters in e-commerce 

287 Average number of countries exported to = 5.1 * 82.4% of informed exporting companies * transaction costs per firm = €2,917 * number of exporters in e-commerce 

288 Retail. 

81

 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
5.  Implementation costs for options 4, 5a and 6 

The  implementation  of  the  different  policy  options  would  generate  costs,  which  depending  on  the 
option,  would  affect  either  exporting  companies  only,  or  all  companies  (including  those  who  only 
trade domestically).  

Option 4 (optional Common European Sales Law) 

The  one-off  implementation  costs  would  affect  only  those  exporting  companies,  who  decide  to 
choose  the  optional  Common  European  Sales  Law.  Under  option  4,  only  a  certain  percentage  of 
exporters would use it. The assumption is that realistically at the first stage 25% up to 50% of new 
exporters  would  be  willing  to  choose  the  optional  Common  European  Sales  Law.  Thus,  the 
aggregate implementation costs for the EU economy can be calculated based on the formula below:  

% using optional Common European Sales Law * number of exporting companies * implementation 
costs per company 

Assuming that 25% use the OI, and using the transaction costs per company estimated in section 2 of 
this Annex, the implementation costs would be:  

B2C (low estimate): 25%* 184 670 * €8,695 = €0.4 bn  
+ 
B2B (low estimate): 25% * 660 554 * €9,000 = € 1.49 bn 
= €1.89 bn 

Option  5a  (Full  harmonisation  Directive)  /  Option  6  (Regulation  establishing  a  mandatory 
Common European Sales Law) 

The one-off implementation costs under options 5a and 6 would affect both exporting companies and 
those who trade only in their domestic market, as the respective instrument would be binding for all 
companies. The aggregate implementation costs for the EU economy can be calculated based on the 
formula below:  

Companies  that  trade  only  domestically  (17  136  213  in  B2B  and  4  420  563  in  B2C)  * 
implementation costs per company = €208.8 bn  
+  
companies that export * implementations costs per company = €8.18 bn 
= € 216.98 bn 

6.  Savings for the EU economy 

6.1. Savings for new exporters 

The savings for new exporters would arise annually, as a consequence of the reduction in transaction 
costs for cross-border trade as a result of a Common European Sales Law  instrument.  

Option 4 (optional Common European Sales Law) 

Exporters will benefit from savings when they export to more than 1 Member State. The companies 
using the optional Common European Sales Law will only incur the cost of familiarising themselves 
with the new law. 

82

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If  the  current  export  level  persists  (on  average  about  2.7  –  5289  MS),  the  cost  savings  could  be 
estimated as follows: 

Annual  transaction  costs  under  baseline  scenario  –  annual  transaction  costs  under  the  optional 
Common European Sales Law = Savings under the optional Common European Sales Law  

Therefore, under different assumptions for the percentage of companies who would use the optional 
Common European Sales Law, the savings can be calculated as:   

(100%  -%  using  the  optional  Common  European  Sales  Law)  *  annual  transaction  costs  under 
baseline scenario + % using the optional Common European Sales Law * (annual transaction costs 
under  baseline  scenario  /  average  number  of  countries  they  export  to)  =  annual  transaction  costs 
under the optional Common European Sales Law.  

For instance, assuming that 25% of the new exporters will use the optional Common European Sales 
Law:  

•  The annual costs would be: 

Low estimate: 75% * €1 bn + 25% *€1bn / 2.7 MS = € 0.85 bn 
High estimate: 75% * €2bn + 25%* €2 bn / 5 MS = €1.6 bn  

•  The annual savings would be: 
Low estimate:  €1bn – €0.85 bn = € 0.15 bn 
High estimate: €2 bn – € 1.6 bn = €0.4 bn  

The more companies that use the optional Common European Sales Law, the higher the savings will 
be.   

In a longer term, these annual savings could be discounted290 to €3.9-€10bn and the net benefit for 
the EU economy would be €2-€8.11bn (€3.9-€10bn minus €1.89bn). 

Option  5a  (Full  harmonisation  Directive)  /  Option  6  (Regulation  establishing  a  mandatory 
Common European Sales Law) 

The savings for new exporters under option 5a would amount to €0.63 – €1.6 bn  (computed under 
the formula used for option 4).291  

However,  this  estimate  is  simplified  and  does  not  consider  that,  particularly  in  B2B  transactions, 
companies would continue to benefit from the freedom of choice of law under international private 
law  rules.  The  percentage  of  companies  that  would  have  a  preference  for  international  law 
instruments or laws of third countries in a scenario where a Directive was put in place is difficult to 
determine. It would partially depend on the content of the Directive and whether companies would 
see it as a more beneficial choice compared to other alternatives. In any case, the Vienna Convention 
would continue to apply on an opt-out basis and would therefore govern the transactions where no 
choice of law was exercised. Furthermore, companies which would have specific preferences for the 
law of third countries, such as Swiss law, could continue to exercise this choice.   

These savings would however not outweigh the initial one-off adaptation cost of €216.98 bn even in 
the longer time frame.292 

289 4.8 in B2B and 5.1 in B2C 

290 Discount rate of 4% as recommended in the European Commission IA Guidelines, Annex XI. 

291 It is important to note that these savings only represent a situation under which the new exporters trade with the same number of MS as under the BS. 

292 In a longer term, these annual savings could be discounted to €15.75 - €40 bn and the net loss for the EU economy would be (- €201.23) – (- €176.98) bn (i.e. €15.75 - 

€40 bn minus €216.98 bn). 

83

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
6.2. Potential savings for current exporters 

Current exporters that would expand their cross-border sales to new countries would also benefit as 
they would incur only a one-off adaptation cost in order to begin trade to a new EU country. 

It  is  assumed  that  25%  of  the  companies  would  use  the  optional  Common  European  Sales  Law 
(46,168  companies).293  The  expected  increase  in  number  of  new  countries  the  companies  would 
trade with if the Common European Sales Law was available is based on the results of EB 321.294 

The potential avoided transaction costs for the EU economy are illustrated in the table below. The 
table takes as a basis the low estimate of transaction costs i.e. €8,695 for each new MS into which a 
company exports.  

Table 11: Savings for the EU economy, B2C 

Companies 

Currently trading to 
1 country 
2-3 countries 
4 or more 

1 country 
2-3 countries 
4 or more 

1 country 
2-3 countries 
4 or more 

Would trade to 
1-2 new countries 
(=1.5) 

3-5 new countries 
(=4) 

6 or more new countries 
(=6) 

40% 
31% 
17% 

4 723 
4 994 
3 103 

31% 
33% 
35% 

3 660 
5 316 
6 388 

8%  PERCENTAGES 
17% 
27% 

945  COMPANIES295 

2 738 
4 928 

20 533 394 
21 710 238 
13 488 938 

95 480 283 
138 665 390 
166 628 061 

41 066 788  SAVINGS (€) 
119 056 143 
214 236 078 

Total savings (low estimate) 

830 865 313 

The  table  is  divided  into  three  horizontal  parts.  The  first  part  (percentages)  shows  the  share  of 
exporters (currently trading to 1, 2-3, or "4 or more" countries) that declared they would expand their 
cross-border sales.  

The second part of the table (companies) shows the absolute number of current exporters that would 
expand their cross –border to a certain number of new countries (1-2, 3-5, "6 or more").  

For example, 40% of current exporters trading with 1 country i.e. 4,723 companies, would expand 
their cross-border sales to 1-2 new countries. 

In  order  to  estimate  the  potential  savings  (third  part  of  the  table),  the  number  of  companies  are 
multiplied by the number of additional MS these companies would export to and by the cost per MS 
that they avoid when using the Common European Sales Law.296   

293 According to EB320 and EB321 40% of companies in B2C and 34% in B2B would increase their cross-border operations if they were able to choose a single Common 

European Sales Law for transactions. These figures give an indication on the number of companies that expect their cross-border trade to expand under option 4.  However, 

as the sample of the EB surveys covered also non-exporters that are interested in cross-border trade, the more conservative estimate of 25% of exporters using the optional 

Common European Sales Law is used. 

294 EB 321, p.36. 

295 Data on number of current exporters and their level of cross–border trade a taken from Table 6 of this Annex.  

84

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Under the low estimate, total savings amount to €0.8 bn. If the high estimate of transaction costs i.e. 
€9,565 (per company per MS) is used, total savings would amount to around €0.9 bn. 

For  B2B  transactions,  it  has  been  assumed  that  25%  of  the  companies  would  use  the  OI  (165,139 
companies)297. 
The  expected  increase  in  number  of  new  countries  the  companies  would  trade  to  if  the  Common 
European Sales Law was available is based on the results of EB 320. 298 
The potential avoided transaction costs for the EU economy are illustrated in the table below. The 
table takes as a basis the low estimate of transaction costs i.e. €9,000 for each new MS into which a 
company exports.  
The calculations are developed similarly as described for the previous table. 

Table 12: Savings for the EU economy, B2B 

Companies 

Currently trading to 
1 country 
2-3 countries 
4 or more 

1 country 
2-3 countries 
4 or more 

1 country 
2-3 countries 
4 or more 

Would trade to 
1-2 new countries 
(=1.5) 

3-5 new countries 
(=4) 

6 or more new countries 
(=6) 

54% 
31% 
24% 

23 040 
19 560 
14 250 

27% 
37% 
37% 

11 520 
23 346 
21 968 

5%  PERCENTAGES 
14% 
21% 

2 133  COMPANIES299 
8 834 
12 468 

103 681 360 
88 022 001 
64 122 910 

311 044 081 
630 351 105 
593 136 917 

96 001 260  SAVINGS (€) 
397 518 715 
561 075 462 

Total savings (low-
estimate) 

2 844 953 811 

Under the low estimate, total savings amount to €2.84 bn. If the high estimate of transaction costs 
i.e. €10,658 (per company per MS) is used, total savings would amount to around €3.4 bn. 

The total savings for the EU economy for B2B and B2C transactions considering the extra number 
of MS in which companies would trade under an OI would be €3.7 – €4.3 bn .  

The total savings under option 5a (full harmonisation Directive) would be at least of the same scale 
as  option  4,  as  the  level  of  exports  is  likely  to  increase  similarly  to  the  scenario  under  option  4. 
However, it is difficult to estimate the precise scale of the increase and the law which would govern 
those transactions in particular in B2B trade. It is not certain what percentage of businesses would 
choose,  as  their  preferred  choice,  the  national  law  after  the  implementation  of  the  Directive  under 
option  5a.  Companies  would  continue  to  benefit  from  the  freedom  of  choice  of  law  under 
international private law rules. Thus, their preference for the Directive would partially depend on its 

296 e.g. for companies currently trading to 1 country that would trade to 6 or more new countries, the savings would be 6*€8,695 – €8,695 of implementation = €43,475, 

multiplied by 945 companies = €41 million. 

297 According to EB320 and EB321 40% of companies in B2C and 34% in B2B would increase their cross-border operations if they were able to choose a single Common 

European Sales Law for transactions. These figures give an indication on the number of companies that expect their cross-border trade to expand under option 4.  However, 

as the sample of the EB surveys covered also non-exporters that are interested in cross-border trade, a more conservative estimate of 25% of exporters using the optional 

Common European Sales Law has been taken forward. 

298 EB 320, p. 34 

299 The number companies currently trading with 1 to "4 or more" MS comes from Table 5 of this Annex. 

85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                                    
content, compared to other alternatives. In any case, the Vienna Convention would continue to apply 
on an opt-out basis and would govern transactions where no choice of law was exercised. Another 
alternative  to  the  Directive  would  be  the  law  of  third  countries,  such  as  Swiss  law.  As  B2B  trade 
accounts for the larger share of aggregate transaction costs, it would also largely determine potential 
costs savings.  

86

 
 
ANNEX IV: ECONOMIC MODEL APPLIED TO THE ASSESSMENT OF POLICY 
OPTIONS 

1.  The Global Trade Analysis Project (GTAP) 

The macro-economic analysis has been carried out using the Global Trade Analysis Project (GTAP) 
model.300  GTAP  is  a  static  general  equilibrium  model  analysing  changes  in  production,  trade  and 
consumption  as  a  consequence  of  changes  in  such  exogenous  variables  as  costs.301  The  model 
includes all countries in the EU27 and 57 products among which 24 are manufactured goods. GTAP 
is able to calculate the impact of a new policy on GDP, trade, intra-EU trade, consumer prices and 
expenditure and consumer welfare. 

For  each  country,  GTAP  identifies  demand  for  the  57  products  by  households  (consumers), 
businesses  and  governments.  For  each  type  of  customer,  product  demand  is  split  into  demand  for 
domestic products and demand for imported products.  For each country, product supply depends on 
the  use  of  domestic  and  imported  products  and  domestic  production  factors  such  as  capital,  land, 
labour and natural resources.  

The model identifies prices at different levels of the supply chain from the production costs to the 
customer  prices  i.e.  producer  prices,  market  prices,  export  prices,  import  prices,  consumer  prices. 
Prices diverge due to taxes and subsidies, transport costs and wholesale and retail margins.  

The labour market is assumed not to be in equilibrium. Wages are fixed and employment grows with 
demand and production.  

Data  is  collected  and  processed  by  a  consortium  of  27  agency  members  including  the  European 
Commission, FAO, OECD, World Bank, three US agencies and WTO.  

2.  Assumptions for impact calculation 

The Flash Eurobarometer surveys 320 and 321302 provide data on the attitudes of companies trading 
and interested in cross-border trade, among others on their willingness to use the European contract 
law  and  impacts  it  could  have  on  the  level  of  their  cross-border  trade.  More  specifically,  the 
companies were asked to indicate whether they would use the European contract law if it was made 
available and whether they would expand their trade to more Member States. 

The respondents were asked to provide a qualitative assessment of the impact the European contract 
law  would  have  on  their  cross-border  sales  i.e.  to  indicate  whether  their  cross  border  sales  would 
increase a lot, a little or decrease. Therefore, assumptions had to be made on the numerical value of 
these qualitative answers.  The following assumptions have been made:  

- 

- 

"small decrease/increase in trade": the assumed value for "small" is within the range of 
1%-4% where 1% is the low, 2% is the medium and 4% is the high estimate. Under the 
low  estimate  it  is  assumed  that  the  cross-border  operations  of  a  company  would 
increase/decrease by 1% and under the high estimate by 4%. 
if  a  respondent  indicated  that  he  expected  a  "large  increase",  the  assumed  value  for 
"large" is within the range of 5%-20%, where 5% is the low, 10% the medium and 20% 
the high estimate. Under the low estimate it is assumed that the cross-border operations 
of a company would increase/decrease by 5% and under the high estimate by 20%. 

300 See www.gtap.agecon,purdue.edu and Hertel et al. (1997),  Global trade analysis; Modelling and applications, Cambridge University Press.  

301 The model has an Input-Output structure for all the economies included. Trade is identified at the bilateral level.  

302 Flash Eurobarometer 321, European contract law in consumer transactions and Flash Eurobarometer 320, European contract law in business-to- business transactions 

87

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
The above assumptions underlie the estimates of impacts of each option.  

Options  5  and  6  would  apply  to  all  Member  States  and  all  traders  and  therefore  have  the  most 
significant impact. The impact of option 4 would only be a fraction of the impact of option 5 and 6, 
as  only  a  part  of  companies  would  choose  the  new  optional  Common  European  Sales  Law.  The 
impact  of  option  3  is  likely  to  be  much  more  limited  than  the  one  of  option  4,  as  not  only  the 
companies, but also the Member States will have the possibility to choose if they want to apply the 
optional Common European Sales Law and in which form. 

Assumed impact of policy option 5 and 6 

Based  on  the  above  assumptions,  the  impact  on  trade  could  be  estimated  at  0.8%-3.1%  for  B2B 
transactions and 0.9%-3.5% for B2C transactions. Option 5 and 6 are likely to increase cross-border 
trade by 0,8% in B2B and 0,9% in B2C under the low estimate and up to 3,1% in B2B and 3,5% in 
B2C under the high estimate. 

88

 
 
 
 
 
Table 1 – Assumed impact on trade303 

B2B transactions: EB 320, question 5 
If companies were able to choose one single European contract law for their B2B cross-border 
transactions in the EU, would their cross-border operations… 
Impact 
expected 

Assumptions 

Share of firms 
indicating 
expected impact 
on cross-border 
trade 

Decrease 
Remain the 
same 
Increase a little 
increase a lot 
Don’t know 

Impact on trade 
Weighted 
average  

Low estimate 

-1%

0%
1%
5%

1,20% 

54,30% 
24,60% 
8,90% 
11,00% 

Medium estimate  High estimate  
-2% 

-4%

0% 
2% 
10% 

0%
4%
20%

0.76%

1.53% 

3.05%

B2C transactions: EB 321, question 6: 
 If companies were able to choose one single European contract law in all transactions with 
consumers from other EU countries, would their cross-border operations… 
Impact 
expected 

Assumptions 

Share of firms 
indicating 
expected impact 
on cross-border 
trade 

Decrease 
Remain the 
same 
Increase a little 
increase a lot 
Don’t know 

Impact on trade 
Weighted 
average 

Low estimate 

Medium estimate  High estimate  
-2% 
0% 

-4%
0%

2% 
10% 

4%
20%

-1%
0%

1%
5%

0,60% 

48,70% 
30,10% 
9,50% 
11,00% 

0.87%

1.73% 

3.46%

The price elasticity of import demand is a measure of how the volume of cross-border trade reacts to 
a change in prices i.e. it shows how the demand decreases as the result of a one percentage increase 
in price. The value of price elasticity of import demand is equal to -2.8%.304  

303 In all MS for options 5 and 6. For option 4, these impacts are proportionally reduced according to the fraction of companies using the optional Common European Sales 

Law. Option 3 has the same characteristic and the trade increases only in MS incorporating the Recommendation. 

304 GTAP model 

89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
As  indicated  above,  the  impact  of  policy  options  5  and  6  is  an  increase  in  trade  of  0,76%  (low 
estimate) to 3,05% (high estimate). In order to achieve this level of the trade growth, import prices 
would need to fall by 0.27% under the low estimate, 0,55% under the medium estimate and 1,23% 
under the high estimate.305  
These values have been used to compute economic impacts in the GTAP model.306  
In  order  to  have  the  desired  change  in  trade,  import  prices  (and  not  trade  itself)  are  manually 
adjusted at the right level in the model. 

Assumed impact of policy option 4 

In case of option 4 all Member States will have to implement the optional Common European Sales 
Law  in  their  national  law.  Therefore,  assumptions  need  to  be  made  only  for  the  number  of 
companies who would be willing to use it.  

The most optimistic assumption is that 70% of exporting companies in all Member States would use 
the  optional  Common  European  Sales  Law.  It  is  based  on  the  responses  to  EB  320  (on  B2B 
transactions)  and  EB  321(on  B2C  transactions)  in  which  respectively  70%  and  71%  of  the 
respondents indicated that they were likely or very likely to use a single European contract law in 
cross-border transactions.  

However, considering that only a fraction of these respondents indicated an optional instrument as 
the  preferred  option,  respectively  38%  EB  320  (on  B2B)  and  37%  in  EB  321  (for  B2C),  more 
conservative  assumptions  could  be  that  50%  or  25%  of  the  exporters  use  the  optional  Common 
European  Sales  Law.  These  conservative  assumptions  have  been  taken  forward  in  the  analysis 
below.307 

Assumed impact of policy option 3 

The assumptions on the take-up of an optional Common European Sales Law by companies used for 
option  4  also  apply  for  option  3.  In  addition,  for  option  3  a  further  assumption  on  the  number  of 
Member  States  who  would  incorporate  the  Commission  Recommendation  introducing  an  optional 
Common European Sales Law needs to be made.  

It  is  likely  that  not  all  Member  States  would  incorporate  the  Commission  Recommendation.  It  is 
however  assumed  that  the  Recommendation  could  be  followed  by  large  and  small,  old  and  new 
Member  States  located  in  different  parts  of  the EU,  at  a  different  level  of  economic  development. 
Based  on  this  criterion  a  representative  selection  of  EU  countries  is  made.  It  includes  Denmark, 
Lithuania, Germany, Netherlands, Hungary, Poland, Portugal, Italy, Romania and the UK.  

For an estimate of the most positive impacts possible, it is assumed that the countries incorporating 
the  Recommendation  do  this  entirely  and  without  changes.  The  willingness  to  expand  trade  is  the 
same as under option 4, at least for the countries incorporating the Recommendation. It seems likely 
that an instrument available only in a number of countries would be less attractive to companies than 
an  instrument  available  in  the  whole  of  the  EU.  Therefore  the  low  assumption  on  the  number  of 
companies  using  the  optional  Common  European  Sales  Law  i.e.  25%  is  used  for  the  estimates  of 
impacts of policy option 3.  

305  0.76% divided by -2.8%, 1.53% divided by -2.8% and 3.46% divided by -2.8%. 

306 In order to have the desired change in trade, import prices (and not trade itself) are manually adjusted at the right level in the model. 

307 For the impact on administrative costs the assumption of 70% of exporters using the optional Common European Sales Law was considered in order to show the 

maximum magnitude of costs. 

90

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
In  fact,  businesses  in  countries  not  incorporating  the  Recommendation  could  still  use  the  new 
instrument  when  trading  into  a  country  having  implemented  it  (B2C  transactions).  In  B2B 
transactions  when  the  Recommendation  is  incorporated  by  at  least  one  Member  State,  companies 
also from other Member States could choose the incorporated law as applicable law. The economic 
impact  of  this  on  countries  not  applying  the  Recommendation  is  shown  in  the  column  "Impact  on 
other Member States" in the tables below and applies only to option 3. 

3.  Estimates of specific impacts 

Following  the  requirements  of  the  Commission  Impact  Assessment  Guidelines  only  the  most 
significant impacts have been quantified.  

The following tables are generated through the application of GTAP based on the assumptions made 
in section 2.  

3.1.  Impact of policy options on export 

As  import  prices  fall308  there  would  be  a  shift  in  demand  from  domestic  supply  to  import  supply 
(imported  products  become  more  attractive  in  terms  of  their  prices).  At  the  same  time,  businesses 
would shift supply from domestic customers to foreign customers i.e. businesses have more foreign 
customers.  

As  import  prices  fall,  domestic  prices  would  be  under  pressure  as  well.  As  a  result,  aggregate 
demand would go up as a consequence of which production would go up. The price decrease would 
benefit both domestic and import supply. 

Table 2 - Impact on exports by EU Countries: intra- and extra-EU trade (€ millions) 

Option  

Companies  
participating 

Impact on 
countries  
participating 

Option 3 
Option 4 

Low 

estimate  Options 5 

25% Companies 
25% Companies 
50% Companies 

& 6 
Option 3 
Option 4 

Medium 
estimate   Options 5 

& 6 
Option 3 
Option 4 

High  
estimate   Options 5 

& 6 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

2,100
4,915
9,831

19,662
4,115
9,585
19,070

38,341
8,397
19,498
38,996

77,993

Total 

Impact on 
other 
Member 
States 

298 

580 
- 
- 

- 

1,190 
- 
- 

2,398
4,915
9,831

19,662
4,695
9,585
19,070

38,341
9,587
19,498
38,996

77,993

With option 4, exports increase by approximately €5-€19 billion. 

308 This variable does not depend from other ones and it is set manually in the model, based on the assumptions described above. 

91

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2. Impacts on consumers  

3.2.1. Impact on consumer prices 

The decrease in import prices would lead to a decrease of consumer prices. For instance, a decrease 
in import prices by 0.27% under the low estimate (see section 2) under options 5 and 6 leads to a 
decrease in consumer prices by 0.14% (see table 4). This is lower, because import prices are only a 
fraction  of  consumer  prices  and  because  prices  of  domestically  supplied  products  would  decrease 
less.  

Under option 3, consumer prices would decrease by 0.03% under the low estimate (if 10 countries309 
incorporated the Recommendation and 25% of companies used the instrument).  

Consumers  would  consume  more  imported  goods  as  they  become  relatively  cheaper.  In  the  low 
estimate, consumption of imported goods would go up by 0.8% under options 5 and 6 and 0.2-0.4% 
under option 3 and option 4 (see table 3). 

Table  3  -  Impact  on  consumer  price  and  consumption  of  imported  household  goods  (% 
changes) 

Option   Companies  
participating 

Consumer price  

Consumption of 
imported goods 

Participat
ing  
countries 

Other  
countries 

Participat
ing  
countries 

Other 
countries 

Option 3  25% 

Companies 

-0.033

-0.002

0.181 

0.026 

Low 
estimate 

Medium 
estimate 

Option 4  25% 

Companies 
50% 
Companies 

Options 
5 & 6 
Option 3  25% 

Companies 

Option 4  25% 

Companies 
50% 
Companies 

Options 
5 & 6 
Option 3  25% 

Companies 

High 
estimate 

Option 4  25% 

Companies 

309 See country selection in section 2. 

-0.035

-0.070

-0.140

-0.064

-0.070

-0.140

-0.280

-0.131

-0.143

-

-

-

-0.003

-

-

-

-0.006

-

0.208 

0.415 

0.830 

0.355 

0.410 

0.820 

1.640 

0.724 

0.835 

- 

- 

- 

0.05 

- 

- 

- 

0.103 

- 

92

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
50% 
Companies 

Options 
5 & 6 

-0.285

-0.570

-

-

1.670 

3.340 

- 

- 

3.2.2. Impact on consumer welfare 

The decrease in consumer prices increases consumer welfare. Consumers would get the same value 
at  lower  prices.  This  would  increase  consumer  surplus,  i.e.  the  difference  between  the  price  the 
consumers are willing to pay and the amount they actually pay. Under the low estimate consumers 
would  have  a  surplus  of  €18  billion  if  a  full  harmonisation  Directive  (option  5)  or  Regulation 
establishing a mandatory Common European Sales Law (option 6) was adopted. A percentage of this 
value would measure the surplus for consumers under option 4: if 25% companies use the optional 
Common European Sales Law, consumers will enjoy an extra €4.5 billion. Option 3 with the same 
percentage  of  companies  using  the  optional  Common  European  Sales  Law,  will  give  a  consumer 
surplus of €1.5 billion. 

Table 4 - Impact on consumer welfare (€ millions) 

Option  

 Companies  
participating 

Impact on 
countries  
Participating 

Impact on  
other  
Member 
States 

Total 

Option 3 
Option 4 

Low 

estimate  Option 5 
Option 3 
Option 4 

Medium 
estimate   Option 5 
Option 3 
Option 4 

High  
estimate   Option 5 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

1,483
4,575
9,150
18,300
2,911
8,980
17,961
35,922
5,392
18,300
36,599
73,199

449 
- 
- 
- 
882 
- 
- 
- 
1,797 
- 
- 
- 

1,932
4,575
9,150
18,300
3,793
8,980
17,961
35,922
7,729
18,300
36,599
73,199

3.3. Macro-economic impacts  

3.3.1. Impacts on GDP 

GDP  grows  because  of  changes  in  consumption  ∆C,  investment  ∆I,  government  spending  ∆G, 
exports ∆X and imports ∆M. 

The change in GDP equals 

∆GDP = ∆C + ∆I + ∆G + ∆X - ∆M 

All these variables have been computed in the GTAP model based on the assumptions in section 2. 

93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 5 - Impact on GDP (€ millions)   

Option  

 Companies  
participating 

Option 3 
Option 4 

Low 

estimate  Option 5 
Option 3 
Option 4 

Medium 
estimate   Option 5 
Option 3 
Option 4 

High  
estimate   Option 5 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

Impact on 
countries  
participating 

Impact on  
other  
Member 
States 

Total 

1,817
5,008
10,017
20,034
3,567
10,017
20,034
40,069
7,268
20,329
40,658
81,316

363 
- 
- 
- 
712 
- 
- 
- 
1,451 
- 
- 
- 

2,180
5,008
10,017
20,034
4,279
10,017
20,034
40,069
8,720
20,329
40,658
81,316

For instance, for option 4, under the low estimate, the GDP grows by € 5-10 billion and under the 
high estimate grows by €20- €40 billion.  

3.3.2. Impacts on Employment  

Table 6 - Impact on employment (persons) 

Option  

Companies  
participating  

Impact on 
countries  
Participating 

Impact on  
other  
Member 
States 

Total 

Option 3 
Option 4 

Low 

estimate  Option 5 
Option 3 
Option 4 

Medium 
estimate   Option 5 
Option 3 
Option 4 

High  
estimate   Option 5 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

25% Companies 
25% Companies 
50% Companies 

63,667
159,300
318,600
637,200
124,977
315,900
631,800
1,263,600
254,670
637,200
1,274,400
2,548,800

10,083 
- 
- 
- 
19,793 
- 
- 
- 
40,332 
- 
- 
- 

73,751
159,300
318,600
637,200
144,770
315,900
631,800
1,263,600
295,002
637,200
1,274,400
2,548,800

For instance, for option 4, under the low estimate, there would be approximately 160 000 – 320 000 
new jobs. 

94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX  V:  DETAILED  ANALYSIS310  OF 
OPTIONS311 

IMPACTS  OF  POLICY 

1.  Policy option 1: Baseline Scenario  

ECONOMIC IMPACTS 
Transaction costs: The baseline scenario (BS) transaction costs312 (one off) for trading with one 
other Member State (MS) amount to: in B2C transactions: on average €9,100 ( €8,695- €9,565, 
plus €2,900 for e-commerce oriented enterprises selling to consumers that face additional contract 
law related IT costs) and in B2B transactions €9,800 (€9,000-€10,658).  
The overall transaction costs stemming from contract law for EU business currently involved in 
B2C and B2B transactions range between €7 billion and €15 billion.313 These figures represent 
sunk costs that are not recoverable. But, in addition to these sunk costs we can compute an annual 
cost for the EU economy as new traders enter the market.  
This cost can be estimated based on the percentage of new exporters within the EU on a yearly 
basis, (estimated at 14.6%).314 Using this estimate, the annual aggregate transaction costs are 
approximately €1-2 billion. This is the maximum incurred annual cost due to the differences in 
contract law. If we assume these costs continued, by the year 2020, exporting firms would face 
transaction costs of €9-18 billion due to differences in contract laws.  
For a micro enterprise in the retail sector the cost of trading in one additional MS amounts to 6.5% 
of its average annual turnover and for trading in the whole of the EU exceeds its average annual 
turnover by almost twice. For a small enterprise in the same sector the cost of trading in one 
additional MS would amount 0.25% of its annual turnover. For trading in the whole of the EU this 
would be 6.4% of its annual turnover. If a medium enterprise wished to trade with the whole of the 
EU it would have to invest 2.22% of its annual turnover, for a large enterprise it would cost 0.06% 
of its annual turnover.  (see problem definition for calculation of costs and more detail). 
Administrative costs (included in the overall figure of transaction costs): To trade in another MS, 
companies need to familiarise themselves with foreign law, adapt their terms and conditions and 
meet requirements (such as information provision to potential customers) set out in the law of this 
MS. 
With no EU action, the average administrative costs315 per company per MS with which it trades 
would amount to: in B2C €2,500, in B2B €1,500. These are mostly one-off costs but accumulate 
as the number of MS a company trades with increases. For example, for trade with 2 MS these 
figures would be €3,000 for B2B and €5,000 for B2C and for 5 MS it would be €7,500 for B2B 
and €12,500 for B2C.316  
Opportunity costs of foregone trade: As set out in the problem definition, the transaction costs in 
some cases deter some businesses from trading, and in others limit their trade. Businesses 

310 The economic impacts in this section have been calculated using the Global Trade Analysis Project (GTAP) model. (See www.gtap.agecon,purdue.edu and Hertel et al. 

(1997),  Global trade analysis; Modelling and applications, Cambridge University Press.)  GTAP is a static general equilibrium model analysing changes in production, trade 

and consumption as a consequence of changes in such exogenous variables as costs. The model has an Input-Output structure for all the economies included. Trade is 

identified at the bilateral level.   The model includes all countries in the EU27 and 57 products among which 24 are manufactured goods. GTAP is able to calculate the 

impact of a new policy on GDP, trade, employment, intra-EU trade, consumer prices, expenditure and consumer welfare.  

311 Unless otherwise stated the analysis in this section applies to both B2B and B2C transactions in a cross border only context. In addition, unless otherwise stated, all data 

in this section comes from EB 320 and 321. (EB surveys 320 and 321 provide data on the attitudes of export oriented companies, in particular, on their willingness to use the 

European contract law and the impacts it could have on the level of their cross-border trade. More specifically, the respondents indicated to what extent they would use 

European contract law if it was made available and whether they would expand their trade to more Member States. The impacts on all considered macro-economic variables 

are computed based on the companies' expectations for cross-border expansion of their trade if European contract law existed.)   

312 See Annex III. 

313 See Annex III. 

314 See Annex III. 

315 See Annex VII. Per company per MS for B2C this would be €2,500 and for B2B €1,500. 

316 See Annex VII for more details on how these costs are calculated. 

  95 

 
 
 
  
 
                                                 
 
therefore miss out on potential trade. The costs for these missed opportunities are €26 billion– 
€184 billion for sales not made (B2B and B2C). 
Competition in internal market and impact on consumer prices: With no EU action, competition in 
the internal market would remain limited. Due to the remaining legal differences and related costs, 
many businesses would not be encouraged to trade cross-border. Without this extra trade taking 
place, a number of businesses would not act competitively, which if they were to, would drive 
down prices.317 As a result without an increase in competition in the market place, consumers 
would continue to face a restricted choice of products at a higher price 
Impact on consumer protection: This option includes the adoption of the CRD which, due to its 
nature (a large element of full harmonisation) ensures that within its scope, consumers have rights 
which are harmonised across the EU. Therefore divergences between the consumer protection 
rules of different MS remain. Many Green Paper respondents stated that action should only be 
taken if a previously adopted instrument has proven to be inefficient.318  However the text adopted 
does not harmonise important areas of consumer contract law, for instance sales remedies and 
unfair contract terms would remain fragmented across the EU. In addition, the CRD does not 
cover the full life cycle of a contract or B2B contracts. Therefore differences between the 
consumer protection rules of different MS remain. Not to take EU action would allow these 
differences to continue. 
Impact on SMEs: For those performing B2B contracts, where parties are of a similar size, 
negotiating the applicable law is a time consuming factor which could otherwise be spent in the 
business. In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable 
law was an important obstacle to cross border trade.   
In addition, it is normally the stronger (usually larger) party which imposes their country’s law on 
the smaller party319 as the law applicable to the contract. The smaller party then has to bear the 
transaction costs of finding out about the foreign contract law which applies to their contract. If 
the SMEs concerned in both scenarios are micro or small enterprises, then these costs would 
weigh, in relative terms, more heavily upon them. 
Impact on law firms: No impact.  
Public authorities: MS: No impact.  
Judiciary: Litigation costs would result from the need for courts to investigate and apply different 
national laws than their own which are relevant for cross-border contracts would remain. Judges 
would either need to investigate the foreign applicable law themselves or obtain the necessary 
knowledge through the advice of legal experts or the evidence submitted by lawyers. In these 
instances, time of the judges and experts/lawyers would be taken to research the foreign applicable 
law. The cost of this time and research would be borne by either the courts or parties involved. 
Analysis of provisions of instrument:320 No impact.  

SOCIAL IMPACTS 

No impact.  
ENVIRONMENTAL IMPACTS 

Without EU action there would not be an increase in cross border trade and therefore no impact 
upon the environment (via for example an increase in delivery of goods which would increase 
CO2 and other emissions, or an increase of costs to control pollution due to the binding EU rules) 
would not be felt. 

317 Thereby not contributing towards the Commission policy towards increasing competitiveness 'An Integrated Industrial Policy for the Globalisation Era Putting 

Competitiveness and Sustainability at Centre Stage', COM (2010) 614.  

318 E.g. BEUC's response to the Green Paper consultation, p. 4; UEAPME's position on the EC Green Paper, p. 2; EuroCommerce's response to the EC consultation, p.1-2. 

319 It is recognised that SMEs are not always in a weaker bargaining position; this example only applies to those who are. 

320 This analysis is only applicable to those options which describe the impacts of a legal instrument. 

96

 
 
                                                                                                                                                                    
ONLINE ENVIRONMENT 
With no EU action, the trend of domestic sales being far greater than cross border ones would 
continue. 

OVERALL ASSESSMENT 
This option would not remove the additional transaction costs for cross-border trade identified in 
the problem definition. The subsequent opportunity costs would continue; the level of legal 
complexity for businesses wishing to trade cross border would not be reduced. This option would 
also mean that the complexity consumers experience regarding their rights in a cross-border 
context would remain and the practice of refusal to sell across border would not decrease.  
Even though this option takes account of full harmonisation of some consumer protection rules 
due to the adoption of the CRD, this harmonisation is restricted to only a few selected areas of 
consumer contract law. Most aspects of this law such as sales remedies and unfair contract terms 
would remain fragmented across the EU. This fragmentation would not give consumers the full 
confidence on all their consumer rights for when they purchase across border.  

2.  Policy option 2 

2.1. Policy option 2a: Toolbox as a Commission document 

The  toolbox  itself  would  only  have  an  indirect  impact  upon  businesses  and  consumers  because 
concepts from the toolbox would be used for the development of future contract law legislation or 
the revision of existing EU legislation. The legislation itself would have the direct impact. As such a 
Commission instrument would not be agreed by the Council and EP, the EU legislator could always 
deviate  from  the  parts  on  Commission  proposals  implementing  the  toolbox.  Because  of  the 
uncertainty of its implementation, the impact of this option would not only be indirect but also very 
limited.321  For  this  reason  it  is  difficult  to  quantify  what  this  impact  would  be.  In  addition,  there 
would  not  be  any  immediate  impact  of  this  option  upon  businesses  as  negotiations  for  new 
legislation or an amendment to existing legislation would take time to achieve.  

ECONOMIC IMPACTS  
Transaction costs: In the longer term this option could lead to a small reduction in the transaction 
costs due to the limited convergence of certain contract law concepts, but the extent of this is 
unknown as one cannot predict when and how these concepts would be used. 
Administrative costs (included in the overall figure of transaction costs): This option could create 
indirect administrative costs associated with future contract law requirements. For example if a 
future law based upon the toolbox obliged a trader to provide information not previously required, it 
could mean that the trader would have to bear the associated administrative costs. The use of the 
toolbox would have an indirect impact on these costs only as far as the concepts used from it impose 
an administrative burden on businesses in future legislation compared to the BS. These costs would 
depend on the potential future use of the toolbox.  
Competition in internal market and impact on consumer prices: There would be little changed from 
the BS. 
Impact on consumer protection: Where rules from the toolbox (which are not in the current acquis or 
domestic legislation) are adopted in EU legislation, they could raise the level of consumer protection 
in the laws of some MS. Having common rules in the toolbox, in the longer term could improve and 
harmonise to some extent the legal protection of consumers compared to the BS, however the 
impacts on consumer protection would only be felt if the EU legislator agrees to use the rules from 
the toolbox.  

321 European Small Business Alliance response to the Green Paper, p2 also supports that the Toolbox does not have the substance 'to deliver real benefits to businesses 

engaged in transactions across the wider European market.' 

97

 
 
 
 
 
 
 
                                                 
Impact on SMEs: Very little change compared to the BS. Initially national contract laws would still 
apply and therefore so would the BS transaction costs. In the longer term there could be some 
limited convergence of Common European Sales Laws that could lead to a small reduction in 
transaction costs, however the extent of this is unknown. 

Impact on law firms: No change from the BS. 
Public authorities: MS: Very little change compared to the BS. An indirect impact felt only where 
new contract law concepts based on the toolbox would be included in future legislation and would 
need to be implemented/transposed by MS.  
Judiciary: Very little change compared to the BS. A limited indirect impact could also be felt by the 
judiciary who, depending on the extent of the change, would need to train for new concepts in future 
legislation. 
Analysis of provisions of instrument:322 No impact.  

SOCIAL IMPACTS 

No change from the BS. With very little likely impact on facilitation of cross border trade, social 
impacts such as job creation would not occur. 

ENVIRONMENTAL IMPACTS 

No change from the BS. Without an increase in cross border trade there would not be an impact 
upon the environment (via for example an increase in delivery of goods which would increase CO2 
and other emissions). 

SIMPLIFICATION POTENTIAL 

This option could create some convergence of the relevant contract law legislation and result in a 
small level of simplification as national laws would in time begin to develop similarities.  

ONLINE ENVIRONMENT 
No change from the BS as this impact would only be applicable to those options which describe a 
legal instrument. 

OVERALL ASSESSMENT 
Compared to the BS this option may to a very small extent help to facilitate the expansion of cross-
border trade in the internal market. It may also to a small extent indirectly lead to an increased level 
of consumer protection in national contract laws.  
However, since the contract law related transaction costs would largely remain unchanged, the 
positive impacts of this option on businesses and consumers would be minimal and in turn so would 
any subsequent impacts upon trade, competition and the internal market. Moreover, any impacts of 
this option would not be felt immediately as negotiations for new legislation or amendments to 
existing legislation would take time to achieve. Overall, as there is no way of knowing whether and 
how widely this option would be used and accepted by the Council and EP, the impacts of this 
option would not differ greatly compared to the BS and any impacts felt would be very small and 
would take place in the longer term. 

2.2. Policy option 2b: Tool box as an inter-institutional agreement  

As per policy option (PO) 2a, the toolbox itself would not have a direct impact upon businesses and 
consumers. As an inter-institutional agreement would bind the three EU institutions to make use of 
the  toolbox  concepts  when  drafting  and  negotiating  legislative  proposals  related  to  contract  law 
(except  when  overriding  sector-specific  reasons  would  lead  to  another  result)  there  would  be  less 

322 This analysis is only applicable to those options which describe the impacts of a legal instrument. 

98

 
 
 
 
 
                                                 
deviation  from  the  use  of  the  toolbox  concepts  compared  to  PO2a  and  more  certainty  in  its 
implementation.  

However, despite this increased certainty, the impacts of this option would remain indirect. For this 
reason  it  is  difficult  to  quantify  what  these  impacts  would  be.  In  addition,  there  would  not  be  any 
immediate impacts of this option upon businesses as negotiations for agreeing new legislation or an 
amendment to existing legislation would take time to achieve.  

ECONOMIC IMPACTS  
Transaction costs: In the longer term this option could lead to some reduction in transaction costs 
due to the convergence of certain contract law concepts. Although the extent of this use is unknown, 
there is a greater likelihood of this taking place as all three EU Institutions would agree on 
application of the toolbox concepts rather than just the Commission as would be the case in PO2a. 
Administrative costs (included in the overall figure of transaction costs): This option could create 
indirect administrative costs associated with future contract law requirements as set out under PO2a. 
Competition in internal market and impact on consumer prices: There would be little changed from 
the BS. 
Impact on consumer protection: Where rules from the toolbox are adopted in EU legislation, they 
could raise the level of consumer protection in the laws of some MS.  The impact would be the same 
as set out under PO2a with one difference. As under this option there the toolbox concepts would be 
accepted by the Council and EP, the impacts would be felt to a greater extent than those felt under 
PO2a. 
Impact on SMEs: Very little change compared to the BS. Initially national contract laws would still 
remain and therefore so would the baseline transaction costs. In the longer term there would be some 
limited convergence of Common European Sales Law that could lead to a small reduction in 
transaction costs, however the extent of this is unknown. 

Impact on law firms: No change from the BS. 
Public authorities: MS: Very little change compared to the BS. An indirect impact felt only where 
new contract law concepts based on the toolbox would be included in future legislation and need to 
be implemented by MS.  
Judiciary: Very little change compared to the BS. This limited indirect impact would also be felt by 
the judiciary who, depending on the extent of the change would need to train for new concepts in 
future legislation. 
Analysis of provisions of instrument:323 No impact.  

SOCIAL IMPACTS 

No change from the BS. With very little likely impact on facilitation of cross border trade, social 
impacts such as job creation would not occur. 

ENVIRONMENTAL IMPACTS 

No change from the BS. Without an increase in cross border trade there would not be an impact 
upon the environment (via for example an increase in delivery of goods which would increase CO2 
and other emissions). 

SIMPLIFICATION POTENTIAL 

This policy option could create a greater convergence of the relevant contract law legislation than 
PO2a and result in a small level of simplification as national laws would in time begin to develop 
similarities to each other.    

323 This analysis is only applicable to those options which describe the impacts of a legal instrument.  

99

 
 
 
 
                                                 
ONLINE ENVIRONMENT 
No change from the BS as this impact would only be applicable to those options which describe a 
legal instrument. 

OVERALL ASSESSMENT 
As this option involves all three Institutions agreeing to make use of the toolbox, this option would, 
to a somewhat greater extent compared to PO2a, reduce the differences between national contract 
laws which would help to facilitate the expansion of cross-border trade in the internal market. This 
option could to a limited, but greater extent than PO2a indirectly lead to a higher level of consumer 
protection and legal certainty about consumer rights.  
However, since the toolbox would only be used for the amendment of existing or preparation of 
future sectoral legislation, contract law related costs stemming from differences of national contract 
laws would largely remain and in turn so would any subsequent impacts upon trade, competition and 
the internal market. Moreover, there would not be any immediate impacts of this option upon 
businesses and consumers as negotiations for new legislation or an amendment to existing 
legislation would take considerable time to achieve. As this option would only concern national 
contract law rules which are modified following revised or new EU legislation and would only have 
an impact at the earliest at a medium term, the overall positive impacts of this option would be, 
albeit greater than PO2a, still rather limited. 

3.  Policy option 3: Recommendation on a Common European Sales Law  

This  option  would  encourage  MS  to  incorporate  voluntarily  into  their  domestic  law  a  Common 
European Sales Law instrument as a 'second regime'. This second regime would not replace existing 
legal  traditions,  but  sit  alongside  a  relevant  specific  national  regime.  The  rules  of  the  Common 
European Sales Law could be voluntarily chosen by the parties as the law applicable to their cross-
border contracts. Therefore businesses would have the choice to continue to use their national law in 
their cross border transactions or to use the Common European Sales Law.   

ECONOMIC IMPACTS  

Transaction costs: The impacts of this option would very much be dependent upon: 

•  Whether  and  how  many  MS  decide  to  incorporate  a  Common  European  Sales  Law 

instrument as an optional regime and to what extent 

•  How many businesses decide to use the Common European Sales Law 

On a qualitative basis the impacts would reduce transaction costs to some degree as for those MS 
who decide to incorporate the Common European Sales Law without any changes, the differences 
between national cross border laws would cease. There are several variants of the incorporation of 
the Common European Sales Law under this option and its subsequent outcomes:  

Scenario  1:  In  the  ideal  scenario  all  MS  would  implement  the  Common  European  Sales  Law 
completely without changes and at the same time. If this occurred then the impacts of this scenario 
would be the same as those listed under the analysis of impacts of policy option 4. 

Scenario  2:  If  only  some  of  the  MS  (for  example  10),  implemented  the  Common  European  Sales 
Law  completely,  without  changes  and  at  the  same  time  a  differentiation  would  be  necessary  for 
those traders performing a B2B contract and those performing a B2C contract. This scenario would 
be  of  benefit  to  traders  who  perform  B2B  contracts,  because  even  where  MS  decide  not  to 
incorporate the Common European Sales Law, traders would have the freedom to decide on the law 
applicable to their contract. This would mean that traders who performed B2B contracts would have 
the  opportunity  to  reduce  their  transaction  costs  through  the  use  of  the  Common  European  Sales 
Law.  This  reasoning  would  also  apply  to  B2C  contracts  but  only  for  trade  with  consumers  from 
those  MS  which  implement  the  Common  European  Sales  Law  entirely  and  without  changes.  For 

100

 
 
 
 
 
those MS who do not do this, scenario 3 (below) would apply.  

Scenario 3: Some MS could decide to incorporate the Common European Sales Law not completely, 
with changes, not at the same time, or a combination of these factors. For B2B contracts the same 
situation  as  scenario  2  would  apply.  For  B2C  contracts  the  situation  would  become  even  more 
complicated  as  under  scenario  2.  First,  like  under  scenario  2  the  Common  European  Sales  Law 
could  only  be  applied  if  the  law  of  a  MS  which  has  incorporated  the  Recommendation  would  be 
applicable. However, businesses would have to research whether and where MS have changed the 
drafting of the Common European Sales Law with regards to mandatory consumer protection rules. 
This means that businesses could not be sure to sell across borders on the basis of one single law 
and  would  therefore  have  similar  transaction  costs  as  in  the  BS.  (This  risk  of  an  increase  in  legal 
complexity  was  raised  in  several  responses  to  the  Green  Paper  and  particularly  by  business 
representatives.)  

This analysis applies scenario 2 to the impacts below as it would allow some quantification for these 
impacts as well as simplicity in their presentation; in reality though scenario 3 would be the most 
likely one to occur. However, scenario 3 is not applied to the impacts because the piecemeal way of 
incorporation of the Common European Sales Law (if at all) would make it very difficult to quantify 
the  exact  impacts  upon  both  B2B  and  B2C  contracts.  One  could  assume  that  there  may  be  some 
benefits for traders with B2B contracts, but for those with B2C contracts the likelihood is that the 
majority of BS impacts would still apply (although the extent of the impacts would be unknown). To 
apply  scenario  3  to  the  analysis  would  mean  that  every  impact  would  reflect  the  reasoning  given 
above without giving possible quantification.  

Administrative costs (included in the overall figure of transaction costs): Some administrative costs 
would occur for B2C traders using the Common European Sales Law. Otherwise BS administrative 
costs would apply.  

Opportunity  costs  of  foregone  trade:  The  costs  for  missed  opportunities  of  trade  costs  are  not 
possible to calculate, however one could assume that they would be less than those set out in the BS 
(for both B2B and B2C).  

Competition  in  internal  market  and  impact  on  consumer  prices:  Compared  to  the  BS,  the  impact 
would be greater the more MS incorporate it without changes and at the same time. For those MS 
who  decide  not  to  incorporate  it  at  all/or  with  changes  the  impact  would  be  similar  to  the  BS.  A 
more harmonised legal system would incentivise more businesses to trade cross border and would 
result in increased competition between them. An increase in cross border trade would therefore lead 
to a rise in imports, which would be likely to increase the competition in the importing MS. To be 
able to compete in the market, businesses would be encouraged to either by improve the quality of 
their products or reduce prices.  This would contribute towards the Commission policy on increasing 
competitiveness324  and  would  be  of  particular  relevance  in  B2B  transactions  which  include  the 
manufacturing industry. This would have a positive impact upon consumers and would allow them 
to  further  benefit  from  the  internal  market;  as  an  increase  in  the  number  of  traders  and  more 
competition between them would give consumers an increased choice of product at a lower price.  
For scenario 2, the prices are estimated to fall by 0.03-0.06%.325 

Impact on consumer protection (Applicable to B2C contracts only): The extent of the impact would 
depend  upon  the  number  of  MS  incorporating  the  Common  European  Sales  Law  entirely  and 
without changes and the number of businesses using it. Depending on the degree of implementation, 
this option could provide a high level of consumer protection (in line with Article 38 of the Charter 
of  Fundamental  Rights  of  the  EU)326  giving  consumers  confidence  that  they  would  have  similar 
rights when using the Common European Sales Law in their own country as they would in all MS 

324 'An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage,' COM (2010) 614. 

325 See Annex IV. 

326 See Annex VI. 

101

 
 
 
                                                 
applying the Common European Sales Law.  

Impact on GDP: Under scenario 2, GDP of the EU is expected to increase by €1.8 to €3.6 billion 
(0.015% - 0.03%).327 
Impact on SMEs: SMEs which perform B2C contracts would still incur transaction costs to find out 
about the level of consumer protection provisions in another country and would incur administrative 
costs where new information provisions were required. Although difficult to quantify, it is assumed 
that  these  costs  would  have  a  greater  impact  upon  micro  and  small  enterprises.  For  SMEs 
performing B2B contracts, the negotiation of an applicable law between similar sized companies are 
likely to become easier.328 

Impact on law firms: There would be a new demand for legal advice from new exporters, as well as 
from existing exporters who would need to become familiar with the Common European Sales Law. 
This would create an opportunity for law firms to tap into the new market and expand their business 
on  giving  advice  on  contract  law.  However  as  contract  law  differences  would  still  remain,  this 
option could add a level of complexity as law firms would need to ensure they fully understand the 
differences of the Common European Sales Law between the MS. In their responses to the Green 
Paper several practitioner representatives mentioned that there would be a cost for law firms to train 
and  familiarise  themselves  with  the  Common  European  Sales  Law,  as  with  all  new  legislation. 
However unlike the BS, a very small share of these costs would be relieved given that the Common 
European Sales Law would be available in all official languages in the EU, and would therefore be 
more accessible.  

Some  stakeholders  were  concerned  that  businesses  would  no  longer  choose  to  use  domestic 
legislation  and  as  a  result  the  law  firms  that  advise  on  specific  national  laws  for  international 
transactions would move their business to outside of the EU. However, a Common European Sales 
Law  would  not  replace  national  laws  and  businesses  could  continue  to  choose  their  preferred 
national  law  in  B2B  contracts.  (Business  that  choose  a  particular  law  compared  to  other  legal 
systems  tend  to  do  so  because  of  its  specificities  and  it  would  be  unlikely  that  these  businesses 
which already choose it for these reasons would cease to do so.)   
Public authorities: MS: The national laws of MS would not be affected. However, MS would bear 
costs which accompany the implementation of EU legislation (such as consultation of stakeholders, 
printing  of  new  legislation,  educating  the  public  about  the  new  legislation,  time  and  cost  of 
legislative process, etc.) 

Judiciary:  For  those  MS  who  choose  to  incorporate  the  Common  European  Sales  Law  into  their 
national  laws,  there  would  be  a  cost  for  the  judiciary  to  train  and  familiarise  themselves  with  the 
new system However this cost would also apply to the judiciary of MS who have not incorporated 
the Common European Sales Law as businesses in their B2B contracts may choose to apply the law 
of a third country (i.e. the Common European Sales Law).   

Analysis  of  provisions  of  instrument:  The  analysis  of  impacts  of  the  main  provisions  of  the 
instrument are described in Annex VIII. 

SOCIAL IMPACTS 

Compared to the BS, the more that MS incorporate it entirely and without changes the greater the 
facilitation of cross border trade and increase in employment.  Under scenario 2 it is estimated that 
there would be 74,000-145,000 new jobs in the EU.329 

ENVIRONMENTAL IMPACTS 

Compared to the BS, the more that MS incorporate it entirely and without changes the greater the 

327 See Annex IV. 

328 In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important obstacle to cross border trade. In response to a similar 

question in the EB 320 (p.16) 25% of respondents said that difficulties on agreeing on the foreign applicable contract law had an impact on their decision to trade cross-

border. However, as the sample in the EB also included large companies, the results of the SME Panel survey are more relevant for the SME test.  

329 See Annex IV  

102

 
 
                                                                                                                                                                    
increase  in  the  use  of  transport.  This  would  have  an  adverse  impact  upon  the  environment  as  the 
increase  in  use  of  transport  for  delivery  would  lead  to  an  increase  in  CO2  and  other  vehicle 
emissions and, would increase the cost to control pollution due to the binding EU rules. 

SIMPLIFICATION POTENTIAL 

Compared to the BS, using scenario 2 this option could create some simplification to the regulatory 
environment.  However  this  would  only  apply  to  those  MS  which  have  incorporated  the  Common 
European Sales Law entirely and without changes and for those businesses that choose it.  

ONLINE ENVIRONMENT 

The  extent  of  this  impact  would  depend  upon  the  number  of  MS  who  incorporate  the  Common 
European Sales Law entirely and without changes and the number of businesses who use it. If for 
instance,  compared  to  the  BS,  if  scenario  2  applied  to  an  online  cross  border  and  domestic 
environment  only  it  would  allow  businesses  the  choice  to  trade  under  the  same  law  regime  for  a 
cross  border  sale  as  they  would  with  a  domestic  one.  This  would  mean  businesses  that  use  the 
Common European Sales Law in those MS which have implemented it entirely and without changes 
would  not  need  to  adapt  their  terms  and  conditions  and  IT  platforms  to  a  great  degree  to  trade  in 
another country – this could provide an incentive to businesses to increase their online cross border 
sales  (or  commence  them).  If  there  were  an  increase  in  the  number  of  businesses  who  used  this 
instrument  to  trade  cross  border,  then  compared  to  the  BS,  this  option  would  help  towards 
narrowing the gap between domestic and cross border online sales.  

However,  an  instrument  dedicated  to  e-commerce  only  could  lead  to  increased  legal  complexity. 
Companies using distribution channels other than e-commerce would have to apply different legal 
rules depending on the distribution channel used which would create a fragmentation of the market 
and distort competition. Furthermore, as mentioned by business representatives in their Green Paper 
consultation  responses,330  it  would  not  be  technologically  neutral  and  thus  may  generate  legal 
uncertainty should new forms of distance sales occur in addition to e-commerce, for instance mobile 
telephony commerce. On the other hand, some businesses who responded favoured a scope limited 
to  cross-border  online  sales  only.331  Such  a  scope  could  create  additional  legal  complexity  for 
consumers  who  could  be  subject  to  different  rules  depending  on  whether  they  make  a  purchase 
online, at a distance using another method (i.e. post or telephone) or face-to-face. 

IMPACT  IF  THIS  OPTION  APPLIED  IN  A  DOMESTIC  CONTRACT  AS  WELL  AS 
CROSS BORDER 

The  extent  of  this  impact  would  depend  upon  the  number  of  MS  which  incorporate  the  Common 
European Sales Law entirely and without changes. Using scenario 2: 

Domestic and cross border: Between those MS who incorporate the Common European Sales Law, 
the  legal  environment  for  businesses  which  trade  both  cross-border  and  domestically  would  be 
facilitated; if businesses chose to operate under the Common European Sales Law for all contracts. 
However, for businesses who wish to trade with businesses in those MS who do not incorporate the 
Common European Sales Law, transaction costs would still occur. 

Cross border only: Between those MS who incorporate the Common European Sales Law, traders 
could use one contract law (the Common European Sales Law) for cross border trade with multiple 
MS  (both  in  B2C  and  B2B  transactions).  Thus,  they  could  reduce  transaction  costs  and  legal 
complexity.  Those  businesses  who  wished  to  continue  to  use  their  national  contract  laws  for 
domestic  trade  would  be  free  to  do  so;  whilst  at  the  same  time  they  would  also  be  able  to  export 
using  the  Common  European  Sales  Law.  Therefore,  business  could  save  costs  when  trading  cross 

330 Eurochambres Position Paper on the Green Paper on policy Options for Progress towards a European Contract Law for Consumers and Businesses, European contract 

law, January 2011 p.3, European Small Business Alliance response to the Green Paper on policy Options for Progress towards a European Contract Law for Consumers and 

Businesses, p.4. 

331 Eurocommerce response to the Green Paper on policy Options for Progress towards a European Contract Law for Consumers and Businesses, 27 January 2011, p. 3. 

103

 
 
 
 
                                                 
border  and  continue  to  enjoy  their  current  arrangements  under  domestic  legislation.  However,  for 
businesses  who  wish  to  trade  with  businesses  in  those  MS  who  do  not  incorporate  the  Common 
European Sales Law, transaction costs would still occur (both in B2B and B2C contracts). 

OVERALL ASSESSMENT 

This  option  would  only  be  effective  if  the  Common  European  Sales  Law  was  incorporated  by  a 
number  of  MS  entirely  and  without  amendment  to  the  original  version  attached  to  the 
Recommendation. If this occurred,332 the transaction costs for cross border trade would be reduced, 
there would be more trade and competitiveness in the internal market and consumers would benefit 
by  having  an  increase  in  choice  of  products  at  a  lower  price  as  well  as  an  increased  level  of 
consumer protection when they buy abroad using the Common European Sales Law.  

However, it is highly unlikely that this option would be incorporated entirely or without amendment. 
This would not greatly affect traders performing a B2B contract (as they would have the freedom to 
decide  on  the  law  applicable  to  their  contract)  and  therefore,  these  traders  would  have  the 
opportunity to reduce their transaction costs by using the Common European Sales Law of one MS 
which  has  best  implemented  it.  The  same  would  not  be  the  case  for  traders  performing  B2C 
contracts, as they would have to research whether and where MS have changed the drafting of the 
Common  European  Sales  Law  with  regards  to  mandatory  consumer  protection  rules.  This  means 
that businesses would not be able to sell across borders to consumers on the basis of one single law 
and would therefore incur transaction costs of the type indicated in the BS. Consequently this option 
would only to a limited extent remove the hindrances to cross-border trade identified in the problem 
definition. The voluntary nature of the incorporation would mean that the instrument would not be 
legally binding and there would be no jurisprudence mechanism to ensure its coherence. 

Overall,  because  of  the  piecemeal  way  in  which  the  Common  European  Sales  Law  could  be 
incorporated,  if  at  all,  this  option  would  further  complicate  the  regulatory  environment  for  both 
consumers and businesses as both parties in B2C contracts would be subject to differing degrees of 
the  Common  European  Sales  Law  in  different  MS  and  the  divergences  in  national  contract  laws 
would  remain.    Many  respondents  to  the  Green  Paper  consultation  (business  groups,  consumer 
organisations  and  legal  practitioners  rejected  this  option).  Because  this  option  would  add  to  the 
issues set out in the problem definition it is highly unlikely to be suitable as a solution.   

4.  Policy option 4: Regulation/Directive setting up an optional Common European Sales Law 

The optional Common European Sales Law would insert a set of clear and practical rules into each 
of the different national laws of a MS as a 'second regime'. This second regime would not replace 
existing legal traditions, but sit alongside a relevant specific national regime. These rules could be 
voluntarily  chosen  by  the  parties  as  the  law  applicable  to  their  cross-border  contracts.  Therefore 
businesses  would  have  the  choice  to  continue  to  use  their  national  law  in  their  cross-border 
transactions or to use the optional Common European Sales Law.  

332 In order to estimate the impacts of PO3 assumptions on the number of exporting companies taking up the optional Common European Sales Law have been made. EB 

320 and 321 show that 70% of businesses would be likely to use a new Common European Sales Law instrument.  Businesses would however need to agree this choice with 

their business partners. Therefore the more conservative assumptions i.e. 25% and 50% of companies using the Common European Sales Law are applied  throughout in the 

report. This allows demonstrating a range of possible economic impacts. 

104

 
 
 
 
 
 
 
 
                                                 
ECONOMIC IMPACTS 

Transaction  costs:  This  option  would  greatly  reduce  transaction  costs  because  it  would  allow 
businesses to use one set of rules for cross border trade irrespective of the number of countries they 
trade with in the EU. In practice, this means that businesses using the optional Common European 
Sales Law may only have to pay one transaction cost for trade with multiple MS.333 For example, a 
business exporting to between 1 and 26 MS may only have to pay on average €9,800 for B2B and 
€9,100  for  B2C  (plus  €2,900  for  e-commerce  oriented  enterprises  selling  to  consumers  that  face 
additional contract law related IT costs), (see BS).  

For businesses that already export and decide to expand their sales but decide not to use the optional 
Common European Sales Law, the costs for exporting to 5 MS could amount to €49,100 for B2B 
and  €45,600  for  B2C  if  the  business  applied  the  law  of  the  country  traded  to  in  each  case.  A 
company applying the optional Common European Sales Law to the same contracts with all 5 MS 
would  save  €39,300  and  €36,500  respectively.  Costs  for  exports  to  10  MS  using  the  law  of  the 
country  traded  to  could  amount  to  €98,300  for  B2B  and  €91,100  for  B2C.    If  the  trader  used  the 
optional Common European Sales Law the costs saved would be €88,500 and €82,000 respectively.  

Assuming  that  initially  only  25%334  of  current  exporters  decide  to  use  the  optional  Common 
European  Sales  Law,  one-off  implementation  costs  would  amount  to  €1.89  billion.335  However  a 
business stakeholder noted, the initial cost of the optional Common European Sales Law would be 
acceptable  when  compared  to  continuing  potentially  high  transaction  costs.336    The  estimate  of 
transaction  costs  does  not  include  the  potential  higher  compliance  costs  for  companies  in  some 
Member  States  where the  level  of consumer  protection would increase (see section on analysis of 
provisions of instrument).  

These costs would however be outbalanced on one hand by costs savings for new exporters and on 
the other hand by potential savings for current exporters that would expand their cross-border sales 
to  new  countries.  Using  a  conservative  assumption  of  25%  of  new  exporters  using  the  optional 
Common  European  Sales  Law  and  the  current  average  level  of  exports,  the  annual  savings337  for 
new exporters would be €150-400 million.338 In addition, if 25% of the current exporters decide to 
use  the  optional  Common  European  Sales  Law  and  start  trading  with  additional  EU  countries  the 
potential  saving  would  be  between  €3.7bn  and  €4.3  bn.339  (i.e.  costs  if  they  were  to  expand  their 
sales to new countries under the BS  €5.6- €6.2 minus one-off cost of implementation €1.89 billion). 

These  cost  savings  would  have  the  biggest  impact  upon  SMEs  (in  particular  on  micro  and  small 
companies) and this is where the optional Common European Sales Law would add the most value 
for such traders.  However the optional Common European Sales Law would also save costs (albeit 
on a relatively lesser scale)340 for big businesses who want to use the optional Common European 
Sales Law to trade with other big businesses. (To ensure all businesses have the opportunity to take 

333 This would facilitate the freedom to conduct a business in line with Article 16 of the Charter on Fundamental Rights of the EU. See Annex VI. 

334 EB 320 and 321 show that 70% of businesses would be likely to 334. 38% of all the companies surveyed would prefer to use a single European contract law as an 

alternative to their national law. Businesses would need to agree the choice of using the instrument with their business partners. Therefore assuming that some business 

partners would not wish to use the Common European Sales Law, the more conservative assumption i.e. 25% of companies using the Common European Sales Law are 

applied throughout the report. 

335 25% of current exporters in B2B and B2C multiplied by the respective costs-see Annex III. 

336 ESBA response to the Green Paper consultation, p. 2. 

337 Number of new exporters annually multiplied by the average saving – see Annex III. 

338 In a longer term, these annual savings could be discounted to €3.9-€10 bn and the net benefit for the EU economy would be €2-€8,11bn  (€3.9-€10 bn minus €1.89bn), 

See Annex III 

339  Number of current exporters that decide to use the optional Common European Sales Law (25%)  multiplied by the saving depending on the number of additional 

countries they would make cross-border sales to - see Annex III. 

340 The amount a big business spends to trade to the whole of the EU is 0.06% of their average annual turnover (see problem definition). 

105

 
 
 
 
                                                 
 
full advantage of the optional Common European Sales Law and to ensure non exclusivity of the use 
in terms of application of scope of the instrument, it may be prudent to allow MS to make the choice 
as to whether big businesses could use the optional Common European Sales Law to contract with 
other big businesses.) 

The  reduction  in  transaction  costs  would  also  facilitate  intra  EU  trade  by  removing  obstacles  for 
those  companies  which  currently  experience  difficulties  in  either  conducting  cross-border  trade  or 
transferring, for example,  property by way of cross border sales and would therefore facilitate the 
exercise of these rights in line with Articles 16 (Freedom to conduct a business) and 17 (Right to 
property) of the Charter on Fundamental Rights of the EU, respectively.341   

Administrative costs (included in the transaction costs): This option would require traders to provide 
consumers with information about the choice of using the optional Common European Sales Law. 
For  example,  companies  trading  via  e-commerce  would  need  to  create  for  example  a  pop-up 
window informing a consumer about the application of the optional Common European Sales Law 
and companies trading via post would need to add similar information, for instance, in a brochure 
format. This would cost a business approximately €500.342 However, the application of the optional 
Common European Sales Law would be voluntary and need only be used by the contractual parties 
if it offered them a commercial advantage compared to the BS. This is one of the instances where 
the optional Common European Sales Law safeguards the principle of 'freedom of contract', which 
was a concern raised by business representatives in response to the Green Paper.  

Exporters could achieve cost savings if trading with more than 1 MS as they would be able to use 
one  set  of  information,  available  in  all  EU  languages.  If  a  business  used  the  optional  Common 
European  Sales  Law  the  administrative  costs  would  amount  to  (on  average)  for  B2C  contracts 
€2,500 and for B2B €1,500.343 Compared to the BS if a company traded with 2 MS the cost saving 
per  company  would  amount  €1,500  in  B2B  and  €2,000  B2C  transactions.  Under  an  extreme 
scenario, when a company trades across the whole of the EU, the cost saving per company would 
amount to €37,500 in B2B transactions and €62,000 in B2C transactions.344  

Competition  in  internal  market  and  impact  on  consumer  prices:  This  option  would  increase 
competition in the internal market and lead to a decrease in prices. For B2C contracts 40%345 of the 
above  mentioned  businesses  surveyed  said  that  if  they  were  able  to  choose  a  single  Common 
European Sales Law they would increase their cross border trade in the internal market. For those 
performing  B2B  contracts,  this  figure  was  34%.346 These surveys have also indicated that 14% of 
those performing B2B contracts would trade with 6 or more additional countries if they were able to 
choose a single Common European Sales Law, 34% said they would trade with 3-5 new countries 
and 35% said they would trade with 1– 2 new countries. For those performing B2C contracts these 
figures were: 18%, 32% and 32% respectively. 

An increase in cross border trade would therefore lead to a rise in imports, which would be likely to 

341 See Annex VI.  

342 Explained further in Annex VII. 

343 See Annex VII for more details on how these costs are calculated.   

344 See Annex VII for more details on how these costs are calculated. 

345 EB 321, p. 36. 

346 EB 320, p.33. 

347 'An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage,' COM (2010) 614. 

348 The impacts are computed using the GTAP (see Annex IV). 

349 See Annex VI. 

350 According to data from EB 342, p. 122-125, most consumers either do not read the terms and conditions (27%) or do not read them carefully and completely (30%). 

According to Allen and Overy, Online consumer research, 2011: 52% of the consumers in the 6 largest EU MS never (5%) or only occasionally (47%) read the terms and 

conditions when purchasing online. 

106

 
 
 
 
 
                                                                                                                                                                    
increase  the  competition  in  the  importing  MS.  To  be  able  to  compete  in  the  market,  businesses 
would be encouraged to either by improve the quality of their products or reduce prices. This would 
contribute  towards  the  Commission  policy  on  increasing  competitiveness347  and  would  be  of 
particular  relevance  in  B2B  transactions  which  include  the  manufacturing  industry.  Consumers 
would benefit from an increased choice of product at a lower price. Prices are expected to decrease 
around  0.04-0.07%  if  25%  of  EU  companies  used  the  optional  Common  European  Sales  Law.348 
The more companies  that make use of the optional Common European Sales Law, the  greater the 
probability that companies who do not use the optional Common European Sales Law would need 
to remain competitive by improving the quality of their products or reducing prices. 

Impact  on  GDP:  Overall  EU  GDP  is  expected  to  increase  by  €5-  €10  billion  (0.04-0.08%)  (see 
Annex IV). 

Impact  on  third  countries:  if  third  countries  could  choose  the  optional  Common  European  Sales 
Law, they would benefit from an easier access at lower  transaction  costs  to  the  whole  EU  market 
and  may  be  able  to  expand  exports  to  more  EU  countries.  If  they  could  not  use  the  optional 
Common European Sales Law, some negative impact could be possible, provided that trade would 
grow more between EU countries at the expense of potential partners from third countries.  

Impact on consumer protection This option would provide a high level of consumer protection (in 
line  with  Article  38  of  the  Charter  of  Fundamental  Rights  of  the  EU)349  by  increasing  consumer 
protection  in  certain  areas  which  are  currently  harmonised  at  minimum  level,  by  creating  a  high 
level of consumer protection in areas in which the Union has not previously acted by integrating the 
fully harmonised provisions of the CRD and by taking the other minimum harmonisation provisions 
of the acquis as a benchmark.  

The  optional  Common  European  Sales  Law  would  strengthen  rights  on  some  points  of  particular 
concern to consumers compared to the existing acquis. For instance, the consumer could choose the 
type of remedy if the goods did not conform to the contract; these remedies would also be available 
to consumers who bought digital content products which also did not conform to the contract. These 
and other consumer protection provisions would give consumers confidence that they would have a 
very high level of consumer protection whenever they used the optional Common European Sales 
Law. 

To  strengthen  certainty  about  their  rights  and  thereby  consumer  confidence,  businesses  would 
provide  consumers  with  a  standardised  information  notice  whenever  the  optional  Common 
European  Sales  Law  was  chosen  for  use.  This  information  notice  would  explain  that  Common 
European Sales Law applied and would set out information about the key rights consumers would 
enjoy under the optional Common European Sales Law. The provision of this information responds 
to  some  concerns  (i.e.  increase  of  the  legal  complexity,  inability  for  the  consumer  to  make  an 
informed  choice  for  the  application  of  the  optional  Common  European  Sales  Law)  raised  by 
consumer  and  legal  practitioner  representatives  in  their  responses  to  the  Green  Paper.  Within  this 
setting the optional Common European Sales Law could encourage more consumers to shop across-
border,  as  they  would  have  the  same  rights  at  a  high  level  of  protection  everywhere  in  the  EU, 
whenever  the  optional  Common  European  Sales  Law  would  apply.  Moreover,  the  information 
notice would be beneficial for the large percentage of consumers who do not always read terms and 
conditions, as it would present their key rights in a concise and prominent way before they agree to 
the contract.350 If this information is not provided to the consumer, then the consumer would have 
the right to terminate the contract without bearing any costs. In addition, the agreement would only 
be  valid  if  the  consumer  consented  -  in  a  separate  statement  -  to  using  the  optional  Common 
European  Sales  Law.  A  business  would  therefore  not  be  allowed  to  include  the  choice  of  the 
optional Common European Sales Law as only a term in his standard terms and conditions. 

107

 
 
 
 
 
 
 
The  optional  Common  European  Sales  Law  could  become  a  'trustmark'  for  consumers:  once  they 
have become familiar with their rights under the optional Common European Sales Law, they would 
become  more  certain  and  therefore  confident  in  purchasing  products  across  the  EU  under  the 
optional  Common  European  Sales  Law's  uniform  rules.  Additionally,  the  optional  Common 
European Sales Law could be of an advantage to the economic interests of consumers, as they could 
gain access to more and better offers at a cheaper price, which would not have been made available 
by foreign businesses if the optional Common European Sales Law had not existed. 

Thus, the information notice and the explicit separate statement of consent the consumer will have 
to provide would also eliminate the fears of several MS and consumer associations who have some 
concerns  about  the  optional  Common  European  Sales  Law,  as  they  think  businesses  could  take 
advantage  of  the  weaker  position  of  the  consumers,  as  the  latter  would  not  be  fully  able  to 
understand the consequences of choosing an optional Common European Sales Law. 

Impact on SMEs: There would be a positive impact upon SMEs trading with more than 1 MS. Micro 
and small companies would benefit in particular as the cost savings of using the optional Common 
European Sales Law would be disproportionately high compared to the BS.  

For B2C contracts, if the optional Common European Sales Law were chosen, it would be the only 
applicable law in the area covered by its scope. Therefore, the trader would have to consider only 
one  set  of  rules  –  those  of  the  optional  Common  European  Sales  Law.  It  would  no  longer  be 
necessary  to  consider  other  national  mandatory  provisions  as  they  would  normally  have  to  when 
concluding a contract with a consumer from another MS. There would be some administrative costs 
where  provision  of  information  would  be  required.351  However  these  costs  would  be  unlikely  to 
outweigh the cost savings, especially for those companies trading in multiple MS. The standardised 
information  notice  for  the  optional  Common  European  Sales  Law  would  limit  the  administrative 
costs: Businesses will not be required to provide individual explanations of the consequences of the 
use of the optional Common European Sales Law to the consumer, as the information notice would 
fulfil  this  purpose.  For  SMEs  concluding  B2B  contracts  the  negotiation  of  an  applicable  law352 
would not be so burdensome anymore.353 Two SMEs could be more willing to agree on the optional 
Common European Sales Law as a 'neutral' contract law. As both parties would have equal access to 
this law as part of their national system, neither of them would be in a weaker position compared to 
the  situation  where  one  of  them  would  be  as  the  applicable  law  would  be  unknown  to  that  party. 
Evidence shows that a law which is considered 'neutral' and is available in multiple languages such 
as the Swiss law, is more likely to become the preferred choice of law.354  

Impact on law firms: There would be a new demand for legal advice from new exporters, as well as 
from existing exporters who would need to become familiar with the optional Common European 
Sales Law. This would create an opportunity for law firms to tap into the new market and expand 
their business on giving advice on contract law.  

In their responses to the Green Paper several practitioner representatives mentioned that there would 
be a cost for law firms to train and familiarise themselves with the optional Common European 
Sales Law, as with all new legislation. However unlike the BS, some of these costs would be 

351 See Annex VIII. 

352 Article 16 of the Charter of Fundamental Rights of the EU. See Annex VI. 

353 In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important obstacle to cross border trade. In response to a similar 

question in the EB 320 (p.16) 25% of respondents said that difficulties on agreeing on the foreign applicable contract law had an impact on their decision to trade cross-

border. However, as the sample in the EB also included large companies, the results of the SME Panel survey are more relevant for the SME test.  

354 Stefan Voigt, Journal of Empirical Legal Studies, Volume 5, Issue 1, 1–20, March 2008, "Are International Merchants Stupid? Their Choice of Law Sheds Doubt on the 

Legal Origin Theory", p. 17. 

108

 
 
 
 
                                                 
relieved given that the optional Common European Sales Law would be user-friendly, clear and 
available in all official languages in the EU, and would therefore be more accessible. Moreover 
there would be public funding available for training on new EU legislation.355  

In time, there could be a chance that law firms could advise less, which would mean less billable 
hours for them. However this would be mitigated by the increased flow of new businesses entering 
the 'cross-border-trade' market and the expansion of existing client advice to a wider range of cross-
border transactions covering all MS.  

The simultaneous application of the optional Common European Sales Law by national courts 
would allow case law to build up quickly. The uniform application would be ensured firstly by the 
ultimate interpretation of the optional Common European Sales Law through the ECJ. A database, 
accessible to judges and legal practitioners and containing translated summaries of national rulings 
applying optional Common European Sales Law provisions would ensure transparency and de-facto 
convergence of relevant case-law.  This would alleviate concerns related to legal certainty raised by 
some Green Paper respondents.  

Legal stakeholders were mostly positive towards this option. Some stakeholders from the UK 
expressed views356  that this option would make the UK, and in particular London, a less attractive 
place for, in particular, large companies (who are advised to use common law as their preferred 
choice of law for international transactions) to obtain legal advice from English law firms. These 
stakeholders maintain that as a result, the expenses for legal advice357 made by these businesses 
would be lost to the UK as companies would obtain legal advice in the US. While these submissions 
are relevant for PO5/6, they do not really apply to PO4.  

An optional Common European Sales Law would not replace national laws. It would become a 
second regime existing alongside domestic legislation, which could be chosen as an alternative to 
the national law, only when businesses see fit. Since English law is chosen by companies because of 
its specificities, compared to other legal systems it is unlikely that companies which already choose 
it for these reasons would cease to do so.  

Thus companies could continue to use common law and the services of English law firms if they 
choose to do so. In this context it is important to note that the number of EU exporting companies 
using the law of a 3rd country (for instance English law or Swiss law) is at any rate only 0.6% of EU 
exporters.358 SME from non Common law practising countries would not be likely to apply 
Common law to their contracts (e.g. a Swedish SME trading with an Italian SME would be more 
likely to use Swedish or Italian law). However a UK based SME trading with a non-Common law 
country would still have the choice to use common law. 

Public authorities:  

There  would  be  a  cost  concerning  a  data-base  which  would  be  created  and  maintained  by  the 

355 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser extent) to train on EU new legislation. The 

cost per trainee was about €1,400. The Commission will continue to finance training and will publish a Communication on this topic by the end of 2011 in which the training 

on a Common European Sales Law instrument will be mentioned as a priority. 

356 Law Society of England and Wales Response to the Green Paper, p.17 – 20; Bar Council of England and Wales response to the Green Paper p.20 and p.21; COMBAR 

response to the Green Paper p.3; City of London Law Society response to the Green Paper on contract law p. 2. 

357 According to the Bar Council of England and Wales Response to Green Paper p.20 and p.21  "Currently the annual fee income of the 100 largest law firms is 

approaching £15bn, with over half of that revenue being generated by London – based law firms." According to the Law Society of England and Wales Response to the 

Green Paper  p.18. "The City Business series Report on Legal Services in 2007 valued the contribution of legal services to the UK economy at £14.9bn in 2004". However it 

would need to be noted that the income mentioned above seems to refer to the contributions of all legal services, not just on contract law. Therefore income solely due to the 

areas of contract law as defined under section 4.2.3. of the IA report in a cross border scenario would be a relatively small percentage of this overall income. 

358 EB 320, p. 57 

109

 
 
 
 
 
 
 
 
 
                                                                                                                                                                    
Commission.  This  database  would  contain  summaries  of  rulings  of  the  application  of  the  optional 
Common  European  Sales  Law  provisions  (as  submitted  by  national  courts).  This  cost  would  fall 
upon the Commission and would be broken down as follows: 
- one-off approximately €100,000359 for creating the website and database; 
- annually approximately €100,000360 for maintaining the website and database; 
- €160.56 for summarising a ruling submitted by a MS' court (assuming that it will take 4 hours to 
read and summarise one ruling and a documentalist is paid €321.12361 a day), and  
-  €117  for  the  translation  of  a  summary  in  English,  French  and  German  (assuming  that  each 
summary will be one page and the translation cost will be €39362 per page).  

Member States: The national laws of MS would not be affected. However, MS would bear the costs 
which would accompany the implementation of EU legislation (such as consultation of stakeholders, 
printing  of  new  legislation,  educating  the  public  about  the  new  law,  time  and  cost  of  legislative 
process, etc.) 

Judiciary: As raised in the Green Paper consultation, there would be a need for some initial training 
for judiciaries familiarise themselves with a new system. However this cost would be mitigated by 
public funding available for training on the new EU legislation.363 All legal practitioners across the 
EU  would  have  access  to  a  database  containing  summaries  of  rulings  on  the  application  of  the 
optional  Common  European  Sales  Law.  This  would  allow  them  to  view  the  application  of  the 
optional Common European Sales Law and ensure the consistency of its future use. The use of this 
option, i.e. a consistent reference to a single body of rules, would remove the necessity for judges to 
investigate foreign law and compare several laws decreasing litigation costs compared to the BS. In 
the longer term, this would alleviate the administrative load on a MS judicial system. Moreover, the 
database  would  also  reduce  the  risk  of  a  different  application  and  interpretation  of  the  optional 
Common European Sales Law mentioned by several respondents to the Green Paper.   

European  Court  of  Justice  (ECJ):  In  the  first  instance  national  courts  would  rule  upon  cases  and 
submit summaries which would be entered into the Commission created database. These summaries 
are likely to lead to a defacto convergence of rulings by national courts which national judges would 
be able to access when needing to refer to how provisions of the optional Common European Sales 
Law have been ruled upon. There may be a limited number of cases which may need to be referred 
to the ECJ,364 which would increase the caseload. There would be a financial cost of referral of a 
case which would need to be borne by the parties to the trial. 

Analysis  of  provisions  of  instrument:  The  analysis  of  impacts  of  the  main  provisions  of  the 
instrument is described in Annex VIII. 

359 In 2002 a database (JURE data-base) was created for summaries of judgements concerning the Brussels I Regulation no 44/2001 of 22 December 2000 on jurisdiction 

and the recognition and enforcement of judgements in civil and commercial matters, the Brussels II Regulation no 1347/2000 of 29 May 2000 on jurisdiction and the 

recognition and enforcement of judgements in matrimonial matters and in matters of parental responsibility for children of both spouses, the new Brussels II Regulation no 

2201/2003 of 27 November 2003 on jurisdiction and the recognition and enforcement of judgements in matrimonial matters and in matters of parental responsibility for 

children of both spouses, repealing Regulation no 1347/2000 and the Convention of 16 September 1988 on jurisdiction and the enforcement of judgements in civil and 

commercial matters (Lugano Convention). The  creation of this database cost at that time almost €80.000. 

360 In the past four years the maintenance of the JURE data-base has cost on average €117.500. As the new data-base will likely be linked with the system of an existing 

data-base – e.g. the data-bases on the e-justice portal – the cost will assumable be lower. 

361 Annex 1 of amendment №4 to Framework contract noJLS/2008/A5/01/lot 21 "Websites, web content management systems and other computer services". 

362 Price list in the Framework contract noJLS/2008/A5/01/lot 21 "Websites, web content management systems and other computer services". 

363 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser extent) to train on EU new legislation. The 

cost per trainee was about €1.400. The Commission will continue to finance trainings and will publish a Communication on this topic by the end of 2011 in which the 

training on a Common European Sales Law instrument will be mentioned as a priority. 

364 This increase of caseload would form a minor part of the ongoing overall institutional and budgetary discussion of the of the resources and responsibilities of the ECJ. 

110

 
 
 
 
 
 
                                                                                                                                                                    
SOCIAL IMPACTS 

The more businesses that use this option, the greater the extent of the positive impact on trade and 
growth. Compared to the BS, this option would help to facilitate cross border trade and as a result 
would create 159,300-315,900 new jobs in the EU if 25% of companies use the optional Common 
European Sales Law.365  
With  regard  to  impacts  on  fundamental  rights,  this  option  would  not  lead  to  discrimination,  as  it 
would apply across the EU without any distinction on the basis of nationality, in line with Article 
21(2) of the Charter of Fundamental Rights of the EU. Moreover, it would be effective in removing 
the contract law related barriers, which may be a reason for the traders' practice of refusal to sell to 
consumers resident in other Member States. It may also contain a rule providing that contract terms 
which  restrict  privacy  rights  are  unfair  and  therefore  non-binding  on  the  consumer  (in  line  with 
Article 8 of the Charter). 

ENVIRONMENTAL IMPACTS 

This would be dependent upon the number of businesses who use the optional Common European 
Sales Law, as an increase in use of transport for delivery would lead to an increase in CO2 and other 
vehicle emissions and would increase the cost to control pollution due to the binding EU rules. 

SIMPLIFICATION POTENTIAL 

For  business:  Compared  to  the  BS,  this  option  would  simplify  the  regulatory  environment, 
eliminating the need for research of different national laws as only one regulatory framework need 
be used. 
For  consumers:  While  they  could  be  subject  to  a  new  unfamiliar  system,366  the  standardised 
information notice would aid consumer understanding of the optional Common European Sales Law 
by  explaining  in  a  concise  and  prominent  way  the  use  and  implications  of  an  optional  Common 
European Sales Law. 
ONLINE ENVIRONMENT 
Compared to the BS, this would be a more simple367 way to conclude a contract and give a trader 
cost savings. The additional transaction costs would no longer apply: Businesses would not need to 
adapt their terms and conditions and IT platforms to take into account the laws of all Member States 
they trade with. This could provide an incentive to businesses to increase their online cross border 
sales (or in some cases to commence them). If there were an increase in the number of businesses 
who  used  this  instrument  to  trade  cross  border,  then  compared  to  the  BS,  this  option  would  help 
towards narrowing the gap between domestic and cross border online sales. 

However,  an  instrument  dedicated  only  to  e-commerce  could  lead  to  increased  legal  complexity. 
Companies using distribution channels other than e-commerce would have to apply different legal 
rules depending on the distribution channel used. This would create a fragmentation of the market 
and distort competition. Furthermore, as mentioned by business representatives in their Green Paper 
consultation  responses,368  it  would  not  be  technologically  neutral  and  thus  may  generate  legal 
uncertainty should new forms of distance sales occur in addition to e-commerce, for instance mobile 
telephony commerce. A scope limited to cross-border online sales only could however also create 
additional  legal  complexity  for  consumers  who  could  be  subject  to  different  rules  depending  on 
whether they make a purchase online, at a distance using another method (i.e. post or telephone) or 
face-to-face. 

365 The calculation of this impact can be found in Annex IV. 

366 BEUC's response to the Green Paper, p.15. 

367 Allen and Overy, Online Consumer Research, found that a relative majority of 46% of the surveyed consumers in the 6 largest MS would be more likely to buy online 

from another EU country if an EU-wide contract law was put in place. 

368 Eurochambres response to the Green Paper, p.3, European Small Business Alliance response to the Green Paper, p.4. 

111

 
 
 
 
 
                                                 
IMPACT  IF  THIS  OPTION  IS  APPLIED  IN  A  DOMESTIC  CONTRACT  AS  WELL  AS 
CROSS BORDER 

Domestic  and  cross  border:  An  optional  Common  European  Sales  Law  would  facilitate  the  legal 
environment for businesses which trade both cross-border and domestically, if they chose to operate 
under the optional Common European Sales Law for all contracts. On the one hand, if the optional 
Common European Sales Law also applied in a domestic context it would go beyond what would be 
necessary  to  resolve  the  problem  of  additional  transaction  costs  and  legal  complexity.  It  would 
therefore not be a proportionate solution to the problem. On the other hand, several respondents to 
the Green Paper favoured this scope.369 However as many respondents who favoured this scope, also 
favoured a cross border only scope. Therefore a more pragmatic solution may be to allow MS the 
choice  as  to  whether  they  would  also  like  the  optional  Common  European  Sales  Law  to  apply  in 
domestic contracts too. 

Cross border only: Traders could use one contract law (the optional Common European Sales Law) 
for  cross  border  trade  with  multiple  MS  (both  in  B2C  and  B2B  transactions).  Thus,  they  could 
reduce  transaction  costs  and  legal  complexity.  Businesses  could  continue  to  use  their  national 
contract laws for domestic trade, whilst at the same time they would also be able to export using the 
optional Common European Sales Law if they wish to do so. Therefore, business could save costs 
when  trading  cross  border  and  continue  to  enjoy  their  current  arrangements  under  domestic 
legislation. A cross border only scope is in accordance with the principle of proportionality as the 
instrument does not go beyond what is necessary to achieve the objectives. Several respondents to 
the  Green  Paper,370  who  commented  on  this,  favoured  an  instrument  which  was  limited  to  cross 
border contracts (in some cases as a first step).  

OVERALL ASSESSMENT 

This option would not replace existing domestic regimes, but complement the national law of MS, 
as it would be inserted into their national laws as an optional set of contract law rules which could 
be used for trading across borders. It need only be chosen by parties voluntarily only when it suits 
their interests.  

The main advantage of this option is that it would eliminate the transaction costs which are incurred 
by  businesses  when  trading  with  more  than  one  MS.  On  a  relative  scale  in  comparison  to  annual 
turnover,  this  advantage  would  benefit  trade  for  businesses  performing  B2C  contracts  and  those 
B2B  contracts  which  are  between  SMEs.    As  it  would  also  offer  cost  savings  to  large  businesses 
which contract with other large businesses, this combination for the application of the scope of the 
optional  Common  European  Sales  Law  should  not  be  ruled  out.    It  could  be  left  to  MS  to  decide 
upon. The decrease in costs would provide incentives to increase trade which would result in more 
competition in the internal market.  The increase in trade and competition would benefit consumers 
by giving them more product choice at a lower price.  

There  could  be  some  administrative  costs  which  arise  from  the  need  for  businesses  to  provide 
information  to  consumers  not  previously  required.  These  costs  are  however  by  far  outweighed  by 
the  savings  and  the  potential  savings  which  are  made  from  not  paying  the  additional  transaction 
costs for when a business trades with more than 1 MS. This option would create opportunities for 

369 Member States: EE, LT and NL.  Stakeholders (business): BIPAR, EMOTA, UPSI, Eurochambres, EFBS, ICAEW, UEL,  I.A.N.U.S., Allianz SE, Audi AG, LVMH, 

Nokia. Legal practitioners: CCBE, Bundesrechtsanwaltskammer, Scottish Law Commission,  Ordre des Barreaux Francophones et Germonophone de Belgique, Deutscher 

Richterbund, Scottish Law Commission, Law Society of Scotland,  Law Society of Ireland.   

370 Member States: AT, BG, EL, FI,  DE, PL. Stakeholders (business): AMICE, FEDSA, APCMA, BdB, EuroCommerce, FAEP, CCIP, Bundesverband der Deutschen 

Industrie. Legal practitioners: CLLS, CNUE, Bundesnotarkammer, Österreichische Notariatskammer, DBF,  Association of Spanish Property and Commercial Registrars, 

ELRA, UNCC. Stakeholders (consumer): VZBV, Belgian Consumer Organisation.  

112

 
 
 
 
 
 
 
                                                 
legal practitioners to cater for new clients as law firms would experience an increase in demand by 
those expanding their cross-border trade and existing exporters wishing to use the optional Common 
European Sales Law.  

Overall, this policy option meets the policy objectives as it reduces costs for businesses and offers a 
less complex legal environment for those who wish to trade cross border to more than one MS and 
at the same time it provides a high level of consumer protection, whilst simplifying the regulatory 
environment.   

5.  Policy option 5 and policy option 6371 

5.1. Policy option 5a: Full harmonisation Directive on a mandatory Common European Sales 
Law and policy option 6: Regulation establishing a mandatory Common European Sales 
Law 

The  end  result  of  a  full  harmonisation  Directive  (once  it  has  been  implemented)  and  a  Regulation 
replacing  national  laws  would  be  very  close  in  their  outcome  (although  not  exactly  the  same); 
therefore both these options are assessed together.372 The instrument would allow businesses to use 
one set of rules in B2B and B2C contracts for both domestic and cross border trade373 irrespective of 
the number of countries they trade with in the EU.  It would also remove the necessity for businesses 
to investigate, compare and possibly adapt to several foreign laws.  

ECONOMIC IMPACTS  

Transaction  costs:  The  instrument  would  considerably  increase  costs  as  it  would  also  affect 
companies  which  do  not  wish  to  trade  cross  border.  Companies  that  trade  only  domestically 
(17,136,213 in B2B and 4,420,563 in B2C) would face a one off instant cost of implementation of 
€208.8 billion374 to use the new legislation. They would be required to pay these costs with no real 
financial gain, as the advantages would only be realised for those companies trading across a border.  

All current exporters would face a one-off cost of implementation of €8.18 billion in order to use the 
new law.375 The estimate of transaction costs do not include the potential higher compliance costs 
for companies in some Member States where the level of consumer protection would increase. There 
would not be an additional cost if a business were to export to more than 1 MS.     

The cost for a micro firm to enter the whole of the EU market would be on average only 6.5% of 
their turnover376 which would be the same as it would have cost to trade with only 1 MS in the BS. 
This  option  would  result  in  costs  savings  for  new  exporters  and  for  current  exporters  who  would 
expand  their  cross-border  sales  to  new  countries.  The  annual  savings  for  new  exporters  would  be 
between  €0.63-1.6  bn.377  In  addition,  similarly  as  under  option  4  the  current  exporters  that  would 
start trading with additional countries would save at least between €3.7 billion and €4.3 billion.378 
The potential benefits of this option would however not outweigh the initial one-off adaptation cost 
even over a longer time span. 

371 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concerning the scope of application and the material 

scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 

372 For simplicity the Directive and Regulation are referred to collectively as the 'instrument' 

373 Article 16 of the Charter of Fundamental Rights of the EU. See Annex IV. 

374 Businesses who trade only domestically, multiplied by the relative individual one off costs for B2B and B2C.  

375 All exporters in B2B and B2C multiplied by the respective costs. Per business this would be €9,100 for B2C (plus €2,900 for e-commerce oriented enterprises selling to 

consumers that face additional contract law related IT costs) and €9,800 for B2B as in the BS. 

376 See section 2.3.2 on problem definition 

377 Number of new exporters annually multiplied by the average saving – see Annex III  

378 -See Annex III. 

113

 
 
 
 
 
 
 
 
 
                                                 
The  reduction  in  transaction  costs  would  also  facilitate  intra-EU  trade  by  removing  obstacles  for 
those  companies  which  currently  experience  difficulties  in  either  conducting  cross-border  trade  or 
transferring, for example,  property by way of cross border sales and would therefore facilitate the 
exercise of these rights in line with Articles 16 (Freedom to conduct a business) and 17 (Right to 
property) of the Charter on Fundamental Rights of the EU, respectively.379   

Administrative  costs  (these  are  included  in  the  transaction  costs  above):  The  instrument  would 
create an additional burden for all companies to adapt to the new legislation and would be especially 
costly for those companies that do not want to trade cross border but would have no choice but to 
apply the instrument to a domestic contract without any economic advantages or cost savings. The 
instrument would create an additional cost for 22 million companies (including for those who trade 
only  domestically)  in  the  EU  with  an  average  one-off  cost  per  company  amounting  to  €2,500  for 
those performing a B2C contract and €1,500 for those performing a B2B contract. Compared to the 
BS, to trade with 2 MS the cost saving per company would amount to €1,500.380 

Competition  in  internal  market  and  impact  on  consumer  prices:  The  instrument  would  increase 
competition in the internal market and lead to a decrease in prices. For B2C contracts 40%381 of the 
above  mentioned  businesses  surveyed  said  that  if  they  were  able  to  choose  a  single  Common 
European Sales Law they would increase their cross border trade in the internal market. For those 
performing  B2B  contracts,  this  figure  was  34%.382 These surveys have also indicated that 14% of 
those performing B2B contracts would trade with 6 or more additional countries if they were able to 
choose a single Common European Sales Law, 34% said they would trade with 3-5 new countries 
and 35% said they would trade with 1– 2 new countries.  

For  those  performing  B2C  contracts  these  figures  were:  18%,  32%  and  32%  respectively.  An 
increase in cross border trade would lead to a rise in imports, which would be likely to increase the 
competition  in  the  importing  MS.  The  higher  competition  would  encourage  businesses  to  become 
more  innovative  and  improve  the  quality  of  their  products  or  to  reduce  prices  in  order  to  stay 
competitive. This would contribute towards the Commission policy on increasing competitiveness383 
and would be of particular relevance in B2B transactions which include the manufacturing industry. 
Consumers would benefit from an increased choice of product at a lower price. The reduction for the 
average consumer price level would range between 0.14% - 0.28%.384 

Impact on GDP: Overall EU GDP is expected to increase by €20- €40 billion (0.17-0.33%).385  

Impact  on  third  countries:  Third  countries  trading  with  the  EU  would  bear  some  one-off 
implementation costs,  but  could  benefit from an easier access to the EU market as a whole in the 
long term. Third countries may be able to expand exports to more EU countries.  

Impact on consumer protection   The instrument would provide a high level of consumer protection 
(in line with Article 38 of the Charter of Fundamental Rights of the EU)386 and would also increase 

379 See Annex VI.  

380 See Annex VII for more details. 

381 EB 321, p.36 

382 EB 320.,p.33 

383 'An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage,' COM (2010) 614. 

384 GTAP model, see Annex IV. 

385 See Annex IV. 

386 See Annex VI. 

387 Allen and Overy, Online Consumer Research, found that a relative majority of 46% of the surveyed consumers in the 6 largest MS would be more likely to buy online 

from another EU country if an EU-wide contract law was put in place.  

114

 
 
 
 
 
 
 
                                                                                                                                                                    
consumer certainty and therefore confidence, as consumers would have the same rights when 
shopping cross border.387However, it would also replace national laws and could lead to changes to 
the level of protection consumers in certain MS enjoy. While the consumer would benefit from an 
increase in the protection for a number of provisions, some consumers could lose protection in 
specific cases compared to their existing national law as their national law would have to be 
changed.  

Impact  on  SMEs:  For  businesses  trading  cross  border,  this  impact  would  be  the  same  as  PO4.  
However the instrument would also place administrative costs on domestic businesses who do not 
wish  to  trade  cross  border.  This  would  have  a particular  impact  upon  micro  and  small  enterprises 
and comparative to their turnover, would weigh more heavily (compared to the BS).  These SMEs 
would  be  required  to  pay  these  costs  with  no  real  financial  gain,  as  this  advantage  would  only  be 
realised for those companies trading across a border. 

Impact  on  law  firms:  There  would  be  an  increase  in  the  demand  for  legal  services,  as  more 
businesses would need to understand how to use the instrument even for those advising on domestic 
transactions.  There  would  be  training  costs  for  law  firms  as  they  familiarise  themselves  with  the 
changes in their national law. The concerns highlighted by legal stakeholders in the UK in PO4 are 
most  relevant  here  as  the  contract  laws  among  MS  would  be  harmonised  and  comparative 
advantages  of  a  specific  law  like  common  law  as  a  popular  option  for  choice  of  law  would  be 
fundamentally diminished. 

Impact  on  Public  authorities:  Member  States:  The  national  laws  of  MS  would  be  affected  as  this 
instrument would require a complete overhaul of the domestic legislation.  MS would bear the costs 
which would accompany the implementation of EU legislation (such as consultation of stakeholders, 
printing  of  new  legislation,  educating  the  public  about  the  new  law,  time  and  cost  of  legislative 
process, etc.) MS' governments are likely to find the instrument (to change domestic legislation for 
contract law in such a fundamental way) to be politically sensitive. In the Green Paper consultation, 
almost all MS responses to the Green Paper consultation rejected both options 5 and 6, stressing that 
to solve the problem of differences in contract laws, this type of instrument was not consistent with 
principle of subsidiarity or proportionality. 

Judiciary: The judiciary of MS would need to familiarise themselves with the new instrument, this 
would  mean  a  substantive  financial  cost  for  training.  .  A  single  body  of  rules  would  remove  the 
necessity  for  judges  to  investigate  foreign  law  and  compare  several  laws.  This  would  decrease 
litigation  costs  (compared  to  the  BS)  and  could  in  time  alleviate  the  administrative  load  on  a  MS 
judicial system.   

European  Court  of  Justice  (ECJ):  In  the  first  instance  national  courts  would  rule  upon  cases  and 
submit summaries which would be entered into the Commission created database. These summaries 
are  likely  to  lead  to  a  de  facto  convergence  of  rulings  by  national  courts  which  national  judges 
would be able to access when needing to refer to how provisions of the optional Common European 
Sales  Law  have  been  ruled  upon.  There  may  be  a limited  number  of  cases  which  may  need  to  be 
referred to the ECJ,388 which would increase the caseload. There would be a financial cost of referral 
of a case which would need to be borne by the parties to the trial. 

Analysis  of  provisions  of  instrument:  The  analysis  of  impacts  of  the  main  provisions  of  the 
instrument is described in Annex VIII. 

SOCIAL IMPACTS 

This option would help to facilitate cross border trade and as a result would be expected to increase 

388 This increase of caseload would form a minor part of the ongoing overall institutional and budgetary discussion of the of the resources and responsibilities of the ECJ. 

115

 
 
 
 
 
 
 
                                                 
output and employment. The instrument is expected to create between 650,000 and 1.3 million new 
jobs.389  However  this  positive  impact  of  job  creation  is  likely  to  be  counteracted  by  the  costs 
incurred  by  all  companies  and  may  lead  to  some  initial  decrease  in  employment,  which  only  at  a 
later  time  would  be  compensated  due  to  the  positive  effects  on  the  economy  stemming  from  the 
raise in intra-EU trade. 

With  regard  to  impacts  on  fundamental  rights,  this  option  would  not  lead  to  discrimination,  as  it 
would apply across the EU without any distinction on the basis of nationality, in line with Article 
21(2)  of  the  Charter  of  Fundamental  Rights  of  the  EU.  It  would  be  effective  in  removing  the 
contract  law  related  barriers,  which  may  be  a  reason  for  the  traders'  practice  of  refusal  to  sell  to 
consumers resident in other Member States. It may also contain a rule providing that contract terms 
which  restrict  privacy  rights  are  unfair  and  therefore  non-binding  on  the  consumer  (in  line  with 
Article 8 of the Charter). 

ENVIRONMENTAL IMPACTS 

This instrument would have an adverse impact upon the environment as an increase in trade would 
increase the use of transport for delivery. This would lead to an increase in CO2 and other vehicle 
emissions and would increase the cost to control pollution due to the binding EU rules. 

SIMPLIFICATION POTENTIAL 

Compared to the BS, this instrument would simplify the regulatory environment as the differences 
between the contract laws of MS would be eliminated.   

ONLINE ENVIRONMENT 

If the instrument applied to an online cross border and domestic environment only, it would allow 
businesses  applying  the  instrument  to  offer  their  products  online  and  across  the  EU  based  on  the 
same set of contract law rules. This would mean businesses would not need to adapt their terms and 
conditions  and  IT  platforms  (the  latter  to  a  great  degree)  to  trade  in  another  country  –  this  could 
provide  an  incentive  to  businesses  to  increase  their  online  domestic  and  cross  border  trade. 
Compared to the BS, this option could help towards narrowing the gap between domestic and cross 
border  online  sales  as  businesses  would  be  encouraged  by  the  use  of  one  contract  to  offer  their 
products in more MS.  

However,  an  instrument  dedicated  to  cross  border  and  domestic  e-commerce  only  may  lead  to 
increased  legal  complexity.  Companies  using  distribution  channels  other  than  e-commerce  would 
have to apply  different  legal  rules depending on the distribution channel  they  use. Furthermore, it 
would  not  be  technologically  neutral  and  thus  may  generate  distortion  of  competition  should  new 
forms of distance sales occur in addition to e-commerce, for instance ‘mobile telephony commerce’. 
Such a solution could also create additional legal complexity for consumers who could be subject to 
different  rules  depending  on  whether  they  make  a  purchase  online,  at  a  distance  using  another 
method (i.e. post or telephone) or face-to-face.   

IMPACT IF THE INSTRUMENT IS APPLIED CROSS BORDER ONLY  

Traders could use one contract law for cross border trade with multiple MS (both in B2C and B2B 
transactions)  and  reduce  transaction  costs.  With  a  cross  border  scope  only,  the  instrument  would 
comply  with  the  subsidiarity  principle  as  the  problem  of  additional  transaction  costs  arises  when 
businesses export.  

However, the instrument would not comply with the proportionality principle as it would go beyond 
what is necessary to solve the problem. The instrument would replace all national contract laws in 
relation  to  cross  border  contracts.    All  exporting  firms  would  have  to  use  the  instrument  in  their 

389 See Annex IV, the GTAP model. 

116

 
 
 
                                                                                                                                                                    
 
 
cross border contracts (rather than having a choice to). Those firms who are already exporting would 
mandatorily have to adapt their contracts to the new instrument – even if they have no desire to enter 
a new market - and incur once again the additional transaction costs. These transaction costs (€8.18 
billion  for  all  current  exporters)  above  would  apply  to  all  exporting  firms.  In  the  Green  Paper 
consultation, almost all MS responses to the Green Paper consultation rejected both options 5 and 6, 
stressing that to solve the problem of differences in contract laws, this type of instrument was not 
consistent with principle of subsidiarity or proportionality. 

OVERALL ASSESSMENT 

Compared  to  the  BS,  the  instrument  would  remove  obstacles  to  cross  border  trade  in  the  internal 
market as the transaction costs for cross border trade would be diminished. The instrument would 
facilitate trade and could make it easier for businesses to expand across borders, as they would only 
need to use one set of rules. There would be an increase in the level of consumer protection allowing 
consumers  to  have  more  confidence  to  purchase  across  border  and  give  them  increased  access  to 
goods. In the longer term, legal practitioners would benefit as they would experience an increase in 
demand by new clients who would need to understand the instrument for domestic and cross-border 
contracts. However, it is likely to lead to a loss of income for UK law firms in the area of provision 
of legal advice on Common law to businesses if these companies chose to obtain legal advice in the 
United States.  

The instrument would have very substantial costs attached to it: Although the transaction costs for 
cross  border  trade  would  no  longer  exist,  businesses  which  only  trade  domestically  would  face  a 
very substantial cost to use the new instrument without an added value. A cross border only scope 
would not be a proportionate solution as businesses who do not want to use it would have to adapt 
their  contracts  and  incur  transaction  costs.  MS  would  be  likely  to  find  this  option  politically  very 
difficult  to  agree  and  to  implement as  it  would  eliminate  domestic  laws  and  legal  traditions.    The 
majority  of  MS  who  responded  to  the  Green  Paper  consultation  rejected  this  option  outright. 
Overall,  although  the  instrument  would  harmonise  existing  contract  law  legislation  and  eliminate 
transaction  costs,  it  would  create  other  substantive  costs  –  which  would  not  only  be  of  monetary 
value.  Therefore  from  a  holistic  perspective,  taking  all  the  costs  (monetary  or  otherwise)  into 
account, these costs outweigh by far the benefits of the instrument.  

5.2. Policy  option  5b:  Minimum  harmonisation  Directive  on  a  mandatory  Common 

European Sales Law390 

As  this  option  is  in  the  form  of  a  minimum  harmonisation  Directive,  MS  would  not  have  to 
implement it at the same time and could implement legislation beyond the consumer protection level 
of  the  Directive.  The  differences  in  timing  of  the  implementation  could  restrict  for  some  time  the 
usability of the instrument.  As experience with existing minimum harmonisation Directives shows, 
the  level  of  implementation  is  likely  to  maintain  a  considerable  number  of  differences  in  national 
contract laws.  

ECONOMIC IMPACTS  

Transaction costs: This option would increase costs as it would affect domestic companies who do 

390 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concerning the scope of application and the material 

scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 

117

 
 
 
 
 
  
 
 
 
                                                 
not  wish  to  trade  cross  border.  Companies  that  trade  only  domestically  (17,136,213  in  B2B  and 
4,420,563  in  B2C)  would  face  a  one  off  cost  of  €208.8  billion391  to  use  the  new  legislation.  All 
current B2B exporters would have to pay the same costs set out in Policy Option 5a (PO5a) (€6.47 
billion, per business this would be €9,800). Because of the minimum harmonisation character of the 
Directive,  the  levels  of  consumer  protection  would  vary  from  MS  to  MS.  To  comply  with  the 
Directive, these differences would need to be researched by businesses that carry out B2C contracts. 
Therefore the costs for business that perform B2C contracts would be (at the very least those set out 
in the BS) between €4.6 billion and € 8.7 billion392 (per business this would be €9,100 as in the BS). 
The exact costs would depend upon the extent to which a MS has implemented the Directive. The 
more changes that exist between MS laws the more the level of costs would increase to match the 
differences in existence between the MS.  

The  Directive  could  facilitate  intra  EU  trade  by  removing  obstacles  for  those  companies  which 
currently experience difficulties in either conducting cross-border trade or transferring, for example, 
property by way of cross border sales and would therefore facilitate the exercise of these rights in 
line with Articles 16 (Freedom to conduct a business) and 17 (Right to property) of the Charter on 
Fundamental Rights of the EU, respectively.393   

Administrative costs (these are included in the transaction costs above): To a large extent the impact 
would be the same as PO5a, however because of the necessity to research the differences in national 
contract laws for B2C contracts, in addition to the costs set out in PO5a, the BS administrative costs 
for exporters would remain largely unchanged. See Annex VII for more details on how these costs 
are calculated. 

Competition  in  internal  market  and  impact  on  consumer  prices:  For  B2B  contracts  the  use  of  a 
Directive could increase trade (as set out in policy option 5a PO5a) as transactions costs would be 
eliminated. For B2C contracts, there may be a less of an increase in trade as the differences between 
the mandatory consumer protection rules of MS would still need to be researched and therefore the 
BS  would  apply.  Where  trade  does  increase,  it  would  be  likely  to  increase  the  competition  in  the 
importing MS. The higher competition would encourage businesses to become more innovative and 
improve  the  quality  of  their  products  or  to  reduce  prices  in  order  to  stay  competitive.  This  would 
contribute  towards  the  Commission  policy  on  increasing  competitiveness394  and  would  be  of 
particular  relevance  in  B2B  transactions  which  include  the  manufacturing  industry.  Consumers 
would benefit from an increase choice of product at a lower price. For this option, as the impact on 
consumer  prices  are  dependent  upon  the  extent  of  the  implementation  of  the  Directive  they  are 
difficult to quantify.   

Impact on GDP: The actual impact upon EU GDP is difficult to quantify as transactions costs would 
still occur.  

Impact on consumer protection: As per PO5a although the instrument would provide a high level of 
consumer protection (in line with Article 38 of the Charter of Fundamental Rights of the EU)395 it 
would also replace national laws and could lead to changes to the level of protection consumers in 
certain MS enjoy. While the consumer would benefit from an increase in the protection for a number 
of provisions, some consumers could lose protection in specific cases compared to their existing 
national law as their national law would have to be changed.  In addition to this, because of the 
minimum harmonisation character of the Directive, the levels of consumer protection would vary 
from MS to MS. These differences could increase consumer uncertainty and decrease consumer 

391 Businesses who trade only domestically, multiplied by the relative individual one off costs for B2B and B2C.  

392 No of B2C exporters (184,670) multiplied by €9,100, multiplied by 2.7 and 5.1 (low and high estimates of average numbers of countries exported to.  Further details of 

calculations can be found in Annex III. 

393 See Annex VI.  

394 'An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage' http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0614:FIN:EN:PDF (last visited: June 2011) 

395 See Annex VI. 

118

 
 
 
                                                                                                                                                                    
confidence as the same situation as the BS would in effect still apply. 
Impact on SMEs: For B2B cross border contracts this impact would be the same as PO4, for B2C 
cross border contracts this impact would be the same as the BS.  However the Directive would also 
place administrative costs on domestic businesses who do not wish to trade cross border. This would 
have a particular impact upon micro and small enterprises and comparative to their turnover, would 
weigh more heavily (compared to the BS).  These domestic trading SMEs would be required to pay 
these costs with no real financial gain, as this advantage would only be realised for those companies 
trading across a border. 

Impact  on  law  firms:  There  would  be  an  increase  in  the  demand  for  legal  services,  as  more 
businesses would need to understand how to use the instrument even for those advising on domestic 
transactions.  There  would  be  training  costs  for  law  firms  as  they  familiarise  themselves  with  the 
changes in their national law. The concerns highlighted by legal stakeholders in the UK in PO4 are 
most  relevant  here  as  the  contract  laws  among  MS  would  be  harmonised  and  comparative 
advantages  of  a  specific  law  like  common  law  as  a  popular  option  for  choice  of  law  would  be 
fundamentally diminished. 
Impact  on  Public  authorities:  Member  States:  The  national  laws  of  MS  would  be  affected  as  this 
instrument would require a complete overhaul of the domestic legislation.  MS would bear the costs 
which would accompany the implementation of EU legislation (such as consultation of stakeholders, 
printing  of  new  legislation,  educating  the  public  about  the  new  law,  time  and  cost  of  legislative 
process, etc.) MS' governments are likely to find the instrument (to change domestic legislation for 
contract law in such a fundamental way) to be politically sensitive. In the Green Paper consultation, 
almost all MS responses to the Green Paper consultation rejected both options 5 and 6, stressing that 
to solve the problem of differences in contract laws, this type of instrument was not consistent with 
principle of subsidiarity or proportionality. 

Judiciary: The judiciary of MS would need to familiarise themselves with the new instrument, this 
would mean a substantive financial cost for training. In the longer term, a consistent reference to a 
single body of rules would remove the necessity for judges to investigate foreign law and compare 
several laws. This would decrease litigation costs (compared to the BS) and could in time alleviate 
the administrative load on a MS judicial system.   

European  Court  of  Justice  (ECJ):  In  the  first  instance  national  courts  would  rule  upon  cases  and 
submit summaries which would be entered into the Commission created database. These summaries 
are  likely  to  lead  to  a  de  facto  convergence  of  rulings  by  national  courts  which  national  judges 
would be able to access when needing to refer to how provisions of the optional Common European 
Sales  Law  have  been  ruled  upon.  There  may  be  a limited  number  of  cases  which  may  need  to  be 
referred to the ECJ,396 which would increase the caseload. There would be a financial cost of referral 
of a case which would need to be borne by the parties to the trial. 

Analysis  of  provisions  of  instrument:  The  analysis  of  impacts  of  the  main  provisions  of  the 
instrument are described in Annex VIII. 

SOCIAL IMPACTS 

This  option  would  help  to  facilitate  cross  border  trade  and  its  use  would  be  expected  to  increase 
output  and  employment.  The  number  of  jobs  created  by  this  option  is  difficult  to  quantify  (as  it 
would depend upon the extent of the implementation of the Directive), one could expect an increase, 
although not as high as the increase for policy option 5a. 

With  regard  to  impacts  on  fundamental  rights,  this  option  would  not  lead  to  discrimination,  as  it 
would apply across the EU without any distinction on the basis of nationality, in line with Article 
21(2)  of  the  Charter  of  Fundamental  Rights  of  the  EU.  It  may  also  contain  a  rule  providing  that 

396 This increase of caseload would form a minor part of the ongoing overall institutional and budgetary discussion of the of the resources and responsibilities of the ECJ. 

119

 
 
 
 
                                                 
contract terms which restrict privacy rights are unfair and therefore non-binding on the consumer (in 
line with Article 8 of the Charter). 

ENVIRONMENTAL IMPACTS 

This  option  would  increase  the  use  of  transport.  This  would  have  an  adverse  impact  upon  the 
environment and would lead to an increase in CO2 and other vehicle emissions and would increase 
the cost to control pollution due to the binding EU rules. 

SIMPLIFICATION POTENTIAL 

Compared to the BS this option would simplify the regulatory environment to a certain extent as a 
number  of  differences  between  the  contract  laws  of  MS  would  be  eliminated.  However,  as  MS 
would still have differing levels of implementation of the Directive, quite a number of differences 
between contract laws would remain.  

ONLINE ENVIRONMENT 

If  the  Directive  applied  to  an  online  cross  border  and  domestic  environment  only,  it  would  allow 
businesses performing B2B contracts to offer their products online and across the EU based on the 
same  set  of  contract  law  rules.  This  would  mean  these  businesses  would  not  need  to  adapt  their 
terms and conditions and IT platforms (the latter to a great degree) to trade in another country – this 
could  provide  an  incentive  to  businesses  to  increase  their  online  domestic  and  cross  border  trade. 
Compared to the BS, this option could help towards narrowing the gap between domestic and cross 
border  online  sales  as  businesses  would  be  encouraged  by  the  use  of  one  contract  to  offer  their 
products in more MS. 

However this would not be the case for businesses who perform B2C contracts and for them, the BS 
situation  would  largely  remain  the  same.  In  addition,  a  Directive  dedicated  to  cross  border  and 
domestic  e-commerce  only  may  lead  to  increased  legal  complexity.  Companies  using  distribution 
channels  other  than  e-commerce  would  have  to  apply  different  legal  rules  depending  on  the 
distribution  channel  they  use.  Furthermore,  it  would  not  be  technologically  neutral  and  thus  may 
generate  distortion  of  competition  should  new  forms  of  distance  sales  occur  in  addition  to  e-
commerce, for instance ‘mobile telephony commerce’. Such a solution could also create additional 
legal complexity for consumers who could be subject to different rules depending on whether they 
make a purchase online, at a distance using another method (i.e. post or telephone) or face-to-face.   

IMPACT IF THIS OPTION IS APPLIED CROSS BORDER ONLY  

Although  businesses  using  B2B  contracts  would  be  able  to  use  one  contract  law  for  cross  border 
trade  with  multiple  MS  and  reduce  transaction  costs,  the  same  would  not  be  true  for  those 
businesses  who  perform  B2C  contracts  as  they  would  still  need  to  research  where  MS  have  gone 
beyond  the  mandatory  consumer  protection  rules  set  out  in  the  Directive  –  thereby  incurring 
transaction costs. 

In addition, the Directive would not comply with the proportionality principle as it would go beyond 
what  is  necessary  to  solve  the  problem.  The  Directive  would  replace  all  national  contract  laws  in 
relation to cross border contracts.  All exporting firms would have to use the Directive in their cross 
border  contracts  (rather  than  having  a  choice  to).  Those  firms  who  are  already  exporting  would 
mandatorily have to adapt their contracts to the new Directive – even if they have no desire to enter 
a new market - and incur once again the additional transaction costs. These transaction costs (€8.18 
billion  for  all  current  exporters)  above  would  apply  to  all  exporting  firms.  In  the  Green  Paper 
consultation, almost all MS responses to the Green Paper consultation rejected this option stressing 
that to solve the problem of differences in contract laws, this type of Directive was not consistent 
with principle of subsidiarity or proportionality. 

120

 
 
 
 
 
OVERALL ASSESSMENT 

Compared to the BS, this option would to a certain extent reduce transaction costs and increase the 
level  of  consumer  protection.  In  the  longer  term,  legal  practitioners  would  benefit  as  they  would 
experience an increase in demand by new clients who would need to understand the instrument for 
domestic and cross-border contracts. However, it could also lead to a loss of income for law firms in 
the  area  of  provision  of  legal  advice  of  a  specific  law  if  companies  chose  to  obtain  legal  advice 
elsewhere.  

However, as set out in options 5a and 6, there would be a very substantial one off cost borne by all 
traders (both domestic and cross border) as they would have to adapt their contracts to use the new 
law. This cost would affect all companies, irrespective of their desire to trade cross-border. A cross 
border  only  scope  would  not  be  a  proportionate  solution  as  businesses  who  do  not  want  to  use  it 
would have to adapt their contracts and incur transaction costs.   

In addition, due to the nature of minimum harmonisation, there would still be some extra costs for 
businesses when trading cross border to consumers, these would arise from the necessity to research 
the  levels  of  consumer  protection  in  other  MS.  Therefore,  whilst  there  may  be  a  worthwhile 
investment for B2B cross border transactions, those performing B2C cross border contracts as well 
as  trading  only  domestically  would  have  to  pay  very  substantial  additional  costs  without  a  clear 
added  value.  There  would  also  be  administrative  costs  which  would  arise  from  the  need  for 
businesses to comply with the Directive these costs would affect all companies. MS would be likely 
to find this option politically very difficult to agree and to implement as it would eliminate domestic 
laws  and  legal  traditions.    The  majority  of  MS  who  responded  to  the  Green  Paper  consultation 
rejected this option outright.  

Overall, although this option would minimally harmonise existing contract law legislation and civil 
codes and reduce transaction costs for some traders, it would add to the issues set out in the problem 
definition  as  some  costs  for  researching  the  law  would  still  remain.  Therefore  from  a  holistic 
perspective, taking all the costs (monetary or otherwise) into account these costs outweigh by far the 
benefits of the instrument. 

6.  Effectiveness of policy options in meeting policy objectives 

6.1. Policy option 1: Baseline Scenario   

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 

Reduce 
transaction 
costs for cross-
border trade 
Reduce legal 
complexity  in 
cross-border 
trade 

The differences in national contract laws would remain, so would additional 
transaction costs for cross border trade.  

Companies would continue to deal with multiple national laws.  In the absence of 
EU action, MS would be likely to continue to take initiatives in an uncoordinated 
manner (for example future implementation/transposition of contract law related 
concepts at the EU level would be different between MS). This would allow the 
legal complexity to further increase. However, the publication of the Expert 
Group work could facilitate some shared understanding of the commonalities 
between the EU legal systems (such a scenario has previously been demonstrated 
by the EP who have used the Draft Common Frame of Reference when making 
amendments to the CRD), but this would not occur in a coordinated and 

121

 
 
 
 
 
 
 
 
Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

predictable manner. In addition, the work of the Expert Group could also be used 
by businesses when drafting their standard terms and conditions provided the 
rules developed by the Expert Group are not contradictory to the applicable law. 
Despite these possibilities, any convergence in national laws would appear in the 
long term as concepts to be agreed in future laws would take time to embed. 

CONSUMER OBJECTIVES 

Reduce 
uncertainty 
about consumer 
rights in cross-
border shopping 

Increased  
consumer 
protection 

The BS includes the adoption of the CRD, which, due to its nature (full 
harmonisation) ensures that consumers have certain rights which are harmonised 
across the EU. However, a level of uncertainty would still exist as MS would be 
free to implement domestic legislation according to their own interpretations, this 
in turn would lead to some differences between the national laws. Because of 
these differences, in some cases consumers would be dissuaded from shopping 
cross-border. 
As set out above the adoption of the CRD ensures that consumers have certain 
rights which are harmonised across the EU. However there are some elements of 
consumer protection in contract law which are not covered by the CRD. With no 
EU action, these would remain. 

6.2. Policy option 2 

6.2.1.  Policy option 2a: Toolbox as a Commission document 

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 
Reduce 
transaction 
costs for cross-
border trade 

This option could go a little way towards meeting this objective as in the longer 
term there could be some minimal reduction in transaction costs due to the 
convergence of certain contract law concepts, but the extent of this is unknown as 
we cannot predict when and how these concepts would be used. 

Reduce legal 
complexity  in 
cross-border 
trade 

In the longer term, there is likely to be a small convergence in national legislation 
in the area of contract law. This would mean fewer differences between the 
contract law legislation in a trader's country compared to the country they 
intended to trade with and effectively reduce the level of complexity in cross 
border trade. 
However, despite this small convergence, this option would not prevent some 
differences in future contract law concepts/rules. At the EU level, the co-
legislators could depart from the toolbox by amending Commission proposals in 
negotiations. At MS level this option would not ensure that MS adopt identical 
rules as set out in the toolbox when implementing Union legislation. As 
differences among national laws resulting from the transposition of Directives 
cannot be avoided, in comparison to the BS legal complexity currently 
experienced by businesses would not decrease to a great extent. 

CONSUMER OBJECTIVES 

Reduce 
uncertainty 
about consumer 
rights in cross-

Compared to the BS, there is likely to be a small convergence in the area of 
Common European Sales Law in the longer term. Because of this convergence, 
this option would provide for some, albeit rather limited, improved legal certainty 
with regards to future contract law concepts.     

122

 
 
 
 
 
 
Policy 
Objectives 

border shopping 
Increased  
consumer 
protection 

Effectiveness in meeting the objectives/addressing the problems  

Compared to the BS, this option would only go a very small way to meeting this 
objective as the impact would be limited and only felt when all three institutions 
use the toolbox concepts when passing EU contract law related legislation.   

6.2.2.  Policy option 2b: Toolbox as an inter-institutional agreement  

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 

Reduce legal 
complexity  in 
cross-border 
trade 

The same concepts set out in PO2a would apply here, however the use of an inter 
institutional agreement (IIA) would commit the institutions to use the toolbox as 
a basis for future contract law concepts; therefore, unless there was a justified 
reason not to, the institutions would always use the toolbox for future contract 
law related concepts. This would lead to a greater convergence and coherence in 
future EU legislation and a greater reduction in complexity for businesses.  
However despite this increased level of convergence, this option cannot fully 
prevent the existence of differences in national contract law concepts in the 
future. This is because if there were justified reasons for the Council and EP to 
depart from the IIA they would be able to. If this happened then differences in 
contract law concepts between the three Institutions (as highlighted in PO2a) 
would be created. As described in PO2a, differences in legislation between MS 
could also remain because this option would not ensure that MS adopt identical 
rules as set out in the toolbox when implementing Union legislation. In the longer 
term, reduction in legal complexity is likely to be of a greater magnitude than in 
the case of PO2a, but still limited compared to the BS. 

CONSUMER OBJECTIVES 

Reduce 
uncertainty 
about consumer 
rights in cross-
border shopping 

In the longer term, this option is likely to lead to some convergence in the area of 
Common European Sales Law, and as a result would provide greater legal 
certainty for consumers with regards to future contract law concepts compared to 
PO2a. However, as described under the 'business objectives,' despite this 
convergence, this option is likely to only remedy the current problem to a small 
extent. 

Increased  
consumer 
protection 

This option would go a small way to meeting this objective as the impacts felt 
would be of a greater magnitude because all three institutions would use the 
toolbox concepts when passing EU legislation.   

6.3. Policy option 3: Recommendation on a Common European Sales Law 

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 

Reduce 
transaction 
costs  for  cross-
border trade 

Compared to the BS this option would only reduce transaction costs if MS who 
incorporate  the  Common  European  Sales  Law  entirely  and  without  changes 
(scenario 2 under the relevant impact analysis). For B2C traders in MS who have 
not incorporated the Common European Sales Law as above, when trading with 
consumers  from  MS  who  have  also  not  incorporated  the  Common  European 

123

 
 
 
 
 
 
 
Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

Sales Law, the differences in contract laws would remain and the BS transaction 
costs would still apply. 

Reduce 
legal 
complexity    in 
cross-border 
trade 

As  the  Recommendation  would  not  be  legally  binding,  it  would  allow  MS 
discretion  on  timing,  method  and  extent  of  implementation.  Therefore  (unless 
many  MS  incorporate  the  Common  European  Sales  Law  at  the  same  time, 
entirely  and  without  changes  as  attached  to  the  Recommendation)  this  option 
would  allow  for  differences  between  contract  laws  of  MS  and  the  legal 
complexity experienced by traders would not change from the BS. 

CONSUMER OBJECTIVES 

Reduce 
uncertainty 
about  consumer 
rights  in  cross-
border shopping 

Increased  
consumer 
protection 

This option would not reduce the level of uncertainty that consumers experience 
about their rights as MS would have discretion on timing, method and extent of 
implementation  thereby  creating  differences  between  the  contract  laws  of  MS. 
However,  if  many  MS  incorporated  the  Common  European  Sales  Law  at  the 
same time, entirely and without changes as attached to the Recommendation then 
this  option  could  also  build  confidence  in  consumers  and  increase  their  legal 
certainty  as  they  would  be  subject  to  one  similar  core  set  of  rules  and  would 
become  familiar  with  a  similar  contract  being  used  in  their  purchases  which 
would not vary greatly between the MS who use it. 

Applicable  to  B2C  contracts  only  and  only  where  a  MS  has  incorporated  the 
provisions  of  the  Common  European  Sales  Law  into  its  national  laws.  When 
compared  to  the  BS,  this  option  would  meet  this  objective  as  the  Common 
European Sales Law would provide for a high level of consumer protection (see 
annex VIII.).  

6.4. Policy option 4: Regulation/Directive setting up an optional Common European 

Sales Law 

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 

Reduce 
transaction 
costs  for  cross-
border trade 

Reduce 
legal 
complexity    in 
cross-border 
trade 

Compared  to  the  BS  (for  B2B  and  B2C)  this  option  would  reduce  additional 
transaction  costs  for  those  businesses  that  choose  to  use  the  optional  Common 
European Sales Law for cross border trade with more than 1 MS. 

This  option  would  reduce  the  legal  complexity  as  it  would  offer  businesses  the 
choice  of  using  one  legal  system  for  cross  border  trade  across  the  whole  of  the 
EU instead of the current twenty six.  

CONSUMER OBJECTIVES 

Reduce 
uncertainty 
about  consumer 
rights  in  cross-
border shopping 

This  option  would  build  confidence  in  consumers  and  increase  their  certainty 
about  their  rights  as  they  would  be  subject  to  one  similar  core  set  of  rules  for 
when  they  purchase  cross  border  from  traders  who  use  the  optional  Common 
European Sales Law.  

124

 
 
 
 
Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

Increased  
consumer 
protection 

Applicable  to  B2C  contracts  only.  This  option  would  meet  this  objective  as  the 
optional Common European Sales Law would provide a high level of consumer 
protection. See annex VIII for more details. 

6.5.  Policy option 5 and policy option 6 

6.6. Policy option 5a: Full harmonisation Directive on a mandatory Common European Sales 
Law and policy option 6: Regulation establishing a mandatory Common European Sales 
Law 

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 

Reduce 
transaction 
costs  for  cross-
border trade 

legal 
Reduce 
complexity    in 
cross-border 
trade 

Compared to the BS for B2B and B2C contracts, the instrument would meet this 
objective  as  it  would  eliminate  transaction  costs  for  those  businesses  that  trade 
with more than 1 MS.  

The  instrument  would  reduce  legal  complexity  as  the  same  system  between  the 
contract laws of the MS would exist.  

CONSUMER OBJECTIVES 

Reduce  level  of 
uncertainty 
about  consumer 
rights  in  cross-
border 
shopping 

The  instrument  would  subject  consumers  to  the  same  set  of  rules  in  their  sales 
contracts  across  the  EU.  This  would  reduce  the  level  of  uncertainty  consumers 
experience about their rights which in turn could increase their confidence when 
shopping cross border. 

Increased  
consumer 
protection 

Applicable to B2C contracts only. This objective would be met as the instrument 
would  have  a  high  level  of  consumer  protection  provisions  (see  Annex  VIII  for 
further details).  

6.6.1.  Policy  option  5b:  Minimum  harmonisation  Directive  on  a  mandatory 

Common European Sales Law 

Policy 
Objectives 

Effectiveness in meeting the objectives/addressing the problems  

BUSINESS OBJECTIVES 

Reduce 
transaction 
costs  for  cross-
border trade 

For  B2B  contracts  this  option  would  meet  this  objective.  However  for  those 
traders who perform B2C contracts there would still be a necessity to research the 
mandatory  consumer  protection  rules  of  a  country  as  MS  could  transpose  the 
Directive  into  their  national  laws  beyond  those  rules  which  are  minimally 
harmonised. Therefore transaction costs would remain. 

125

 
 
 
 
 
 
 
 
Policy 
Objectives 

Reduce 
legal 
complexity    in 
cross-border 
trade 

Effectiveness in meeting the objectives/addressing the problems  

For B2B contracts this option would meet this objective. For B2C contracts there 
would be some reduction in legal complexity as a more consistent and convergent 
system between the contract laws of the MS would exist, however due to possible 
differences  in  consumer  protection  rules  between  MS,  some  legal  complexity 
would remain. 

CONSUMER OBJECTIVES 

Reduce 
uncertainty 
about  consumer 
rights  in  cross-
border 
shopping 

This  option  would  go  some  way  towards  meeting  this  objective  as  it  would 
subject  consumers  to  a  more  similar  set  of  rules  in  their  sales  contracts.    This 
would  reduce  the  level  of  uncertainty  consumers  experience  about  their  rights, 
which in turn could increase their confidence when shopping cross border. 

Increased  
consumer 
protection 

Applicable  to  B2C  contracts  only.  This  option  would  meet  this  objective  as  the 
Directive would have a high level of consumer protection provisions (see annex 
VIII for further details).  

126

 
 
 
 
 
ANNEX  VI: 
FUNDAMENTAL RIGHTS  

IMPACTS  OF  THE  COMMON  EUROPEAN  SALES  LAW  ON 

EU  legislation  must  fully  comply  with  the  provisions  of  the  EU  Charter  of  Fundamental  Rights, 
which has become legally binding following the entry into force of the Lisbon Treaty. All legislative 
proposals of the Commission are subject to a systematic check to ensure their compliance with the 
Charter.397 This annex assesses in detail the impact on the relevant fundamental rights embodied in 
the Charter. They include: Article 38 on consumer protection, Article 16 on the freedom to conduct a 
business,  Article  17  on  the  right  to  property,  Article  21(2)  on  non-discrimination  on  the  basis  of 
nationality and Article 8 on data protection.    

Irrespective of the legal form it may take, the Common European Sales Law instrument would not 
have  a  negative  impact  on  any  of  the  abovementioned  rights  and  would  facilitate  the  exercise 
particularly  of  the  freedom  to  conduct  a  business  and  consumer  protection.  It  would  also  have  a 
positive  impact  on  the  right  to  property  (by  facilitating  the  disposal  thereof)  and  to  non-
discrimination of consumers on the basis of nationality.   

The scale of the positive impact on fundamental rights may vary and is in some way connected to the 
effectiveness  of  specific  policy  options  in  achieving  the  policy  objectives,  as  stated  above.  As 
discussed in the section on comparison of policy options in the impact assessment report, the most 
effective  options  in  achieving  the  business  and  consumer  objectives  are  the  optional  Common 
European  Sales  Law  (policy  option  -  PO  4),  the  full  harmonisation  Directive  on  a  mandatory 
Common  European  Sales  Law  (PO  5a)  and  a  Regulation  establishing  a  mandatory  Common 
European Sales Law (PO 6). The least effective ones are the toolbox (PO 2) and Recommendation 
on a Common European Sales Law (PO 3b). 

•  Article 38 on consumer protection398  

The  instrument  of  Common  European  Sales  Law  will  contribute  to  ensuring  a  high  level  of 
consumer protection by the following means: Firstly, it will increase consumer protection in certain 
areas which are currently minimally harmonised (e.g. pre-contractual statements binding the seller, 
no hierarchy of sales remedies, increased warranty period). Secondly, it will create a high level of 
consumer protection in areas in which the Union has not previously acted (e.g. obligation of business 
to take back faulty products). Thirdly, it will take the fully harmonised provisions of the Consumer 
Rights Directive and the other minimum harmonisation provisions of the acquis as a benchmark. 

A Common European Sales Law instrument, irrespective of the form, would have a positive impact 
on consumer protection, as it would ensure a high level of protection on a number of key consumer 
protection rules (examined in detail in Annex VIII). The positive impact of different policy options 
on consumer protection would differ, depending on the effect that the respective legal instruments 
would have on existing national laws.  

The  Recommendation  introducing  an  optional  Common  European  Sales  Law  (PO  3(b))  and  a 
Regulation/  Directive  introducing  an  optional  Common  European  Sales  Law  (PO  4)  would  not 
deprive consumers of any rights they currently enjoy, as they would not replace or necessitate any 
changes  in  national  laws.  Therefore,  consumers  who  wish  to  rely  on  their  national  law  could 
continue  to  do  so.  Alternatively,  those  who  are  willing  to  accept  an  optional  Common  European 
Sales Law to govern their contracts could even gain more protection compared to their national law. 

397  Communication from the Commission Strategy on the effective implementation of the Charter, COM(2010) 573 final, available at: 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0573:FIN:EN:PDF  

398 Union policies must ensure a high level of consumer protection. The Explanations clarify that this right is based on Article 169 TFEU, according to which "the Union 

shall contribute to protecting the … economic interests of consumers, as well as to promoting their right to information [and] education".  

127

 
 
 
  
 
 
 
 
 
                                                 
As illustrated by the analysis of impacts of key substantive consumer protection provisions (e.g. pre-
contractual  information,  remedies  for  non-performance,  burden  of  proof,  damages)  in  Annex  VIII, 
the level of protection ensured by the Common European Sales Law rules could overall be higher 
than the level of protection in most national laws of Member States.  

On the other hand, the options of a full harmonisation Directive on a mandatory Common European 
Sales Law (PO 5a) and Regulation (PO 6) would replace national laws and could lead to changes to 
the  level  of  protection  consumers  in  certain  Member  States  enjoy.  While  any  Common  European 
Sales Law instrument would ensure a high level of consumer protection, it would not be politically 
feasible  to  adopt  an  instrument  which  would  take  over  all  rules  which  ensure  the  highest  level  of 
protection  out  of  the  existing  national  laws  of  Member  States.  While  the  consumer  would  benefit 
from  an  increase  in  the  protection  for  certain  provisions,  some  consumers  would  be  likely  to  lose 
protection in some specific cases compared to their existing national law. Therefore, the consumers 
in  those  Member  States  would  lose  protection  for  those  selected  provisions,  as  their  national  law 
would be changed.  The same problem could occur in the case of a toolbox (PO 2), provided any of 
the rules it contains would be at a lower level than the respective rules in the national law of a given 
Member State.  

•  Article 16 on the freedom to conduct a business  

The  instrument  of  Common  European  Sales  Law  would  facilitate  the  exercise  of  the  freedom  to 
conduct  business,  in  particular  with  regards  to  cross-border  transactions  in  the  EU.  By  creating  a 
single set of contract law rules which businesses could choose to apply in transactions across the EU, 
it  would  remove  obstacles  for  those  companies  which  currently  experience  difficulties  to  conduct 
cross-border business. The instrument of Common European Sales Law contains no restrictions on 
the freedom of the parties to conclude contracts and to subject them to any applicable law.   

The  policy  options  of  an  optional  Common  European  Sales  Law  (PO  4),  a  full  harmonisation 
Directive (PO 5a) and a Regulation replacing national laws (PO 6) would be the most effective in 
facilitating the exercise of this right, particularly in a cross-border context. However, PO 5a and PO 
6  would  have  the  disadvantage  of  imposing  costs  on  all  (both  domestic  and  exporting)  companies 
(including those which are not interested in cross-border trade) in order to adapt to the changes in 
their national laws.  

•  Article 17 on the right to property  

The  instrument  of  Common  European  Sales  Law  contains  no  restrictions  on  the  freedom  of  the 
parties  to  exercise  their  property  rights.  Moreover,  it  can  facilitate  the  exercise  of  this  right  as 
regards to the transfer of property by way of cross-border sales.  

The  policy  options  of  an  optional  Common  European  Sales  Law  (PO  4),  a  full  harmonisation 
Directive  (PO  5a)  and  a  Regulation  (PO  6)  would  be  most  effective  in  facilitating  the  disposal  of 
property by way of cross-border sales as they would introduce a set of uniform rules. While PO 5a 
and  PO  6  would  ensure  that  the  same  rules  apply  both  domestically  and  cross-border,  they  would 
also have the disadvantage of generating costs for adaptations to the change in national law for those 
economic operators who are not interested in cross-border sales.  

•  Article 21(2) on non-discrimination on the basis of nationality399 

399 Article 21 of the Charter of Fundamental Rights does not create powers on the Union to enact anti-discrimination measures. It only addresses acts of discrimination by 

the institutions and bodies of the Union themselves, when exercising powers conferred under the Treaty. In particular, EU measures must not discriminate on the basis of 

nationality. 

128

 
 
 
 
 
 
 
 
 
 
 
                                                 
The  instrument  would  not  lead  to  discrimination,  as  it  would  apply  across  the  EU  without  any 
distinction  on  the  basis  of  nationality.400    Moreover,  the  content  of  the  instrument  is  likely  to 
diminish  indirect  discrimination  on  grounds  of  nationality  by  private  parties.  More  specifically,  it 
would diminish the practice of refusal of cross-border sales to consumers in certain Member States. 
Consumers in countries such as Romania, Bulgaria, Latvia, Belgium, Malta, Ireland and Poland are 
particularly affected.401 This will be achieved by removing objective contract-law related obstacles, 
which pose obstacles to cross-border transactions for businesses.  

The  policy  options  of  an  optional  Common  European  Sales  Law  (PO  4),  a  full  harmonisation 
Directive (PO 5a) and a Regulation replacing national laws (PO 6) would be the most effective in 
reducing  the  number  of  consumers  who  experience  the  refusal  to  sell.  These  options  would 
effectively remove the contract law related barriers, which may be a reason for the traders to refuse 
cross-border sales.  

•  Article 8 on data protection  

The  instrument  of  Common  European  Sales  Law  does  not  contain  specific  provisions  on  data 
protection. However, it may contain a rule providing that contract terms which restrict privacy rights 
are unfair and therefore non-binding on the consumer. In contractual relations, personal data may be 
affected  to  the  extent  that  they  have  to  be  exchanged  during  the  conclusion  of  a  contract  (name 
address, credit card details). Particularly in e-commerce situations personal data may be put at risk, 
as  it  could  be  used  for  instance  for  commercial  purposes  without  the  person's  consent.  However, 
specific rules of Directive 95/46 on Data Protection provide adequate protection concerning the use 
of this information.   

400 The only exception is the option 3b (a Commission Recommendation) under which the application may be limited only to the Member States which will follow  

the Recommendation and could therefore use the instrument.  

401 Communication on Cross-Border Business to Consumer e-Commerce in the EU, COM (2009) 557 final, 22.10.2009, p.6. 

129

 
 
 
 
 
 
 
 
                                                 
ANNEX VII: ADMINISTRATIVE COSTS 

1. Identification and classification of obligations requirements  

Contract  law  covers  both  pre-contractual  and  contractual  information  requirements.  Legal 
obligations to provide information will mostly refer to B2C contracts. The consumer contract acquis 
consists  of  a  number  of  Directives.  They  are  mostly  based  on  the  principle  of  minimum 
harmonisation  and  Member  States  are  allowed  to  introduce  more  stringent  provisions  including 
additional  information  requirements.  There  are  also  contract  law  related  information  requirements 
that are not regulated at the EU level. 

The contract law related information requirements could be classified as non-labelling information. 

2. Identification of required actions  

The information requirement involves the following actions:  

Table 1: Identification of required actions 

Action 
1. Familiarising with information obligations   
2. Training members and employees 
3. Retrieving relevant information from existing data  
4. Adjusting existing data  
5. Producing new data  
6. Designing information material 
7. Filling in forms 
8. Holding meetings  
9. Inspecting and checking  
10. Copying  
11. Submitting information to the relevant actor 
12. Filing the form 
13. Buying equipment and supplies 
14. Other 

Applicability  
Yes 
No 
No 
No 
No 
Yes 
No 
No 
No 
Yes 
Yes 
No 
No 
No 

In  order  to  meet  the  information  requirement  companies  wishing  to  trade  cross-border  have  to 
familiarise  themselves  with  information  requirements  of  the  foreign  law  (action  1),  adapt  their 
general  terms  and  conditions  or  other  information  materials  accordingly  and  submit  it  to  the  other 
contractual party (actions 6, 10 and 11). 

3. Classification by legal origin and impact of different options 

-  Option 1- (baseline scenario)- information requirements for B2B transactions are due to 
national  law.  In  B2C,  information  requirements  are  due  to  national  and  EU  law.  The 
Commission  in  the  impact  assessment  on  the  Consumer  Rights  Directive  (CRD  IA) 
estimated that 25% of administrative costs stem from national legislation and the rest is 
due to EU law. This estimate has been taken forward in this impact assessment for B2C 
transactions.  In  B2B  transactions  100%  of  the  administrative  costs  result  from  national 
law. 

130

 
 
 
 
 
 
 
 
 
 
 
 
 
 
-  Option 2a and 2b - no impact on administrative costs- a toolbox does not directly impose 

an information requirement.  

-  Option 3 –impact on administrative costs depending upon whether and to what extent a 

Member State decides to apply the Commission Recommendation.  

-  Option 4- impact on administrative costs. An optional Common European Sales Law will 
contain  a  set  of  information  requirements.  In  addition,  all  traders  choosing  the  optional 
Common European Sales Law will need to inform consumers about this fact. This would 
generate  additional  administrative  costs  (compared  to  the  baseline  assumptions) 
concerning designing information materials. 

-  Option 5a and 5b / Option 6 

o  Option  5a  (full  harmonisation)  and  Option  6  (Regulation  establishing  a  Common 
European  Sales  Law)  –  impact  on  administrative  costs.  These  instruments  will 
contain  a  set  of  information  requirements.  Traders  would  need  to  adapt  to  new 
information requirements. 

o  Option  5  b  (minimum  harmonisation)  -  the  same  impacts  as  option  5a.  However,  if 
the Directive is based on minimum harmonisation, Member States will be able to go 
beyond  the  minimum  information  requirements  and  there  would  be  additional  costs 
for  companies  trading  cross-border  (the  baseline  administrative  costs  for  exporters 
would remain unchanged). 

4. Identification of target groups  

The administrative costs will be borne by businesses. The costs do not differ between small, medium 
and large enterprises.  

5 Identification of the frequency of required actions  

Contract law related administrative costs are mostly one-off costs- e.g. there is no need to adapt the 
general terms and conditions or a website until a major reform of contract law.  

-  Option 1- one-off costs per entering a Member State.  Costs borne by companies wishing 

to trade cross-border. 

-  Option  3-  one-off  costs  for  entering  Member  States  that  applied  the  Recommendation 
with national adjustments due to possible differences in the way Member States applied 
it. 

-  Option  4-  only  one  set  of  one-off  costs  for  entering  all  Member  States.  Costs  borne  by 

companies wishing to trade cross-border. 

-  Option  5  (a  and  b)  and  Option  6-  one–off  costs  for  all  EU  companies  and  under  sub-
option  b  (minimum  harmonisation)  the  additional  administrative  costs  for  companies 
trading cross-border (the same as under the baseline scenario) 

131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 Identification of cost parameters  

Option 1 
As described in section 2.3.1 of the main report, a company wishing to trade cross-border needs to 
hire a lawyer who is an expert in the contract law of each relevant country. The lawyer will need to 
check  the  relevant  national  laws  and  the  company  will  need  to  design  the  information  material 
accordingly. 

The baseline transaction costs in BC2 for trading with one other Member State amounts to €8,695-
€9,565 and in B2B transaction €9,000-€10,568. These costs include administrative  costs and other 
costs to familiarise and comply with other non-information related requirements. 

The Commission in the CRD IA estimated the cost of legal validation of information requirements 
per Member State amount to €2,500 i.e. 10 hours of work billed at €250 per hour. In addition, the 
CRD IA considers other one-off cost elements such as designing information material, copying and 
submitting the information. These additional costs have been estimated at €1,026 for a distance seller 
and €2,125 for a doorstep seller. The total baseline administrative costs for a distance seller selling 
cross-border to one Member State amount to €3,526 and for a doorstep seller to €4,625. 

These  costs  are  likely  to  go  down  once  the  CRD  has  been  adopted.  The  CRD  foresees  full 
harmonisation  of  the  pre-contractual  information  requirements  but  other  information  related 
requirements  e.g.  a  form  in  which  information  is  to  be  provided  are  likely  to  remain  fragmented. 
Therefore,  exporters  would  still  need  to  familiarise  and  comply  with  some  national  provisions 
concerning  the  information  requirements.  It  could  be  assumed  that  the  time  needed  for  legal 
validation  of  information  requirements  as  estimated  in  the  CRD  IA  would  be  shorter  but  other 
required costs (e.g. designing information materials, copying and submitting the information) would 
remain  unchanged  after  the  adoption  of  the  CRD.  The  scope  of  the  Directive  is  also  likely  to  be 
limited to distance and off-premises sales meaning that the adoption of the CRD will not have any 
impact  on  administrative  costs  for  exporters  who  sell  by  other  methods  (i.e.  on-premises  sales)  or 
those which stem from provisions of general contract law. Therefore, for this impact assessment the 
average  administrative  cost  per  company  exporting  are  estimated  at  €2,500  (average  for  all  sales 
channels – doorstep, distance and on-premises sales) that will remain after the adoption of the CRD. 
This means that the administrative costs amount to around 25% of the transactions costs as estimated 
in section 2.3.1 of the report.  

Difference between administrative and transaction costs 

EU consumer protection rules require companies to provide certain information to consumers before 
and after the conclusion of a contract. The information requirements cover, for example: identity of 
the  supplier,  the  main  characteristics  of  the  product,  the  arrangements  of  payment  etc.  These 
obligations  are  however  regulated  differently  between  Member  States.  In  some  countries, 
information must be provided in writing or in a specific form. Member States have also introduced 
additional information obligations.  

Administrative  costs  refer  to  all  the  costs  associated  with  compliance  with  these  information 
requirements while transactions costs are a broader concept covering all the aspects of contract law. 

For example, companies need to investigate the national rules according to which remedies may be 
invoked or national lists of unfair contract terms. These requirements do not impose any information 
obligations  (i.e.  companies  do  not  have  to  provide  information  on  available  sales  remedies  in  the 

132

 
 
 
 
 
 
 
 
 
 
 
contract or before conclusion of the contract). These costs are however part of the transaction costs 
for business wishing to trade cross-border. 

In addition, specific IT costs may be relevant for businesses selling to consumers in other Member 
States  via  e-commerce.  These  additional  costs  stem  from  the  need  to  adapt  a  business's  internet 
platform to the legal requirements of each Member States it directs its activity to. They include costs 
for adapting the web-site so that it can recognise the consumer's country of residence and retrieve the 
correct set of pages.402 These additional transaction costs have been estimated at €2,916 per Member 
State and they are related to providing information (action 6 – designing information material). 

In B2B transactions, companies are not faced with such strict information requirements as in B2C 
contracts.  The  national  law  may  however  contain  some  provisions  related  to  information 
requirements. It is assumed that the legal validation of information requirements in B2B transactions 
and other related actions will take less time than for B2C transactions. It has been roughly assumed 
that administrative costs would amount to 15% of transactions costs for B2B sales as estimated in 
section 2.3.1 of the report (compared to 25% in B2C transactions). 

To simplify calculations, it is further assumed that these administrative costs are split equally across 
all the identified actions. 

Option 3 

The impacts of this option would very much be dependent upon: 

•  Whether and how many MS decide to incorporate an optional  Common European Sales Law 

and to what extent. 

•  How many businesses decide to use the Common European Sales Law. 

On  a  qualitative  basis  the  impacts  would  reduce  the  baseline  administrative  costs  to  some  degree 
only.    For  those  MS  who  decide  to  incorporate  the  Common  European  Sales  Law  completely 
without any changes and at the same time, the differences between national cross border laws would 
cease (similarly to option 4 and 5). Therefore if traders used the Common European Sales Law they 
would only incur the one off administrative cost to become familiar and comply with the information 
requirements, but this cost would not be borne again if the trader wished to expand trade to another 
MS that incorporated the Common European Sales Law.  

Option 4 
It is assumed that the one-off cost of adaptation to the optional Common European Sales Law equals 
the  baseline  administrative  cost  per  company  for  entering  one  Member  State  under  the  baseline 
scenario i.e. €2,500. This is considered as a high estimate since the costs are likely to be lower than 
under the baseline scenario e.g. a company would not need to advise an expert in international law 
which is often be the case under the baseline scenario but rather a local lawyer. 

The  additional  administrative  cost  for  option  4  in  B2C  contracts  concerns  the  need  to  inform 
consumers about the choice of the optional Common European Sales Law. This cost will be borne 
by  all  companies.  For  example,  companies  trading  via  e-commerce403  would  need  to  create  e.g.  a 
pop  window  informing  a  consumer  about  the  application  of  the  European  contract  law  and 
companies trading via post will need to add similar information in a brochure. This one-off cost is 

402 Federation of Small Businesses (FSB) in the UK, Response to the Green Paper on policy options for progress towards a  possible European contract law for consumers  

and businesses , p.3; see FSB Position Paper on Rome I, p.3 for detailed breakdown of costs. 

403 It should be noted that under option 4, additional IT costs for companies trading via e-commerce would disappear as retailers would not be required to adapt their 

websites to recognise the consumer's country. They should use the same set of information for all the countries. 

133

 
 
 
 
 
 
 
 
                                                 
assumed  to  be  around  €500.  Therefore  the  total  one-off  cost  for  a  company  using  an  optional 
Common European Sales Law would amount to €3,000. 

Option 5 and Option 6 

Option 5 a (full harmonisation Directive) and Option 6 (Regulation establishing a European contract 
law) 
Similarly  to  option  4,  it  is  assumed  that  the  one-off  cost  of  adaptation  to  the  Directive/Regulation 
equals  the  baseline  administrative  cost  per  company  for  entering  one  Member  State  i.e.  €2500. 
Similarly to option 4, this is considered as a high estimate since the costs are likely to be lower than 
under  the  baseline  scenario  e.g.  a  company  would  not  need  to  seek  advice  from  an  expert  in 
international law which is often be the case under the baseline scenario but rather a local lawyer. 

Option 5 b (minimum harmonisation Directive) 
The  same  impact  as  option  5a.  However,  if  the  Directive  is  based  on  minimum  harmonisation, 
Member  States  will  be  able  to  go  beyond  the  minimum  information  requirements.  In  this  case  the 
baseline administrative costs for companies trading cross-border will remain unchanged. 

7. Assessment of the number of entities concerned  

Option 1 
In  B2C  transactions  all  the  exporting  companies  will  need  to  bear  administrative  costs.  In  B2B 
transactions,  the  costs  will  be  borne  by  companies  exporting  and  applying  the  law  of  the  other 
contractual party. 

Table 2:  Number of companies affected in Option 1 

Number  of  firms 
exporting404 
(a) 

and 

Agriculture (B2B) 
Manufacturing 
mining (B2B) 
Wholesale (B2B) 
Retail (B2C) 
Total  

28,771 
363,353 

268,430 
184,670 
845,224 

firms 
Share  of 
exporting 
under 
law  of  partner 
country 405 
(b) 
14.6% 
14.6% 

Number of firms  
exporting  under 
law  of  partner 
country (c ) 
c= a*b 
4,200 

14.6% 
- 
n/a 

53,050 
39,190 
184,670 
281,110 

The number of companies in B2C that will incur additional IT costs amounts to 67,230.406 

The costs grow proportionally to the number of countries with which enterprises trade. The number 
of  required  actions  has  therefore  been  multiplied  by  4  (the  average  between  the  low  and  high 
estimate of the average number of EU countries companies export to, both in B2B and B2C).407 

It  should  be  noted  that  for  Option  1  the  administrative  costs  are  calculated  for  the  firms  currently 
active. Notably, these are mainly sunk one-off costs, sunk by EU businesses which already entered 

404 See annex III.  

405 Flash Eurobarometer 299, European contract law in business-to-business transactions, not published. 

406 See annex III, Calculation of opportunity and transaction costs. 

407 See annex III, Calculation of opportunity and transaction costs. 

134

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
cross-border  trade.  On  the  other  hand,  more  administrative  costs  for  the  EU  economy  occur 
annually, as the new EU exporters (estimated at 14.6% yearly)408 pay transaction costs for entering 
cross-border trade.  

Option 3 

There  are  several  variants  of  the  incorporation  of  the  Common  European  Sales  Law  under  this 
option and its subsequent outcomes:  

Scenario 1:  

In the ideal scenario all MS would implement the Common European Sales Law completely, without 
changes and at the same time. There would be a one-off sunk cost for familiarisation of the Common 
European Sales Law when businesses first use it to trade with a business or consumer in one other 
MS. The impacts of this scenario would be the same as those listed under the analysis of impacts of 
policy option 4. 

Scenario 2: 

Some of the MS could decide to implement the Common European Sales Law completely, without 
changes and at the same time. 

This  scenario would be of benefit to traders who perform B2B  contracts, because even where MS 
decided  not  to  incorporate  the  Common  European  Sales  Law,  traders  would  have  the  freedom  to 
decide on the law applicable to their contract (as the choice of using the law of a third country would 
still  apply  to  them).  This  would  mean  that  traders  who  performed  B2B  contracts  would  have  the 
opportunity to reduce their administrative costs through the use of the Common European Sales Law 
(provided  that  at  least  1  MS  implemented  the  Recommendation)  –  even  if  their  MS  had  not 
incorporated it. The same would be the case for B2C contracts, if both MS of the business' and the 
consumer's residence implemented the Common European Sales Law entirely and without changes. 
If not, scenario 3 would apply. 

Scenario 3:  

Some  MS  could  decide  to  incorporate  the  Common  European  Sales  Law  not  completely,  with 
changes, not at the same time, or a combination of these factors.  

Under  this  scenario,  problems  would  arise  similar  to  those  set  out  under  Scenario  2  and  in  some 
countries  businesses  would  face  higher  administrative  costs  than  in  other  countries.    For  B2B 
contracts the same situation as under scenario 2 would apply. For B2C contracts the situation would 
become even more complicated as businesses who wanted to use the Common European Sales Law 
could only approach and sell to consumers whose MS have incorporated the Recommendation and in 
doing  so,  businesses  would  have  to  research  where  MS  have  gone  beyond  the  drafting  of  the 
Common European Sales Law with regards to mandatory consumer protection rules and where the 
level  of  domestic  consumer  protection  is  higher  than  that  offered  in  the  Common  European  Sales 
Law.  However  for  those  consumers  whose  MS  have  not  implemented  the  Recommendation  who 
approach  a  business  in  another  country  and  want  to  use  the  Common  European  Sales  Law,  they 
would not be able to.409 

Because of the piecemeal way in which the Common European Sales Law could be incorporated, it 
is  difficult  to  estimate  the  precise  number  of  companies  potentially  affected  by  additional 
administrative  costs.  The  administrative  costs  are  likely  to  remain  on  a  similar  level  as  under  the 
baseline scenario. 

408 The estimate of 14.6% does not take reflect that some of the new exporters may have already exported in the past and incurred the one-off transaction costs. However, 

this is partly balanced by the fact that this estimate does not include companies which already export and want to expand their operations to more EU countries. See annex 

III for further details. 

409 See the main report, section 5. 

135

 
 
 
 
                                                 
Option 4 

Option 4 is likely to affect the current exporters who would have the possibility to use the Common 
European Sales Law but also to encourage companies currently trading only domestically to extend 
their business cross-border. 

-  Current exporters 

Companies wishing to trade cross-border would be able to choose optional Common European Sales 
Law and need to adapt their terms and conditions only once to trade with all EU countries. These are 
the companies that are affected by the baseline administrative costs (see table 2). 

In  the  Eurobarometer  surveys,  70%  of  the  surveyed  enterprises  (B2B  and  B2C)410  said  that  they 
would  choose  the  jurisdiction  of  an  EU  contract  law  if  it  existed  and  this  has  been  used  as  an 
assumption of the number of companies using the European contract law. However, considering that 
only  a  part  of  these  respondents  indicated  an  optional  instrument  as  the  preferred  policy  options 
(respectively 38% EB 320 (on B2B) and 37% in EB 321 (for B2C) this assumption is considered as 
a high estimate giving an indication of maximum costs to be borne by companies. 

It  could  therefore  be  estimated  that  156,272  companies  currently  exporting  (129,626  in  B2C  and 
26,643 in B2B) would use the optional instrument and would bear administrative costs. 

Table 3:  Number of exporters using optional instrument 

Number 
of 
firms  affected 
by the baseline 
administrative 
costs411 (a) 

Share  of  firms 
likely 
to  use 
Common 
European 
Sales Law(b)  

to 

Number  of  firms 
willing 
use 
Common  European 
Sales Law  (c) 
= a*b 

Agriculture (B2B) 
Manufacturing (B2B) 
Wholesale (B2B) 
Retail (B2C) 
Total  

4,200 
53,050 
39,190 
184,670 
281,110 

70% 
70% 
70% 
70% 

2,940 
37,135 
27,433 
129,629 
197,137 

-  New exporters 

Option  4  is  expected  to  encourage  companies  currently  trading  only  domestically  to  extend  their 
business cross-border. 

- B2C transactions 
 The  Eurobarometer  survey  found  that  21%  of  retailers  that  do  not  make  cross-border sales would 
expand their business across-borders if laws regulating transactions were the same across the EU.412  

410EB 320 on European contract law in business-to-business transactions, 2011; EB 321 on European contract law in consumer transactions. 2011- companies likely or very 

;likely to of use the European contract law in cross-border transactions for cross-border transactions. 

411 See table 2. 

412 Flash Eurobarometer 300.  Business attitudes towards cross-border trade and consumer protection,  p.25.  

136

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
The  sample  of  this  Eurobarometer  survey  covers  only  companies  of  10  employees  and  more.  The 
study on Internalisation of SMEs shows that the bigger the company is the more likely it is to export. 
The share of exporters among micro enterprises amounts to 24% compared to 54% for medium size 
companies. It could be therefore assumed that the proportion of micro enterprises that would expand 
their business cross-border if an optional European contract law instrument was available would be 
2,25  times    lower  than  for  larger  companies  i.e.  9.3%.  Micro  companies  account  for  95%  of  all 
retailers. It could be therefore estimated that 10% of all retailers would start cross-border operations 
under option 4.413  

Based on above, it has been estimated that 442,056 companies who trade B2C and who are currently 
only trading domestically would expand their operations cross-border. 

- B2B transactions 
In B2B transactions companies are free to choose the applicable law. It is therefore assumed that a 
considerably smaller proportion i.e. 5% of companies involved in B2B transactions will extend their 
operation  cross-border  compared  to  10%  of  companies  involved  in  B2C  transactions.  For  the 
agriculture  sector  where  the  number  of  companies  currently  exporting  is  marginal  i.e.  0.29%  the 
potential effect will be minimal and therefore this sector is not included in the estimates below. 
Based on the above, it has been estimated that 173,229 companies in  B2B who  are  currently only 
trading domestically would expand their operations cross-border (99,043 in the manufacturing sector 
and 74,186 in the wholesale sector). 

Table 4: Number of new exporters using the optional Common European Sales Law 

Number  of  non 
exporters414  
(a) 

Manufacturing (B2B)  1,980,860 
1,483,724 
Wholesale (B2B) 
4,420,563 
Retail (B2C) 
7,885,147 
Total 

Option 5  

Share of new 
exporters  due  to 
of 
introduction 
Common 
the 
European 
Sales 
Law 
(b) 
5% 
5% 
10% 

firms 
Share  of 
exporting 
under  
optional  Common 
Sales 
European 
Law 
(c ) 

100% 
100% 
100% 

Number  of  new 
exporters 
exporting  under 
optional Common 
European 
Sales 
Law(d) 
d=a*b*c 
99,043 
74,186 
442,056 
615,285 

Full harmonisation Directive (option 5a) and Option 6 

All firms including exporters and non- exporters will have to adapt contracts and the general terms 
and conditions.  

Table 5:  Number of companies affected in Option 5a and Option 6 

Number 
firms415 
13,700,400 

Agriculture (B2B) 
Manufacturing (B2B) 2,322,830 

of 

413 (95% of micro companies *8.4% + 5% (larger companies)  x21%=9.99%. 

414 See annex III, Calculation of opportunity and transaction costs. 

415 See annex III, Calculation of opportunity and transaction costs. 

137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Wholesale (B2B) 
Retail (B2C) 
Total  

1,752,155 

4,605,233 
22,402,000 

Minimum harmonisation Directive (option 5b) 

All firms including non-exporters will have to adapt contracts and the general terms and conditions. 

As  this  option  is  based  on  minimum  harmonisation,  the  impact  on  administrative  costs  for  current 
exporters  will  be  minimal  compared  to  the  baseline  scenario.  Companies  will  need  to  familiarise 
themselves with national laws transposing the Directive and adapt their contracts accordingly. The 
administrative  costs  for  companies  trading  cross-border  will  remain  unchanged  compared  to  the 
baseline. 

8. Summary of estimates   

B2C transactions 

The  table  below  shows  the  comparison  of  administrative  costs  of  different  options.    The  baseline 
administrative cost per company amount to €10,000.416The average administrative cost per company 
are  the  lowest  under  option  5  and  6  (€2,500)  but  this  option  is  likely  to  impact  many  more 
companies than option 4 so the total administrative burden for the companies is much higher. 

Table 6: Comparison of administrative costs in B2C transactions  

companies 

No 
of 
affected 
(a) 
184,670418 
67,230  

Average  one-off  cost 
per company 
(b) 
€10,000419 
€11,664420  

 Total  administrative 
costs (in millions €)417 
c=a*b 
1,847 
784 

571,685421 
4,605,233422 

€3,000 
€2,500 

Option 1(baseline) 
E-commerce 
(additional costs) 
Total cost 
Option 4 
Option 
harmonisation) 
Option 6 
Option  5b  (minimum 
harmonisation) 

(full 
and 

5a 

All companies 

Exporters  (additional 
the 
as 
costs- 

in 

4,605,233 

184, 670 

€2,500 

€10,000 

416 The baseline administrative cost per company per MS €2,500 * 4 the average number of EU countries companies export to. 

417 See also the SCM spreadsheets with administrative costs calculations.  

418 This number covers all current exporters. The annual administrative costs for the EU economy can be estimated based on the percentage of new exporters within the EU 

on a yearly basis, estimated at 15%. See table 2, column c.  

419 €2,500 (the baseline administrative cost per company per MS)* 4 (the average number of EU countries companies export to). 

420 €2,916 (the baseline additional administrative costs in e-commerce)* 4 (the average number of EU countries companies export to). 

421 This number covers all the retailers that are likely to use an optional instrument: current exporters (129,619 –see table 3 column d) and new-exporters that will only 

expand their operations cross-border as the result of a new legal framework (442,056 – see .table 4 column d). This effect will not be immediate and is likely to take a 

number of years. 

422 See table 5. 

138

2,631 
1,715 
11,513 

11,513 

1,847 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
baseline) 

67,230  

€11,664 

Total costs 

784 

14,144 

Option 4, option 5 and option 6 are likely to contribute to cost savings for companies trading to more 
than 1 MS compared to the baseline scenario. These savings grow proportionally to the number of 
Member States a company trades to. For example, if a company trades to 2 MS the cost saving of 
option 4 would amount to €1,500 and €2,500 under option 5 and 6. If a company trades in the whole 
EU,  the  cost  saving  per  company  under  option  4  would  amount  to  €62,000  and  to  €62,500  under 
option 5. 

Table 7: Comparison of administrative costs per company in B2C transactions 

Option 1 (baseline) 
0 

Option 4 
0 

€2,500 
€5,000 
€7,500 
€10,000 
€65,000 

€3,000 
€3,000 
€3,000 
€3,000 
€3,000 

Option 5 
€2,500 

€2,500 
€2,500 
€2,500 
€2,500 
€2,500 

traders 

Domestic 
only 
Trading with 1 MS 
Trading with 2 MS 
Trading with 3 MS 
Trading with 4 MS 
Trading  with  26  MS 
(whole EU) 

B2B transactions  

The table below shows the comparison of administrative costs of the different options. The baseline 
administrative cost per company amount to €6,000. The average administrative cost per company are 
the lowest under option 4, 5 and 6. However, option 5 and option 6 are likely to impact many more 
companies than option 4 so the total administrative burden for the companies is much higher. 

139

 
 
 
 
 
 
 
 
 
 
 
 
 
Table 8: Comparison of administrative costs in B2B transactions 

companies 

No 
of 
affected 
(a) 

96,440424 
240,737426 
17,775,385427 

Average 
company 
(b) 

€6,000425 
€1,500 
€1,500 

cost 

per 

Total 
administrative 
costs  (in  millions 
€)423 
c=a*b 
579 
361 
26,695 

5a 

Option 1 (baseline) 
Option 4 
Option 
harmonisation) 
Option 6 
Option  5b  (minimum 
harmonisation) 

(full 
and 

All companies 

Exporters  (additional 
the 
as 
costs- 
baseline ) 
Total costs 

in 

17,775,385 

€1,500 

26,695 

96,440 

€6,000 

579 

27,274 

Option 4, option 5 and option 6 are likely to contribute to cost savings for companies trading to more 
than 1 MS compared to the baseline scenario. These savings grow proportionally to the number of 
Member States a company trades to. For example, if a company trades to 2 MS the cost saving of 
option 4, 5 and 6 would amount to €1,500. If a company trades in the whole EU, the cost saving per 
company under option 4, 5 and 6would amount to €37,500. 

Table 9: Comparison of administrative costs per company in B2B transactions 

traders 

Domestic 
only 
Trading with 1 MS 
Trading with 2 MS 
Trading with 3 MS 
Trading with 4 MS 
Trading  with  26  MS 
(whole EU) 

Option 1 (baseline) 
0 

Option 4 
0 

€1,500 
€3,000 
€4,500 
€6,000 
€39,000 

1,500 
1,500 
1,500 
1,500 
1,500 

Option 5 
1,500 

1,500 
1,500 
1,500 
1,500 
1,500 

423 See also the SCM spreadsheets with administrative costs calculations. 

424 See table d, column c (4,200+53,050+39,190).  

425 €1,500 (the baseline administrative cost per company per MS)* 4 (the average number of EU countries companies export to). 

426This number covers all the retailers that are likely to use an optional instrument: current exporters (2940+37135+27433–see table 3, column d) and new-exporters that 

will only expand their operations cross-border as the result of a new legal framework (99,043+74,186– see .table 4 column d). This effect will not be immediate and is likely 

to take a number of years. 

427 See table 5. Total number of companies in B2B sector = 13,700, 400 (agriculture) + 2,322,830 (manufacturing) + 1,752,155 (wholesale). 

140

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at 
another level, insert here the name and reference of that or these 'original' 
acts

No. Art.

Orig. 
Art.

Type of obligation

Description of 
required action(s)

1

3

4

6

14

Non labelling information 
for third parties 

Familiarising with the 
information obligation

Non labelling information 
for third parties 

Copying 

Non labelling information 
for third parties 

Non labelling information 
for third parties 

Submitting 
information to the 
relevant actor

Designing information 
material (leaflet 
conception…)

Companies 
exporting

Companies 
exporting

Companies 
exporting

Companies 
exporting

Non labelling information 
for third parties 

Designing information 
material (leaflet 
conception…)

Companies 
exporting via e-
commerce

Option 1: Administrative costs B2C transactions

Tariff
(€ per 
hour)

TIme 
(minutes)

Price
(per 
action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number 
of actions x 
4MS

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total 
Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total 
Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

150

625

1         184.670            738.680   

         461.675.000   

250

150

625

1         184.670            738.680   

         461.675.000   

250

150

625

1         184.670            738.680   

         461.675.000   

250

150

625

1         184.670            738.680   

         461.675.000   

2916

1           67.230            268.920   

         784.170.720   

1

1

1

1

1

0

0

0

0

0

Int

EU

25%

25%

25%

25%

25%

OK

OK

OK

OK

OK

657.717.680

Total administrative costs (€)

2.630.870.720

Total administrative burden (€)

2.630.870.720

Administrative costs by origin (€)

Average cost per company

Average cost per company per MS

Average cost for a company exporting via e-commerce

0

10.000

2.500

12.916

Option 1: Administrative costs B2B transactions

Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts

No. Art.

Orig. 
Art.

Type of obligation

Description of required action(s)

1

3

4

6

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

Companies exporting

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

Companies exporting

Companies exporting

Companies exporting

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions x 4 MS

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total 
Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

90

90

90

90

375

375

375

375

1

1

1

1

96.440

96.440

96.440

96.440

385760

385760

385760

385760

144660000

144660000

144660000

144660000

1

1

1

1

Int

EU

Nat

Reg

0

0

0

0

25%

25%

25%

25%

75%

75%

75%

75%

OK

OK

OK

OK

144.660.000

433.980.000

Total administrative costs (€)

578.640.000

Total administrative burden (€)

578.640.000

Average cost per company

Average cost per company per MS

6.000

1.500

Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here the name 
and reference of that or these 'original' acts

No. Art.

Orig. Art.

Type of obligation

Description of required action(s)

1

3

4

6

14

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

Companies exporting

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

Companies exporting

Companies exporting

Companies exporting

Companies exporting

Non labelling information for 
third parties 

Designing information material 
(leaflet conception…)

infroomation 
about the 
choice of ECL

Option 4: Administrative costs B2C transactions

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions 

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total Administrative Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

150

150

150

150

625

625

625

625

500

1

1

1

1

1

571.685

571.685

571.685

571.685

571685

571685

571685

571685

571.685

571685

Int

EU

Nat

Reg

357303125

357303125

357303125

357303125

285842500

1

1

1

1

1

0

0

0

0

0

100%

100%

100%

100%

100%

1.715.055.000

0

OK

OK

OK

OK

OK

Total administrative costs (€)

1.715.055.000

Total administrative burden (€)

1.715.055.000

Administrative costs by origin (€)

Average cost per company

0

3.000

Average cost per company per MS

n/a

141

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Option 4: Administrative costs B2B transactions

Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts

No. Art.

Orig. 
Art.

Type of obligation

Description of required action(s)

1

3

4

6

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

Companies exporting

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

Companies exporting

Companies exporting

Companies exporting

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total 
Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

90

90

90

90

375

375

375

375

1

1

1

1

240737

240737

240737

240737

240737

240737

240737

240737

Int

EU

Nat

Reg

90276375

90276375

90276375

90276375

1

1

1

1

0

0

0

0

100%

100%

100%

100%

0%

0%

0%

0%

OK

OK

OK

OK

Total administrative costs (€)

361.105.500

Total administrative burden (€)

361.105.500

Administrative costs by origin (€)

Average cost per company

0

1.500

Average cost per company per MS

n/a

Option 5 a (full harmonisation) : Administrative costs B2C transactions

Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts

No. Art.

Orig. 
Art.

Type of obligation

Description of required action(s)

1

3

4

6

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

all companies

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

all companies

all companies

all companies

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions 

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

150

150

150

150

625

625

625

625

1

1

1

1

4.605.233

4605233

4.605.233

4605233

4.605.233

4605233

4.605.233

4605233

Int

EU

Nat

Reg

2878270625

2878270625

2878270625

2878270625

1

1

1

1

0

0

0

0

100%

100%

100%

100%

OK

OK

OK

OK

11.513.082.500

0

Total administrative costs (€)

11.513.082.500

Total administrative burden (€)

11.513.082.500

Administrative costs by origin (€)

11.513.082.500

Average cost per company

2.500

Option 5 a (full harmonisattion ): Administrative costs B2B transactions

Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts

No. Art.

Orig. 
Art.

Type of obligation

Description of required action(s)

1

3

4

6

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

all companies

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

all companies

all companies

all companies

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

90

90

90

90

375

375

375

375

1

1

1

1

17796767

17796767

17796767

17796767

17796767

17796767

17796767

17796767

Int

EU

Nat

Reg

6673787625

6673787625

6673787625

6673787625

1

1

1

1

0

0

0

0

100%

100%

100%

100%

0%

0%

0%

0%

OK

OK

OK

OK

Total administrative costs (€)

26.695.150.500

Total administrative burden (€)

Administrative costs by origin (€)

Average cost per company

26.695.150.500

26.695.150.500

1.500

Average cost per company per MS

n/a

142

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts

No. Art.

Orig. 
Art.

Type of obligation

Description of required action(s)

1

3

4

6

8

9

11

12

14

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

all companies

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)
Familiarising with the information 
obligation

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

all companies

all companies

all companies

Companies exporting

Companies exporting

Companies exporting

Companies exporting

Companies exporting 
via e-commerce

Non labelling information for 
third parties 

Designing information material 
(leaflet conception…)

Option 5 b (minimum harmonisation): Administrative costs B2C transactions

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions 

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

250

250

250

250

150

150

150

150

150

150

150

150

625

625

625

625

625

625

625

625

1

1

1

1

4.605.233

4605233

4.605.233

4605233

4.605.233

4605233

4.605.233

4605233

1         184.670                  738.680   

1         184.670                  738.680   

1         184.670                  738.680   

1         184.670                  738.680   

2878270625

2878270625

2878270625

2878270625

                     461.675.000   

                     461.675.000   

                     461.675.000   

                     461.675.000   

2916

1           67.230                  268.920   

                     784.170.720   

Int

EU

Nat

Reg

1

1

1

1

1

1

1

1

1

0

0

0

0

0

0

0

0

0

100%

100%

100%

100%

100%

100%

100%

100%

100%

############

0

OK

OK

OK

OK

OK

OK

OK

OK

OK

Total administrative costs (€)

14.143.953.220

Total administrative burden (€)

Administrative costs by origin (€)

Average cost per company trading domestcially

Averega cost per company expoerting 

14.143.953.220

14.143.953.220

2.500

10.000

Insert here the name and reference of the regulatory act assessed

If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts

No. Art.

Orig. 
Art.

Type of obligation

Description of required action(s)

1

3

4

6

8

10

12

14

Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 
Non labelling information for 
third parties 

Familiarising with the information 
obligation

all companies

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)
Familiarising with the information 
obligation

Copying 

Submitting information to the 
relevant actor
Designing information material 
(leaflet conception…)

all companies

all companies

all companies

Companies exporting

Companies exporting

Companies exporting

Companies exporting

Option 5b minimum harmonisation)): Administrative costs B2B transactions

Tariff
(€ per hour)

TIme 
(minutes)

Price
(per action)

Freq 
(per entry) - 
ONE OFF 
COSTS

Nbr 
of 
entities

Total number of 
actions

Equipment 
costs 
(per entity 
& per year)

Outsourcing 
costs 
(per entity 
& per year)

Total Administrative 
Costs

Business 
As Usual 
Costs
(% of AC)

Total Administrative 
Burdens
(AC - BAU)

Regulatory origin
(%)

250

250

250

250

250

250

250

250

90

90

90

90

90

90

90

90

375

375

375

375

375

375

375

375

1

1

1

1

1

1

1

1

17775385

17775385

17775385

17775385

17775385

17775385

17775385

17775385

96.440

96.440

96.440

96.440

385760

385760

385760

385760

6665769375

6665769375

6665769375

6665769375

144660000

144660000

144660000

144660000

1

1

1

1

1

1

1

1

Int

EU

Nat

Reg

0

0

0

0

0

0

0

0

100%

100%

100%

100%

25%

25%

25%

25%

0%

0%

0%

0%

75%

75%

75%

75%

OK

OK

OK

OK

OK

OK

OK

OK

Total administrative costs (€)

27.241.717.500

Total administrative burden (€)

27.241.717.500

Administrative costs by origin (€)

27.241.717.500

Average cost per company trading domestically

Average cost per company exporting

1.500

6.000

143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX VIII: ANALYSIS OF IMPACTS OF MAJOR SUBSTANTIVE PROVISIONS OF 
A COMMON EUROPEAN SALES LAW  

METHODOLOGY 

A Common European Sales Law would comprise of a number of provisions, however, not each 
provision is likely to have a direct impact of the same magnitude on stakeholders. There are some 
rules, for instance the consumer protection provisions, which have received particular attention by 
both businesses and consumer stakeholders. For example, business representatives have pointed out 
that a Common European Sales Law should have a balanced level of consumer protection,428 and 
consumer representatives have insisted that any new regulatory or non-regulatory tool in the field of 
consumer policy should have a clear added value for consumers.429  

Quite a number of the provisions arise from the existing EU acquis or the the Consumer Rights 
Directive (CRD) which has been recently adopted. As a result, these provisions would have to be 
integrated and have already been impact assessed.  

For the purpose of this impact assessment report a number of provisions have been selected for a 
detailed impact analysis. They include the rules which could be potentially burdensome on business 
or important for consumer confidence. They exclude provisions arising from existing EU acquis or 
the CRD. For each of the former provisions, the legal comparison and the assessment of impacts are 
carried out. 
Legal analysis 

The legal comparison sets out the draft provisions of a Common European Sales Law and compares 
it to the level of protection provided in the legal systems of a representative selection of Member 
States. It concludes with the impact such a provision would have on the level of protection in these 
Member States. 

The sample of Member States (for most of the provisions) include: Austria, Belgium, Estonia, 
Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, 
Romania, Spain and United Kingdom. This selection ensures a good geographical coverage 
(representation of EU15 and EU12 Member States) as well as coverage of different legal systems 
and traditions.  
Assessment of impacts 

For each provision the costs and benefits for the main stakeholders groups i.e. consumers and 
businesses are analysed.430 These analyses are mostly of a qualitative nature. However, where 
reliable assumptions could be made and there was enough reliable information, the impacts are also 
monetised. 

428 See for instance responses to the European Commission Green Paper consultation on Policy Options towards a European contract law for consumer and businesses by: 

Eurocommerce, p.4; Emota, p.2; UEAPME, p.3  

429 See for instance response to the European Commission Green Paper consultation on Policy Options towards a European contract law for consumer and businesses by 

BEUC, p.9 

430 These analyses are mostly of a qualitative nature. However, where reliable assumptions could be made and there was enough reliable information, the impacts are also 

monetised. 

144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
B2C TRANSACTIONS 
Pre-contractual information:  
 Remedies for breach of information duty 

Issue: 

In the existing consumer acquis, there is only an obligation imposed on Member States to ensure 
adequate and effective means exist to ensure compliance with the pre-contractual requirements 
provided by Directives in the interests of consumers.  For example Art. 11 (1) 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. This Directive also states that where the business does not provide pre-
contractual information to the consumer, then the withdrawal period of seven days is extended. 
However, the acquis does not provide any right for damages.  

A Common European Sales Law would introduce the following additional remedies in case of 
breach of pre-contractual information duties (if there was no information provided or the information 
provided was not correct): Where the business has not fulfilled his pre-contractual information duty 
and, as result a contract has been concluded which the other party would not have concluded, or 
would not have concluded on the same terms, the business would be liable for damages. This would 
be a mandatory rule for B2C contracts. 
- Where the business has not fulfilled his pre-contractual information duty and a contract has been 
concluded, the other party may, under certain conditions, avoid the contract under the 'mistake' or 
'fraud' provisions. 

Legal comparison: 

Country  Provision comparison  

BE 

- Distance contracts: The Belgian Act of 6 April 2010 on Market Practices 
and Consumer Protection contains most of the national provisions 
implementing EU consumer contract law directives, does not provide for a 
specific right to damages or a right to enforce the obligation. It has been 
defended that a consumer who does not exercise his right of withdrawal 
can claim damages for any loss incurred by the omission of the information 
on the basis of the general Art. 1382 Civil Code on extra-contractual 
liability. No case law is known. 
- Off-Premises contracts: Off-premises sales contracts must mandatorily be 
in writing. The absence of a written contract leads to the nullity of the 
contract. It is disputed whether this nullity is of public order (in which case 
it has to be raised ex officio by the judge). Normally courts do not 
recognise a right for the trader to claim any compensation in case of nullity 
of the off- premises sales contract (except where the consumer acted in bad 
faith). Like for distance contracts it would seem that the consumer in an 
off-premises contract would also have the right to claim damages under tort 
law for any loss caused by the absence of the information. 
- In Belgian law it is generally accepted that a contract is concluded on the 
basis of the expressed will of the parties rather than on their intended will. 
Thus where a party could legitimately rely on the other party’s declaration, 
that declaration will prevail over the real will of that party and the parties 
will be deemed to have agreed on that basis.   

Impact on 
the level 
of  
consumer 
protection 
+ 

145

 
 
 
 
 
 
 
 
 
 
 
 
 
 
DE 
EE 

ES 

FI 

= 
=  

= 

=  

- Damages follow from §§ 280, 311 (1), 241 (2) BGB.  
- In the breach of information duties the consumer will have a right to 
damages under general information duties rule (no special regulation).  

- Distance sales: Administrative sanctions for breach of obligations 
regarding information and documentation [Sections 49.2.b) and 50.2 Act 
1/2007, of 16th November, that passes the codified text of the General Law 
for the Defence of Consumers and Users and other complementary laws, 
henceforth TRLGDCU]. Reference to the TRLGDCU general provisions 
for B2C contracts and the Spanish Civil Code general contractual 
provisions: 
→ TRLGDCU: There are no special provisions on damages regarding 
breach of information duties. According to Section 65, consumers’ 
contracts that do not include relevant pre-contractual information will be 
completed in favour of consumers, according to the good faith principle. 
→ Civil Code: There are no special provisions on damages regarding 
breach of information duties. Consumers will have a right to damages 
based on pre-contractual liability or culpa in contrahendo (Sections 7.1, 
and 1902 of the Civil Code). Contracts in which the failure to provide 
information amounts to –essential- mistake (error esencial) or fraud (dolo 
omisivo o reticencia dolosa), the lack of information can make the contract 
void (Sections 1266,  1269, 1270, and 1300 and ff. of the Civil Code), and 
can eventually also lead to damages. In cases of fraud (including for lack of 
information) case law of the Spanish Supreme Court allows the innocent 
party to use the remedies in the contract (essentially full damages and/or 
rescission, but there has been one case in which specific performance was 
granted) instead of avoidance and the accompanying damages. 
- Doorstep/off-premises sales: Consumers will have a right to damages 
based on precontractual liability or culpa in contrahendo (Sections 7.1 and 
1902 of the Civil Code). Contracts can be made void (Art. 112 
TRLGDCU) if consumers have not been informed about their right to 
withdraw from them (Sections 69 and 111 TRLGDCU). 
- Consumers may have the right to damages if there is a breach of pre-
contractual information duties. Right to remedies is not automatic but 
depends on how essential the breach has been. These are general principles 
which apply for all kind of (consumer) contracts. 

- Consumer Protection Act Chapter Section 20 — Failure to provide 
information (1072/2000): 
(1) If the door-to-door selling document or the confirmation (…) has not 
been supplied to the consumer, the contract shall not be binding on 
him/her. If the consumer wishes to invoke this remedy, he shall notify the 
business within one year of the conclusion of the contract.  
(2) If the business supplies the door-to-door selling document or the 
confirmation before the consumer has invoked the non-bindingness of the 
contract, the consumer shall be entitled to withdraw from the contract, in 
door-to-door selling … and in distance selling … as from the receipt of the 
document or the confirmation. 
(3) If the contract lapses owing to the consumer having invoked its non-
bindingness, the business shall without delay and in any event within 30 
days of the notification refund the payments received and compensate the 
consumer for the costs of returning the goods or other performances. 

146

 
 
 
 
 
 
  
 
 
 
 
 
FR 

HU 

IT 

LU 

NL 

PL 

PT 

RO 

UK 

The pre-contractual information duties for doorstep and off-premises sales 
are provided by Art. L. 121-18 of the consumer code. Distance sales are 
dealt with in Art. L. 121-18 of the consumer code.  
No specific remedies are provided by French law more than the Directives 
allow. However application of general rules about damages and 
interpretation would lead to the same remedies mentioned above in the 
introductory paragraph. 
- Regarding distance contracts, there are no specific remedies providing for 
damages for the non-compliance with the information requirements (see: 
Arts. (3) and (4) of the Government Decree of 17/1999 on distance 
contracts.  
- Regarding off-premises contracts, under Art. 3 (1) of the Government 
Decree of 213/2008 on off-premises contracts if the seller does not fulfil its 
information duties the contract shall be null and void. 
- There are no special provisions on damages regarding breach of 
information duties, but the general provisions on damages apply. (Arts. 
1337, 1218 of the Civil Code; see also, Cass. S.U. 26724/07). 

- Distance contracts: In the absence of confirmation of the imposed pre-
contractual information duties (latest at the delivery of the goods or supply 
of services), the withdrawal right is extended by a further 3 months (Art. L. 
222-5 Code Consommation).  
- Off-premises: If the consumer has not been properly informed in writing 
about his/her withdrawal right, the contract is void and this avoidance may 
be invoked by the consumer whatever the time lapsed since delivery of the 
goods or execution of the service (Art. 10 loi concernant le colportage, la 
vente ambulante, l’étalage de marchandises et la sollicitation de 
commandes).   
- Under current Dutch law there would be liability in damages only in the 
cases where the failure to provide the information would amount to an 
unfair commercial practice (see Art. 6:193j BW) or to a common tort, 
where fault would have to be established (6:162 BW).  
- There is no special provision on damages regarding breach of information 
duties, but the general provisions on damages (Arts. 471 and 415 of the 
Civil Code) would apply.  
Same protection regarding the right to damages. 

In Romanian consumers protection legislation, failure to inform the 
consumer prior to the conclusion of a distance agreement, insofar as it 
concerns certain specific matters (e.g. the essential characteristics of the 
product/service/tariff, consumer’s right to have the agreement terminated 
for convenience, price) constitutes a minor offence and is sanctioned by an 
administrative fine ranging between (approx.) €250 and €1,000.  
No right to damages is expressly conveyed to the consumer under the 
specific legislation for cases where business defaults on its information 
duties. However, where it may be proven that damage has been caused, the 
consumers may obtain proper reparation based on the Romanian Civil 
Code provisions relating to tort. 
If the business fails to inform the consumer of his/her right to terminate the 
agreement for convenience, or such information is incomplete or 
mistakenly transmitted, the consumer’s right to terminate the agreement for 
convenience is extended from 7-10 days to 60-90 days.  
- No provisions on damages.  

=  

+ 

= 

+ 

+  

=  

=  

=  

+ 

147

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts 

No costs for consumers. 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits 
for 
consumers 

Pre-contractual information requirements are one of the most important instruments 
for consumer protection. However at present, in a number of Member States, 
companies are not liable for damages if a consumer concludes a contract as a result of 
the incorrect information or in the absence of information (e.g. BE, HU, LU, UK). 
Consumers could under certain conditions also avoid the contract under the 'mistake' 
or 'fraud' provisions (see section 2.2 and 2.3). 
Consumers would benefit from receiving more accurate information which would 
enable them to take well informed purchasing decisions.  

Costs and benefits for businesses 
Costs for 
businesses 

Businesses would be liable for information requirements and damages if they fail to 
provide information or provide incorrect information. The additional costs related to 
any potential claims for damages would affect traders who do not currently fulfill their 
obligations to provide full or correct pre- contractual information to consumers.  
In many Member States, the general provisions regarding the rights to damages 
already apply (e.g. DE, ES, EE, FI, FR, IT, PL, PT, RO). In these countries, the 
Common European Sales Law would confirm or further clarify these obligations but 
not create any additional obligations. 
Businesses would benefit from clearer rules and increased consumer confidence.  

Benefits 
for 
businesses 

Duty to ensure information supplied is correct 

Issue: 

In addition to the general duty to disclose information about goods and services, a Common 
European Sales Law could introduce a duty for the party who supplies information before or at the 
time a contract is made, to take reasonable care to ensure that the information supplied is correct and 
is not misleading. In case of breach of this duty the aggrieved party has the remedies for breach of 
information duties (see point 2.1.1 above). 

Country  Provision comparison 

BE  

- Art. 4 of the Law of 6 April 2010 on Market Practices and Consumer 
Protection (MPCPA431) contains a general information duty of businesses 
vis-à-vis consumers: at the latest at the moment of convening the contract, 
the business shall give in good faith the consumer appropriate and useful 
information with regards to the most important characteristics of the 
product and concerning the sale conditions, taking into account the need 
for information expressed by the consumer and taking into account the 
expressed use or the reasonable foreseeable use by the consumer. 

431 Law of 6 April 2010 concerning 'market practices' and consumer protection, BS 12 April 2010. 

Impact on 
the level of  
consumer 
protection 
= 

148

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
- Under general contract law giving incorrect or misleading information is 
considered fraud (‘vice du consentement’; 1116 Civil Code). Four 
conditions must be fulfilled: (1) the use of artifices; (2) the fraud must be 
committed by the other contracting party; (3) the party that commits fraud 
must have the intention to deceive or to mislead the other party and finally 
(4) the fraud must be of an overriding importance. Only if the latter 
condition is fulfilled, will fraud (‘principal fraud’) lead to the avoidance of 
the contract (at the request of the party that is victim of the fraud). If the 
fraud is not of an overriding importance and has not led the other party to 
enter into the contract (but could have led him or her only to enter into the 
contract under different conditions, e.g. a lower price) the fraud is 
'incidental'. In the latter case, only damages can be claimed on the basis of 
a pre-contractual fault (tort liability: Art. 1382 of the Civil Code). The first 
condition (artifices) will be fulfilled: 1) If the information provided is 
incorrect, incomplete or misleading, (through lies, misleading declarations 
or overstatements); or 2) If there is an omission to provide information; in 
this case fraud will only be accepted if there is a special duty to inform 
and if the contracting party deliberately conceals this information. This 
special duty to speak can come forth of special legislation (e.g. Art. 4 
MPCPA). Thus, in B2C situations it is also very likely that an omission to 
give information can constitute fraud. 
- All violations of the MPCPA, can give rise to an action for injunctive 
relief, although in the case of Art. 4 that sanction does not seem to be 
obvious. In addition, violation in bad faith of that provision is a criminal 
offense (fines: €500-€20000). In many cases of violation of Art. 4 
MPCPA the consumer will have the possibility to rely on the remedies of 
general contract law: pre-contractual liability (culpa in contrahendo: Art. 
1382-1383 of the Civil Code (damages)) and the sanction of avoidance for 
a defect of consent (mistake or fraud). But no right to enforce an 
obligation on which the consumer reasonably believed was due to the 
breach of information duty. 
Estonian Law of Obligations Act (1.07.2002) provides (§ 14. Pre-
contractual negotiations):  Persons who engage in pre-contractual 
negotiations or other preparations for entering into a contract shall take 
reasonable account of one another’s interests and rights. Information 
exchanged by the persons in the course of preparation for entering into the 
contract shall be accurate. There are no special remedies provided for in 
the Art. itself, but all remedies mentioned above are available (LOA § 101 
(1)). 
No similar provision exists in Act 1/2007, of 16th November, that passes 
the codified text of the General Law for the Defence of Consumers and 
Users and other complementary laws (TRLGDCU). Nevertheless, Section 
60 TRLGDCU establishes that, before a contract is made, businesses must 
give relevant, truthful and sufficient information about the main features 
of the contract to consumers (see the same provision in Section 97 
TRLGDCU for distance contracts). The general remedies in Spanish 
Contract Law (TRLGDCU) would be available and are roughly similar. 
No such duty in Finnish law. But if the party supplies wrong information 
and the goods do not correspond to that information, the goods are 
defective (Consumer Protection Act, Chapter 5, Section 13). 

+ 
Regarding 
remedies 

= 

Slightly + 

+ 

EE432  

ES  

FI  

432 ESTONIA: The responses are based on the Law of Obligations Act (LOA, 2002) which contains all relevant mandatory provisions for B2C and B2B contracts, General 

Part of Civil Code Act (2002) and Consumer Protection Act (1995).   

149

 
 
 
 
 
                                                 
IT  

LU  

PL  

PT  

UK  

There is no such provision under Italian law. The Italian Consumer Code 
however has extended the meaning of unfair commercial practises also to 
misleading negotiation practises (Art. 21-23 Consumer Code).  

= for the duty 

According to Art. 20 of the Consumer Code, the victim of misleading 
information is entitled to claim for damages under general rules on torts 
(Art. 2043 of the Civil Code).  
The business’ obligation not to supply false or misleading information 
derives from the implementation of the UCPD (Code de la consommation 
L.122-2). 

+ for 
remedies 

= for the duty 

+ for 
remedies 

+ 

= 

+ for 
remedies 

Slightly + 

Consumer may invoke avoidance of any contract clause(s) which infringe 
L.122-2 – see L. 122-8 (2) of the Consumer Code. 
There is no such special provision and no such remedies under Polish 
Law. 
- In general: Art. 227 para 1 of the Civil Code which provide a general 
duty of good faith in pre-contractual relations, from which the courts 
derive a duty to ensure the information is not misleading. Art. 8, para 1, of 
the Consumer Protection Act (CPA – Law 23/96, from the 31st July 1996), 
provides the same rule.  

- The remedies in general are damages; in contracts with consumers, there 
can also be the possibility for the consumer to withdraw from the contract; 
but no right to enforce an obligation on which the consumer reasonably 
believed was due to the breach of the information duty. 
England and Wales: The rules governing misrepresentation, including 
Misrepresentation Act 1967, s 2(1) apply in principle only where there has 
been a misstatement of fact, but the courts are ready to find that a 
statement that literally may be true but which is misleading amounts to a 
false statement. Right to avoid if misrepresentation is serious; right to 
damages unless the person giving incorrect information shows that they 
had reasonable grounds for belief. 
Scotland: No such duty is directly imposed in Scottish law. However, 
there will often be remedies via the rules on error or damages for fraud or 
negligent misrepresentation. Also information may have to be given to 
avoid liability for non-conformity. 

Assessment of impacts 

No costs for consumers. 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Information requirements are one of the most important instruments for consumer 
protection. Proper information about goods and services enable consumers to make an 
informed purchasing decision and facilitate product comparison. Consumers are only 
enabled to do this if the information on goods and services provided to them is correct 
and not misleading. In the case of a breach of information obligations, consumers 
would benefit from remedies (see assessment in point 2.1.3) 

Costs and benefits for businesses 

Costs for 
businesses 

Businesses would have some additional costs to ensure that the information supplied 
is correct and is not misleading. However, these costs are considered as minor as the 

150

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
required standard would correspond to normal business practice. In many Member 
States, the rules on available remedies in the case of a breach of information 
requirements are less protective (e.g. PT, UK, LU, IT, ES, BE) and businesses might 
incur some additional costs if consumers make use of these remedies (see assessment 
in point 2.1.3) 
 Businesses would benefit from increased consumer confidence and from more clear 
rules concerning their rights and obligations.  

Benefits for 
businesses 

Mistake 

Issue: 

In the existing consumer acquis there are no contract law rules on a mistake and its consequences. 

A Common European Sales Law would introduce a right of each party to avoid a contract for a 
mistake if the party, but for the mistake, would not have concluded the contract and if the other 
party: (1) caused the mistake; or (2) knew or could be expected to have known of the mistake and 
caused the contract to be concluded under a mistake by not pointing out the relevant information, 
provided that good faith and fair dealing would have required the party aware of the mistake to point 
it out; or (3) caused the contract to be concluded in mistake by failing to comply with his pre-
contractual information duty; or (4) made the same mistake. 

Legal comparison: 

Country 

Provision comparison  

AT 

DE 

EE 

ES 

§ 871 (1) ABGB: Avoidance if the mistake is fundamental and caused by 
the other party or the other party should have been aware according to 
circumstances. No particular reference to good faith and fair dealing. 
There is also a right of avoidance if the other party made the same 
mistake, but no black letter rule. 
Broader right of avoidance under § 119 BGB (insofar one could say 
better protection in German law). 
Same as in the General Part of Civil Code Act § 92.  

Under Section 1266 of the Civil Code, 'for error to invalidate consent, it 
must be about the substance of the thing which constituted the subject 
matter of the contract, or about the conditions thereof which should have 
been the main reason to enter into it. Error concerning the person shall 
only invalidate the contract where consideration for such person should 
have been the main cause thereof. A simple error in counting shall give 
rise only to its correction'. 
According to case law regarding Section 1266 of the Civil Code, a 
mistake is fundamental and therefore there is a right of avoidance 
(Sections 1300 and ff. of the Civil Code) when: 
- the mistake affects the conditions that have been a decisive cause of 
conclusion of the contract so the party, but for the mistake, would not 
have concluded it or would have done so only on fundamentally different 
terms. 
- the mistake has been caused -not necessarily by fraud-by the other party 

Impact on 
the level of  
consumer 
protection  
= 

- 

= 

= 

151

 
 
 
 
 
 
 
 
 
 
FI 

FR 

HU 

IT 

LU 
NL 

PL 

PT 

RO 

or at least the other party knew of the mistake. 
- the mistake cannot be avoided with ordinary diligence. 
-the other party made the same mistake. 
Section 33 in Contract Law: A transaction that would otherwise be 
binding shall not be enforceable if it was entered into under 
circumstances that would make it incompatible with honour and good 
faith for anyone knowing of those circumstances to invoke the 
transaction and the person to whom the transaction was directed must be 
presumed to have known of the circumstances. Concerning the mistake 
of both parties, there is no such provision.  
A mistake is regulated by Art. 1110, of the Civil Code and case law: A 
contract may be void if the mistake is provoked by the other party or if 
that other party makes the same mistake (e.g. Cass. civ. 1re, 17 sept. 
2003, Bull. civ. I n° 183). In French Law, a mistake (even on a minor 
subject) always avoids the contract when this mistake is due to  fraud of 
the other party (Cass. civ. 3e, 21 févr. 2001, Bull. civ. III, n° 20). 
Under Art. 210 (1) and (3) of the Civil Code the party acting under a 
misapprehension regarding any essential circumstance at the time of the 
conclusion of the contract is entitled to challenge his contract statement if 
his mistake had been caused or could have been recognised by the other 
party. If the parties had the same mistaken assumption at the time of the 
conclusion of the contract, either of them may challenge the validity of 
the contract.  
Under Art. 1428 of the Civil Code a right of avoidance exists when the 
mistake is essential and recognisable by the other party. Italian case law 
under this Art. admits a right of avoidance also without the required 
condition of recognisability when the same mistake is made by the other 
party. There is no provision about the right to claim for damages against 
the party who caused the mistake. 
Same protection (i.e. Art. 1110 of the Civil Code).  
Level of protection more or less the same (Art. 6:228 BW). 

Under Art. 84 of the Civil Code, where a declaration of will containing a 
mistake is made to another person, the mistake must be caused by that 
person (even without fault) or must be on which was known or should be 
known or could be easy have been noticed by that person. Under Polish 
law there is no provision about the other’s party making the same 
mistake.  
- Avoidance for mistake depends on the condition that other party has 
known or should have known that the mistake concerned an element that 
was essential to the mistaken party.  
- Mutual mistake can lead to right of avoidance if it relates to the basis of 
contract (fundamental presuppositions of both parties).  
- Simple causation of the mistake gives no right of avoidance (Arts. 247, 
251 and 252 of the Civil Code). However, in B2C contracts if the 
mistake was caused by violation of the duty to inform by the business 
and it affects adequate usage of the good or service, the consumer can 
rescind the contract within a short delay of 7 days (Art. 8, para 4 of the 
Consumer Protection Act [CPA]).  
In accordance with the provisions of the Romanian Civil Code, the error 
is capable of invalidating the consent when it bears to the substance of 
the essential things or matters falling within the scope of the agreement 
or to the person in whose consideration the agreement has been 

+ 

Slightly + 

= 

+ 

= 
= 

Slightly + 

Slightly + 

+ 

152

 
 
concluded with. 

UK 

- Avoidance in the case of a mistake caused by the other party falls under 
the rubric of misrepresentation or, in Scotland, induced error.  
- Concerning the latter case that the other party knew or could be 
expected to know the mistake and was required to point it out, there is no 
provision.  
- Mistake by both parties gives the right of avoidance only under very 
restrictive conditions, almost requiring that the contract was in fact 
impossible to perform, Scottish law takes a slightly less restrictive 
approach.  

+ 

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts 

No costs for consumers. 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumers would be able to claim damages for mistakes in well defined situations. At 
present, many national laws foresee the possibility for the consumer to avoid a 
contract only for some of these defined situations (e.g. UK, PT, IT, PL, FR, FI). 
Under a Common European Sales Law, consumers in these Member States would 
benefit from strengthened rules. In other Member States, where the current rules offer 
the same level of protection, consumers could gain some clarity as the rules on 
mistakes would list specific situations in which a party could avoid a contract for a 
mistake (e.g. HU, LU, NL, EE, ES). 

Costs and benefits for businesses 
Costs for 
businesses 

Some businesses might face some increase of costs as the result of strengthened rules 
concerning the situations in which a contract might be avoided and in which 
consumers may potentially claim damages (e.g. UK, PT ,IT, PL, FR, FI). However, 
the costs are considered to be minor as they would mostly impact on the small number 
of traders who act in contrary to fair trading principles and conclude a contract not 
pointing out a mistake. 
Businesses would benefit from more clear rules concerning their rights and 
obligations. 

Benefits for 
businesses 

Fraud 

Issue:  

In the existing consumer acquis there is no contract law rule on fraud and its consequences. 
A Common European Sales Law could introduce a right of each party to avoid a contract for fraud. 
Fraud can take place orally, by conduct or by fraudulent non-disclosure of information which good 
faith, fair dealing or any pre-contractual information duty require the other party to be informed 
about. 

153

 
 
 
 
 
 
 
 
 
 
 
 
 
Impact on 
the level of  
consumer 
protection  
= 

Legal comparison: 

Country 

Provision comparison  

AT 

BE 

DE 
EE 

ES 

FR 

HU 

IT 

LU 

NL 

PL 

= 

= 

Not explicitly said in the rule on fraud (§ 870 ABGB). But requirement 
included in § 871. Also: § 928 handles liability for fraudulent silence on 
a defect. 
The right of avoidance for fraud requires that the fraud is committed by 
the other party.  Keeping silent about certain information constitutes 
fraud where the party not disclosing the information has an obligation to 
provide information. That obligation may result from a specific legal 
provision (e.g. Art. 4 Market Practices Act: the general duty / obligation 
of information) or the special responsibility or competence of that party, 
e.g. a specialised business and a consumer who could reasonably not 
obtain the information but from the business. 
German law provides a similar protection: under case law on § 123 BGB.   = 
= 
Estonian law provides a similar protection: under the General Part of the 
Civil Code, Act § 94 (2). 
Spanish law offers a similar protection: Under Section 1269 of the Civil 
Code, 'Fraudulent misrepresentation exists where, with insidious words 
or machinations on the part of one of the contracting parties, the other 
party is induced to enter into a contract which he would not have done 
without them'. Although Section 1269 of the Civil Code does not foresee 
the right to avoidance by fraudulent non-disclosure of any information 
which good faith or any pre-contractual information duty required that 
party to disclose, it is inferred from case law regarding this Section. 
French jurisprudence offers a similar protection: fraud because of non 
disclosure of information (Cass. civ. 3e, 15 janv. 1971, Bull. civ. III, n° 
38), by application of Art. 1116 of the Civil Code dealing with fraud.  
Hungarian law provides the same protection based on the interpretation 
of Art. 4 (1) and 210 (1) of the Civil Code. 
According to Italian case law under Art. 1439 of the Civil Code, the 
notion of fraud includes fraudulent non-disclosure of any information 
and false representation. 
Luxembourgish law provides the same protection: under Art. 1116 of the 
Civil Code.  
The level of consumer protection under fraud in Dutch Law (Art. 3:44 
BW) is more or less the same. However, in practice, it is almost 
impossible to prove fraud under Dutch law where the fraud is said to be 
constituted by keeping silent in breach of good faith and fair dealing, as 
the Supreme Court has determined that the consumer (as the trader’s 
counterpart) bears the burden of proof that the trader has concealed the 
relevant fact  - i.e. acted on purpose – and that where the trader has 
‘merely forgotten’ to mention the relevant facts does not give ground to a 
claim for fraud (see HR 2 May 1969,  NJ 1969, 344 (Beukinga/Van der 
Linden). 
There is no general duty of disclosure under a regulation of fraud (Art. 
86 of the Civil Code) – Under the circumstances such a duty could arise 
from the good faith and fair dealing rule.  

= 

+ 

= 

+ 

= 

= 

154

 
 
 
 
PT 

RO 

UK 

Portuguese law offers the same protection according to Arts. 227 para 1 
and 253, para 2, of the Civil Code.  
Under the Romanian Civil Code, the fraud constitutes a cause for 
invalidating an agreement if the fraudulent means used by a party leaves 
no room for interpretation that the other party would have not entered 
into the agreement had he been aware of them. However, there is no 
protection for fraud committed in the pre-contractual phase except for 
remedies based on the Romanian Civil Code provisions relating to tort. 
No such rule (unless the parties are in a relationship of trust and 
confidence).  

= 

= 

+ 

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

No costs for consumers. 

At present, in most Member States there are general rules in case law that ensure a 
similar level of consumer protection (e.g. AT, BE, DE, ES, FR, HU, IT, PT, RO) 
Nevertheless, in these countries consumers would benefit from having more clear and 
specific rules. Consumer confidence would increase, as it would be easier to assert 
the consumers right in case of a fraud.  

Costs and benefits for businesses 
Costs for 
businesses 

No additional costs for businesses as in most Member States the current rules provide 
for avoidance of a contract for fraud. Any potential costs would only arise for rogue 
businesses which use fraudulent practices, possibly in countries where the present 
rules are not so clear (e.g. UK, PL). 
Legitimate businesses would gain a competitive advantage as clear rules against 
fraud would eliminate rogue traders using fraudulent practices. In the case of 
concluding a contract based on the consumer's fraudulent non-disclosure of 
information, it would be easier for businesses to avoid such a contract. 

Benefits for 
businesses 

Unfair exploitation  

Issue: 
In the existing consumer acquis, there is no contract law rule regarding unfair exploitation. 
A Common European Sales Law could introduce a right for a party to avoid a contract if, at the time 
of the conclusion of the contract:  
- the party was dependant on or had a relationship of trust with the other party, was in economic 
distress or had urgent needs, was improvident, ignorant, inexperienced or lacking in bargaining skill; 
and 
- the other party knew or could be expected to have known this and took an excessive benefit or 
unfair advantage 

Legal comparison: 

Country 

Provision comparison 

Impact on 
the level of 
consumer 
protection 

AT 

Same provisions: covered by § 879 (2) 4 ABGB. Invalidity of 

= 

155

 
 
 
 
 
 
 
 
BE 

DE 

EE 

ES 

FI 

FR 

HU 

IT 

LU 

NL 

PL 

contracts contra bonos mores. 
There is no general principle or rule in Belgian law that a contract is 
avoidable in case of unfair exploitation. The avoidance of unfair terms 
in consumer contracts is seen as a lex specialis. There is also a special 
provision in the Civil Code on loans for interest that gives the judge 
the power to reduce the borrower’s obligation to reimburse the loan 
and/or to pay interests where the lender has exploited the weakness, 
the passion or the ignorance of the borrower by charging an interest 
that is manifestly excessive. (Art. 1907 of the Civil Code). 
German law contains similar provisions, under § 138 BGB and case 
law; this case is constructed not as a right of avoidance, but as a nullity 
of the contract or juridical act. 
Estonian law contains similar provisions in the General Part of its Civil 
Code Act § 96. 
Under Spanish law, there is no general possibility of avoiding the 
contract for unfair advantage except where: (i) there is duress; (ii) 
there is some quantitative disadvantage in very specific cases 
involving minors and similarly situated persons, and no other remedy 
is available; (iii) in certain Spanish regions -Cataluña, Navarra- where 
the traditional rescission by seller for laesio enormis is applicable.  
Finnish law provides a similar protection: Section 31 in the Contracts 
Act provides that if anyone, taking advantage of another’s distress, 
lack of understanding, imprudence or position of dependence on 
him/her, has acquired or exacted a benefit which is obviously 
disproportionate to what he/she has given or promised or for which 
there is to be no consideration, the transaction thus effected shall not 
bind the party so abused. 
Art. L. 122-8 of the Consumer Code prohibits 'abus de faiblesse' 
(weakness abuse) through criminal prosecution. As a civil sanction 
mistake could make the contract void. Case law has also developed the 
idea of 'contrainte économique' (economic constraint) on the basis of 
threat (Art. 1112, of the Civil Code) which is a cause of avoidance 
(Cass. civ. 1re, 30 mai 2000, Bull. civ. I, n° 169. - 3 avr. 2002, Bull. 
civ. I, n° 108). 
Under Art. 202 of the Civil Code if a contracting party has stipulated 
an unreasonably disproportionate advantage at the conclusion of the 
contract by exploiting the other party's situation, the contract shall be 
null and void.   
Under Art. 1448 of the Civil Code the party is entitled to avoid the 
contract when there are specific conditions such as:  
a) 'ultra dimidium' disproportion among the reciprocal obligations;  
b) the party had urgent needs;  
c) the other party exploited the first party’s situation by taking an 
excessive benefit or an unfair advantage. 
Luxembourgish law provides a similar protection: Art. 1118 Code 
Civil. 
Dutch law offers a similar protection: under 'abuse of circumstances' in 
Art. 3:44 BW. 
Polish law offers a similar protection: under Art. 388 of the Civil Code 
in a case of unfair exploitation, a party may demand a reduction of its 
own performance or an increase in the performance due it and in the 
event that one or the other would be excessively difficult, it may 
demand that the contract be declared invalid.  

+ 

= 

= 

+ 

= 

= 

= 

= 

= 

= 

= 

156

 
 
PT 

RO 

UK 

Portuguese law offers a similar protection: under Art. 282 of the Civil 
Code, if the other party has drawn excessive or unjustified benefits of 
the exploitation. This Art. also applies to other conditions, namely the 
exploitation of dependency, weakness of character or mental state of 
the other party. 
Romanian Civil Code provides the possibility to invalidate the 
agreement on grounds of lesion for the minors and other incapacitated 
persons. 
Under Romanian consumer protection legislation, the unfair 
exploitation may be inferred from any clause which was not negotiated 
with the consumer and which created in the detriment of the consumer 
(between the rights granted and the obligations undertaken) and 
contrary to the good faith principle, a significant imbalance.    
English law provides a similar protection if either the parties have a 
relationship of trust and confidence or one of them is a 'poor and 
ignorant person', who acts without advice. In Scotland there can be 
avoidance for; facility and circumvention;. This is not limited to cases 
of necessity or ignorance but requires some mental weakness, some 
lesion and some element of deceit or dishonesty on the part of the 
exploiting person. 

= 

= 

Slightly + 

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts 

No costs for consumers. 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumers would benefit from having clear protection against unfair exploitation e.g. 
they would be able to avoid a contract if they were in economic distress, or had urgent 
needs, were improvident, ignorant, inexperienced of lacking of bargaining skill and 
the other party knew this and took an excessive benefit from it. Consumers would 
particularly benefit in the small minority of countries where at present the rules are 
less specific (e.g.  BE, ES, UK). 

Costs and benefits for businesses 
Costs for 
businesses 

No additional costs for businesses as in most Member States (e.g. AT, DE, FI, IT, RO, 
PL, PT, NL, LU, FR, HU, EE) the current rules provide for the similar level of 
consumer protection against unfair exploitation. Any increase in costs would affect 
only rogue traders that currently benefit from less strict rules on unfair exploitation in 
a few Member States (e.g. UK, ES, BE) 
Businesses would benefit from relying on one set of clear rules concerning unfair 
exploitation.  

Benefits for 
businesses 

Interpretation in favour of consumers  

Issue: 

According to the existing consumer acquis, where there is doubt about the meaning of a contractual 
term which has not been individually negotiated the interpretation most favourable to the consumer 
shall prevail (Art. 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer 
contracts). 
A  Common European Sales Law could possibly extend this interpretation rule to all contractual 
terms whether they are individually negotiated or not, unless the term was supplied by the consumer.  

157

 
 
 
 
 
 
 
 
Legal comparison: 

Country 

Provision comparison  

AT 

BE 

DE 

EE 

ES 

FI 

FR 

HU 

IT 

LU 

MT 

General 'unclearness rule': An unclear statement is interpreted to the 
detriment of the party who used it (§ 915 ABGB). 
In case of doubt about the meaning of a contract term in a contract 
between a business and a consumer, whether supplied by the consumer 
or not (the law does not make a distinction here), the interpretation that is 
most favourable to the consumer prevails (Art. 40, § 2, Market Practices 
Act).  
Interpretation rule in favour of consumers (§ 305c (2) BGB) does not 
apply for individually negotiated terms. 
The Estonian law does not contain such provision. This could be taken 
into account under the rules of objective interpretation but not as an 
obligation (LOA § 29 (4)). Special rule on interpretation of standard 
terms contracts in favour of the other party (LOA § 39).  
In case of doubt about the meaning of standard terms, interpretation most 
favourable to consumer prevails (Section 80.2 TRLGDCU). 
According to the Consumer Protection Act Chapter 4 Section 3 and 4: If 
a term in a contract referred to in this Act has been drafted in advance 
without the consumer having been able to influence its contents and if 
uncertainty arises as to the significance of the term, the term shall be 
interpreted in favour of the consumer. If a dispute arises as to whether a 
term referred to in sections 2 and 3 has been drafted in advance, the 
burden of proof of this shall lay on the business. 
Art. L. 133-2 of Consumer Code provides this solution. The general rules 
are on Art. 1162 of Civil Code; according to case law the contract is 
interpreted against the party who has drafted it (Cass. Civ. 1re, 22 oct. 
1974, Bull. civ. I, n° 271). 
Same solution according to Art. 207 (2) of the Civil Code: in general, in 
the event of a dispute, the parties shall, in light of the presumed intent of 
the person issuing the statement and the circumstances of the case, 
construe statements in accordance with the general accepted meaning of 
the words. However, in consumer contracts the national law creates an 
exception: according to the referred Art. of the Civil Code, if the contents 
of a consumer contract cannot be clearly established, the interpretation 
that is more favourable to the consumer shall be authoritative.  
Italian law provides the same protection (Art. 35 co. 2 Consumer Code; 
Art. 1370 of the Civil Code). 
Luxembourgish law offers the same protection (Art. L.211-2 (2) Code 
Consommation)   
Art. 1009 of the Civil Code: In case of doubt, the agreement shall be 
interpreted against the obligee and in favour of the obligor. 
In addition, Art. 47(2) of the Consumer Affairs Act provides that 'where 
any term is ambivalent or any doubt arises about the meaning of a term, 
the interpretation most favourable to the consumer shall prevail'.  

Impact on 
the level of  
consumer 
protection  
Slightly + 

= 

+ 

+ 

+ 

+ 

= 

= 

= 

= 

= 

158

 
 
 
 
 
NL 

PL 

PT 

RO 

UK 

A general rule to this extent does not exist in Dutch law; contra 
proferentem may at most be one of the factors to be taken into account. 
The contra proferentem rule applies as a rule only with regard to not-
individually negotiated terms in consumer contracts, see Art. 6:238(2) of 
the Dutch Civil Code, introduced in order to implement Art. 5 of the 
Unfair Terms Directive. 
Under Art. 385 §2 of the Civil Code interpretation contra proferentem is 
recognised for standard terms in consumer contracts (without limitation 
of terms supplied by consumer).  
Portuguese law does not contain such provision.  
Under the Romanian legislation, in case of doubt about the meaning of 
standard terms, the interpretation which is most favourable to consumers 
prevails. 
No such a rule. However, courts do seem to interpret contracts in favour 
of the consumer. In England, Wales and Scotland contra proferentem 
rule might lead to this result, but not confined to consumers. 

+ 

+ 

+ 
+ 

+ 

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts: 

No costs for consumers. 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumers would benefit in case there is doubt about the meaning of a contractual 
term, negotiated or not, as the interpretation most favourable to the consumer shall 
prevail in this case. In many Member States, the interpretation in favour of consumers 
apply only to standard terms and individually negotiated terms are excluded (e.g. DE, 
RO, PL, NL, FI, ES). As businesses would try to avoid any potential doubts as to the 
interpretation of the contractual terms, consumers might also benefit from having 
more clear contracts. 
Costs and benefits for businesses 
Costs for 
businesses 

There could be some additional costs for companies in case of doubts about the 
meaning of a contractual term which has not been individually negotiated as the 
interpretation most favourable to the consumer is also likely to be more costly for 
businesses. These additional costs are expected to be rather minor as they would only 
occur in case of doubts as to the interpretation and businesses would be interested in 
avoiding such situations by making sure that the contractual terms do not raise any 
doubts. For companies in a number of Member States (e.g. IT, LU, MT, HU) there 
would be no change as the current rules provide for similar levels of protection as a 
Common European Sales Law. 
Businesses might gain indirectly from having more clear terms in contracts which do 
not leave scope for divergent interpretation. 

Benefits for 
businesses 

Terms unfair as not sufficiently drawn to the consumer's attention  

Issue: 

A Common European Sales Law could protect against standard terms of which the party not 
supplying the terms could not be aware: contract terms supplied by one party and not individually 
negotiated may be invoked against the other party only if the other party was aware of them, or if the 
party supplying them took reasonable steps to draw the other party's attention to them, before or 
when the contract was concluded.  

159

 
 
 
 
 
 
 
 
Moreover, a term could be considered as not sufficiently brought to the consumer’s attention by the 
mere reference to it in a contract document, even if the consumer signs the document. 

Country 

Provision comparison  

BE  

EE 

ES  

Under Belgian law, the control of unfair contract terms in B2C relations 
extends to terms that have been individually negotiated. Although there 
is no such provision in Belgian law, with regard to B2C contracts, Art. 
74(26°) MPCPA states that the following term is in all circumstances 
unlawful: a term which determines irrefutably the consent of the 
consumer with stipulations of which the consumer actually could not be 
aware of is sanctioned with nullity according to Art. 75, §1 MPCPA 
(Black listed). 
It should be noted that under general contract law not individually 
negotiated terms will not be deemed to be accepted (and will therefore 
not constitute a part of the contract) unless the other party has – at the 
latest at the moment when the contract was concluded – knowledge of 
those terms or could have obtained knowledge of those terms and has 
accepted those terms. 
- Regarding the mere reference to the term in a contract document: there 
is no express provision in Belgian law to that effect. Case law is not 
uniform in relation to the acceptation of standard-terms. However, 
generally the courts rule that the mere reference to their existence or that 
the standard terms can be consulted somewhere will not suffice. It is 
generally held that the business has a duty to make standard contract 
terms available to the consumer. General clauses are preferably written 
on the front side of the contract and if they are provided for on the back, 
there must be a clear reference to them on the front side of the 
document.  
- Estonian law provides this principle as part of the fairness control: § 
37-Standard terms as part of contract: (1) Standard terms are part of a 
contract if the party supplying the standard terms clearly refers to them 
as part of the contract before entering into the contract or while entering 
into the contract and the other party has the opportunity to examine their 
contents. Standard terms are also part of a contract if their existence 
could be presumed from the manner in which the contract was entered 
into and the other party was given the opportunity to examine their 
contents. (2) The parties may (…) agree in advance that standard terms 
apply to certain types of contracts.  
- Regarding the mere reference to the term in a contract document: no 
such rule exists in Estonian law.  
- A provision in Section 5 of the Standard Form Terms Act (Ley 7/1998, 
de 13 de abril, LCG) determines that a standard term will not be 
incorporated to the contract if the supplier of the term did not effectively 
ensure that the other party knew of the existence and content of the 
term. In B2C, according to Section 80 TRLGDCU, terms supplied by 
one party and not individually negotiated must fulfil the following 
conditions: (i) have precise, clear and simple writing; (ii) be accessible 
and legible in order to let consumers know the existence and content of 
the contract before its celebration. 

Impact on 
the level of  
consumer 
protection  
= 

= 

+ 

= 

Slightly + 

160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IT  

HU 

LU  

PL  

PT  

- Regarding the mere reference to the term in a contract document: No 
similar provision exists in TRLGDCU, but it is clear from the above 
rules just mentioned. A clearer rule such as the one envisaged would 
provide a slightly higher protection. 
- There is no such provision under Italian law. Nevertheless, Art. 34 co. 
5 Consumer Code provides the general rule by which the business bears 
the burden of proving that it has provided all the information required. 
Moreover, the general clause stated by Art. 35 co.1 Consumer Code 
provides a duty of plain and intelligible language in the drafting of 
written terms. 
- Regarding the mere reference to the term in a contract document: there 
is no such provision under Italian law. However, Art. 34 co. 4 – 5 
Consumer Code on the duty of plain and intelligible language can be 
interpreted as to reach a similar result. According to Italian case law 
under the above mentioned Art. (Cass. 8.6.2007, n. 13377; 
Cass.26.9.2008, n. 24262), terms are not sufficiently brought to the 
consumer’s attention by a mere reference to them in a contract 
document, even if the consumer signs the document. 
- No such specific provision in the national law. However, Art. 205/B 
(1) of the Civil Code provides that standard terms become part of a 
contract only if they have previously been made available to the other 
party for perusal and if the other party has accepted the terms explicitly 
or through conduct that implies acceptance. Finally, according to Art. 
209 (4) of the Civil Code, a standard contract condition or a contractual 
term of a consumer contract which has not been individually negotiated 
shall be regarded as unfair if they are not drafted in plain, intelligible 
language.  
- Regarding the mere reference to the term in a contract document: no 
such provision in the national law.  
- L.211-1 Consumer Code refers to compliance with Art. 1135-1 Civil 
Code (' Les conditions générales d’un contrat préétablies par l’une des 
parties ne s’imposent à l’autre partie que si celle-ci a été en mesure de 
les connaître lors de la signature du contrat et si elle doit, selon les 
circonstances, être considérée comme les ayant acceptées').  Such terms 
cannot be enforced (inopposabilité)  
- Regarding the mere reference to the term in a contract document: the 
Consumer Code blacklists the following clause which pursues a similar 
objective : 'Les clauses qui constatent de manière irréfragable l’adhésion 
du consommateur à des clauses dont il n’a pas eu, effectivement, 
l’occasion de prendre connaissance avant la conclusion du contrat' – 
L.211-3 (23)).  
- There is a provision in the grey list of unfair contract terms under 
which a term is presumed to be unfair if the consumer was not aware of 
them (Art. 3853 (4) of the Civil Code). 
- Regarding the mere reference to the term in a contract document: there 
is no such special provision. 
- Terms are excluded from a contract if the party supplying the terms 
did not fulfil the duty of communication or the duties of information to 
the other party about the terms– Arts. 5, 6 and 8 of the Decree-Law 
446/85, from the 25th of October 1986. When the other party was not 
aware of the terms, they are also automatically excluded if there was a 
lack of communication or information or if, by their context, title or 
presentation, the said terms would not be noticed by a normal 

+ 

=  

= 

+ 

= 

+ 

= 

161

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UK  

contracting party in the position of the real one (Art. 8 of the Decree-
Law 446/85).  
- There is no specific provision on the mere reference to the terms in a 
contract document. However, terms included after the signature, or 
terms included and referred to in a signed document are not included in 
the contract if the duties of communication and information were not 
fulfilled.  
England and Wales: Where the relevant term is not in a signed 
document but, for example  on a ticket, then they will be incorporated 
into the contract only if the party supplying them gives reasonable 
notice of the terms to the other party. Where a term is unusual or 
onerous, the degree of notice required is greater and it may be necessary 
to draw attention to the term specifically. 
Where the term is in a document that has been signed by the other party, 
it will form part of the contract; but the legislation controlling unfair 
terms (Unfair Contract terms Act 1977; Unfair Terms in Consumer 
Contracts Regulations 1999) are frequently used (when applicable) to 
deal with clauses that are surprising to such an extent that they can be 
seen as unfair. 

Scotland: No such express general rule. However, a contract term may 
be regarded as unfair under the Unfair Terms in Consumer Contracts 
Regulations 1999 if it has the effect of irrevocably binding the 
consumer to terms with which he or she had no real opportunity of 
becoming acquainted before the conclusion of the contract.  

Slightly + 

+ 

Assessment of impacts 

No costs for consumers. 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumers would be more clearly protected against terms supplied by businesses of 
which they were not aware. Such terms could be invoked only if a trader took 
reasonable steps to draw the consumer's attention to them, before or when the contract 
was concluded. A term could be considered as not sufficiently brought to the 
consumer’s attention by the mere reference to it in a contract document, even if the 
consumer signs the document. At present, in a number of Member States the rules are 
less strict i.e. the mere reference to the term in a contract document is sufficient (e.g. 
HU, EE, PL, UK). Consumers in these countries would gain more confidence as they 
would need to be made aware of all the terms supplied by businesses or otherwise 
regard this term as unfair. As a result, they would be able to make well informed 
purchasing decisions. 

Costs and benefits for businesses 
Costs for 
businesses 

Businesses supplying the terms to a contract would be obliged to take reasonable steps 
to draw consumers' attention to them, before or when the contract is concluded. 
Business from countries where the similar rules are in place at present (e.g. BE, PT, 
LU, ES) would not bear any additional costs. Any costs would only affect traders that 
insert terms in the contract and do not inform the other party about them in a 
sufficient way at present. However, these costs are considered as minor as the 
reasonable steps to inform the other party about inserted terms would in practice be 
relatively easy to implement. 

Benefits for  Businesses would benefit from the increased consumer confidence. They could also 

162

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
businesses 

benefit from avoiding potential disputes with consumers if they bring all the 
contractual terms to consumers' attention.  

Merger clauses 

Issue:  
In the existing consumer acquis there are no contract law rules on merger clauses. 

A Common European Sales Law would introduce a provision on merger clauses as follows: where a 
contract document contains a 'merger clause' stating that the document embodies all the terms of the 
contract then any prior statements, undertakings or agreements which are not embodied in the 
document, do not form part of the contract. However, a consumer would not be bound by such a 
merger clause. 

Legal comparison: 

Country 

Provision comparison  

AT 

BE 
DE 

ES 

FI 

FR 
HU 
IT 

LU 

NL 

PL 
PT 

RO 

UK 

§ 10(3) KschG stipulates that the legal validity of formless declarations 
of the company cannot be excluded by contract to the detriment of the 
consumer. 
No such provision in Belgian law. 
German law offers a slightly lower protection: it follows case law on the 
general clause for unfairness controls of standard contracts, § 307 BGB. 
No specific provision on merger clauses for consumer contracts.  
There is no special provision in Finnish law. If such clauses were used, 
they would probably be considered as unreasonable.  
No provision and no case law. 
There is no specific provision on this issue in national law.  
Italian law offers the same protection: according to case law under Art. 
34 co. 4 of the Consumer Code, merger clauses do not demonstrate the 
existence of an individual negotiation. (Cass. 13890/05).  
Luxembourgish law offers the same protection, even if not explicitly laid 
down. 
A comparable rule does not exist in Dutch law. However, a merger 
clause which is not individually negotiated is presumed to be unfair if the 
clause would fundamentally limit the content of the trader’s obligations 
that the consumer could otherwise reasonably have expected (see Art. 
6:237(b) of the Dutch Civil Code). In such a case, the trader bears the 
burden to prove that the clause is nevertheless fair. 
Under Polish law there is no express regulation on a merger clause. 
No such general provision under Portuguese law.  
There are no specific provisions on merger clauses in consumer 
contracts.  
No such provision under English law. 

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts 

Costs and benefits for consumers 
Costs for 
consumers 

No costs for consumers. 

Impact on 
the level of  
consumer 
protection  
= 

+ 
+ 

+ 
+ 

+ 
+ 
= 

= 

+ 

+ 
+ 
+ 

+ 

163

 
 
 
 
 
 
 
 
Benefits for 
consumers 

Consumers would benefit as in most Member States the use of merger clauses is not 
prohibited as such (e.g. BE, ES, UK, PL, RO, PT, FR, HU). In several Member States, 
this issue is dealt within the context of the Unfair Contract Terms legislation (e.g. DE, 
NL). Consumers would gain more confidence as they would be able to rely on the 
clear invalidity of merger clauses attempting to reduce the obligation of the business 
following from prior statements, undertakings or agreements which are not embodied 
in the contract document.  

Costs and benefits for businesses 
Costs for 
businesses 

Businesses would need to adapt their contracts to eliminate any merger clauses. Any 
potential costs are likely to be one-off and affect only companies that are at present 
using such merger clauses. Business would also have to be aware that some prior 
statements, undertakings or agreements not embodied in the contract document may 
still bind them in their relationship with the consumer. However, the impact of this is 
likely to be minor as pre-contractual information required by the CRD and taken over 
by the Common European Sales Law for distance and off-premises contracts forms in 
any case an integral part of the contract. 
Businesses might gain indirectly from increased purchases by consumers who are able 
to rely on prior statements by businesses even if they are not explicitly mentioned in 
the contract.  

Benefits for 
businesses 

Method of payment 

Issue: 

A Common European Sales Law could introduce a rule that, unless indications about the means of 
payment are made by the seller, ,the buyer may use any form of payment. Consequently, a seller is 
obliged to accept all types of payment (e.g. cash, bank transfer or all types of debit or credit cards) 
when he or she did not make any previous indications about the method of payment, provided that 
the method of payment is one used in the ordinary course of business at the place of payment (i.e. 
the business' place of business) and is appropriate to the nature of the transaction. 

Legal comparison: 

Country 

Provision comparison  

DE 

EE 

ES 

FI 

There is no specific provision on method of payment. According to 
jurisprudence, payment by card or bank transfer must be (at least 
implicitly) agreed by the parties - (Münchener Kommentar BGB, § 362 
Rn. 20 f., 364 Rn. 1.) 
LOA § 91 - Manner of performance of monetary obligations (1) 
provides: 'A monetary obligation may be performed in cash. A monetary 
obligation may also be performed in some other form if so agreed by the 
parties or if such form is used in the ordinary course of business at the 
place of payment.'  
Art. 1170 of the Spanish Civil Code provides that payment must be made 
in the agreed way and, if not possible, in money that is legal tender in 
Spain. No similar provision exists in TRLGDCU.  
In Finland there is no longer in force a rule which always obliges to 
accept payment in cash. If the consumer is offered the opportunity to pay 
with any available bank account debit card, this is usually considered as a 

Impact on 
the level of  
consumer 
protection 
+ 

= 

+ 

+ 

164

 
 
  
 
 
 
 
sufficient alternative to payment in cash. Cash payment is any case the 
basic method of payment. If the seller does not accept cash or a debit 
card, the consumer must be informed separately already in the early 
marketing stage, so that he can take such information into account in his 
purchasing decisions. If the credit payment is the only payment method 
accepted by the seller, the consumer must be informed in advance.  
There is no specific provision on method of payment in French consumer 
law.  
There are no such rules in the Civil Code (Ptk) at present. Currently 
businesses can and effectively do limit the form of payment (the type of 
cards) irrespective of the actual possibility of usage, for both face-to-face 
and distance sales. In the case of e-commerce it is quite frequent that the 
only possible form of payment is cash payment at the time of delivery, 
although contracting would be easier with the use of different cards. 
There is no specific provision on method of payment in Italian law. 
According to Art. 52 co. 2 lett. e) Consumer Code on distance sales and 
Art. 67-sexies co. 1 lett. f) Consumer Code on distance financial services, 
payment may be made by the methods established by the business and 
previously communicated to consumers. Specific provisions regarding 
payments with credit card for distance contracts can be found in Art. 56 
co. 1 of the Consumer Code.  
The Dutch Civil Code decrees that payment is made in current money 
(Art. 6:112 of the Civil Code). Unless otherwise decreed by the creditor, 
payment can also take place via transfer to his bank account (Art. 6:114).  
Polish law obliges the trader to put – in the place of business – clear 
information which methods of electronic payment are accepted (Art. 11 
of Ustawa z dn. 12 września 2002 r. o elektronicznych instrumentach 
płatniczych). It does not, however, oblige the seller to accept all types of 
payment cards in case he or she failed to determine the method of 
payment. 
There is no special provision on method of payment.  
England and Wales: No specific rule. The court is likely to reach this 
result as a matter of interpretation of the contract.  
Scotland: No such rule but same result is likely to be reached in practice.  

+ 

+ 

+ 

+ 

+ 

+ 
Slightly + 

FR 

HU 

IT 

NL 

PL 

PT  
UK 

Assessment of impacts  

Costs and benefits for consumers 
Costs for 
consumers 

Benefits for 
consumers 

Businesses would be able to indicate the most convenient methods of payment and 
avoid any potential compliance costs stemming from the obligation to accept more 
costly methods of payment e.g. credit cards. Therefore, there are likely to be no costs 
for consumers. 
If the means of payment are not indicated by a trader a consumer would benefit from 
the possibility of choosing the payment method which suits him best among these 
which are used in the ordinary course of business and are appropriate to the nature of 
the transaction.  
Businesses wishing to receive the payments by certain methods would need to 
indicate them to consumers. A consumer could therefore not be surprised by a 
unilateral restriction on the methods of payment imposed by the business, which 
would currently be possible under the national law of most of Member States. This 
would be the case for example in FR, DE, HU, IT, ES, PT, PL, NL, IT where there are 
no specific provisions on methods of payment in the national contract laws. Under 

165

 
 
 
 
 
these laws traders can force consumers without prior information to make a payment 
by a particular method which may be more costly and less convenient for them. 

Costs and benefits for businesses 
Costs for 
businesses 

Businesses would avoid any additional compliance costs as they would have the 
possibility to indicate the accepted methods of payment to consumers. Any potential 
costs would affect only traders who do not provide this information. In this case, they 
would be obliged to accept all types of payments which are used in the ordinary 
course of business and are appropriate to the nature of the transactions. As a 
consequence their margin could be reduced if consumers choose e.g. credit card 
payments. However, in practice most of the traders are very likely to indicate the 
accepted methods of payment thereby avoiding any additional compliance costs.  
Retailers would profit from an increase in both the buyer’s confidence and easiness 
when performing a purchase. 

Benefits for 
businesses 

Place of delivery  

Issue: 

The current acquis does not contain a provision regarding the place of delivery of goods in a 
consumer contract of sales. A Common European Sales Law could provide a specific default rule 
stating that, where the place of delivery cannot be otherwise determined, the place of delivery is in 
distance and off-premises contracts, or in contracts where the seller has undertaken to arrange 
carriage to the buyer, the consumer's place of residence at the time of the conclusion of the contract. 

Country 

Provision comparison  

Impact on the 
level of  
consumer 
protection 

BE  

EE 
ES  
HU 

+ 

+ 
+ 
+ 

There is no specific provision concerning the place of delivery in 
consumer sales and distance and off-premises contracts. However, 
general sales law (Art. 1609 of the Civil Code) determines that in the 
absence of an agreement, the place of delivery is the place where the 
good was at the time of the sale. Regarding the hypothesis 'where the 
seller has undertaken to arrange the carriage to the buyer', it could be 
considered as being an agreement on the place of delivery, but the 
text is more protective in that it clearly points out that the good must 
be delivered at the consumer's place of residence at the time of the 
conclusion of the contract. 
There is no such special provision under Estonian law.  
No similar provision exists in TRLGDCU.  
According to Art. 278 of the Civil Code the place of performance is 
the domicile or registered place of business of the obligor, unless: a) 
it is otherwise provided by legal regulation, b) the object or purpose 
of the service suggests otherwise, c) the object of the service is at a 
different location, which is known to the parties. If the object of a 
service is to be sent to a place other than the domicile or registered 
place of business of the obligor, and if such a place or an 
intermediate location has not been stipulated as the place of delivery, 
performance shall be deemed accomplished when the obligor delivers 
the object of service to the beneficiary, a shipping agent, or a carrier. 

166

 
 
 
 
 
 
 
 
 
In the case of consumer contracts, performance shall be deemed 
effected upon handing over to the consumer. If the obligor delivers 
the thing by its own means of transportation or through its 
representative, the place of performance shall be the domicile or 
registered place of business of the latter. For distance and off-
premises contracts: the same rule applies. 
There is no such provision under Italian law.  
No such rule in the Consumer Code.  
There is no such special provision under Polish law.  
There is no such provision in Portuguese law. According to the 
general rules of the Civil Code, the place of delivery will normally be 
the place where the good was at the time of the conclusion of contract 
(Art. 773, para 1).  
England and Wales: No clear rule but a court might well reach this 
result as a matter of interpretation of the contract.  
Scotland: No such express rule. 

+ 
+ 
+ 
+ 

+ 

IT  
LU  
PL  
PT  

UK 

Assessment of impacts 

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

No costs for consumers as a place of consumer's residence is in most cases the most 
convenient place of delivery. 
Consumers would benefit from having the goods delivered to their place of residence 
in distance and off-premises contracts or in contracts where the seller has undertaken 
to arrange carriage to the buyer (if the place of delivery cannot be otherwise 
determined). The delivery of goods to a consumer's place of residence would be very 
convenient for consumers. Consumers would not have to bear any costs of 
transportation of the goods from the place where the good was at the time of the 
conclusion of contract which is a default place of delivery at present in some Member 
States (e.g. PT, BE). 
Costs and benefits for businesses 
Costs for 
businesses 

Businesses in distance and off-premises contracts or in contracts where the seller has 
undertaken to arrange carriage to the buyer would have additional costs for delivering 
the goods to the consumer's place of residence at the time of the conclusion of the 
contract. These additional costs would depend on the delivery distance and might 
affect companies in most Member States where at present the rules are less protective 
for consumers (e.g.UK, PT, PL, LU, IT, HU, EE, ES). These costs would however 
occur only where the place of delivery cannot be otherwise determined e.g. was not 
agreed with a consumer. 
In many Member States there are no specific rules concerning the default place of 
delivery (e.g. PL, LU, IT, EE, ES). In these Member States, businesses could benefit 
from having clear rules on default place of delivery where the place of delivery cannot 
be otherwise determined. 

Benefits for 
businesses 

Right to damages for non-performance  

Issue: 

The current acquis does not provide for rules on damages for non-performance, but defers the matter 
to national laws. 

167

 
 
 
 
 
 
 
 
 
A  Common European Sales Law could provide a right to damages for non-performance of 
contractual obligations, unless the non-performance is excused.  

Legal comparison: 

Country  Provision comparison 

BE 

DE 
EE 

ES 

FR 

HU 

IT 

MT 

NL 

There is a right to damages under general law of obligations (See Art. 
1649 quinquies § 1 C.C.) 
According to German law, there is a right to damages. 
Remedies are available for all kinds of non-performance. 

Damages for non-performance would be covered by general rules of the 
Spanish Civil Code: liability will depend on the proof of effective 
damages caused by non-performance and/or the existence of an accepted 
offer -particularly in those cases where a binding offer is required by law. 
French consumer sales law provides for legal warranty of conformity. 
Nevertheless, a claim under the legal warranty does not preclude the 
consumer from using the rights he derives from general contract law for 
performance (Art. L 211-13 of the Consumer Code). According to Art. 
1184 of the Civil Code the party faced with non-performance of his 
contracting partner may either require specific performance or resolve the 
contract without prejudice of damages according to Art. 1147 of the Civil 
Code. For the consumer it is always possible to claim the damages in case 
of non-performance.   
According to Art. 310 of the Civil Code, apart from guarantee rights, 
consumers are entitled to damages resulting from lack of conformity under 
the rules of indemnification. 
If the consumer suffers damages because of a faulty performance, he can 
ask for reimbursement of his damages according to the indemnification 
rules. 

This in practice means that the consumer can only receive reimbursement 
through a litigation process if the business is not willing voluntarily to 
give such a reimbursement. 
Italian consumer sales law provides for legal warranty of conformity. 
Nevertheless, a claim under the legal warranty does not preclude the 
consumer from using the rights he derives from general contract law.  
There is a general right to damages for non-conformity unless the seller 
has ignored them without fault (Art.1494 of the Civil Code) The party 
faced with non-performance of his contracting partner may either require 
specific performance or terminate the contract without prejudice of 
damages (including actual damages and loss of profit, but not punitive 
damages). 
Maltese law has general rules about damages for non-performance (Art. 
1125 of the Civil Code: 'Where any person fails to discharge an obligation 
which he has contracted, he shall be liable in damages'). 
Under Art. 6:74 BW, any failure to fulfil an obligation shall require the 
debtor to compensate the creditor for the damages he suffered due to the 
non-performance, unless the non-performance is excused. 

Impact on 
the level of  
consumer 
protection 
= 

= 
= 

= 

= 

= 

= 

= 

= 

168

 
 
 
 
 
 
PL 

RO 

UK 

Polish law has general rules about damages for non- performance (Art. 
471 of the Civil Code).  
The consumers are entitled to damages arising out of the lack of 
conformity of the products ascertained within the warranty period. The 
consumers are entitled to damages according to the general provisions of 
the Romanian Civil Code. 
Under English law, there is a right to damages.  

= 

= 

= 

Assessment of impacts  

Costs and benefits for consumers 
Costs for consumers 
Benefits for 
consumers 

No costs for consumers. 
At present, most Member States have general rights to damages for non-
performance (e.g. BE, EE, ES MT, HU, NL, HU, IT, PL,FR, RO, UK). 
The level of consumer protection would not change. 
Consumers would be able to claim compensation for non-performance of 
a business's obligations. 

Costs and benefits for businesses 
Costs for businesses 

No additional costs for businesses as in most Member States the current 
rules provide for damages for non-performance. 

Benefits for businesses  Businesses would benefit from relying on one set of clear rules on 

damages for non-performance. Businesses performing their obligations 
diligently may gain additional customers. 

Length of the prescription periods  

Issue: 

In the current acquis (Consumer Sales Directive 1999/44/EC), the business is liable for the lack of 
conformity of the goods which becomes manifest during 2 years from the moment the goods are 
delivered to the consumer.  

A Common European Sales Law would not contain such a fixed liability period during which the 
consumer could still claim lack of conformity. Instead the general rules on prescription would apply. 
A prescription period would run for 2 years from the moment the consumer has knowledge of the 
defect, but no later than for 10 years from the moment the goods were delivered. In practice, the 
result would be comparable to the existing acquis. While the starting point would be slightly later, 
i.e. knowledge of the defect extent of delivery, the period would be slightly shorter as contrary to the 
substantive period of the Consumer Sales Directive, the consumer would need to undertake the 
necessary steps before the end of the prescription period in order to prevent its effects.  

Legal comparison: 

Country 

BE 

DE 
EE  

Provision comparison  

Impact on 
the level of  
consumer 
protection 
No longer than 2 years. 
= 
Prescription after 2 years (except for building materials), cf. § 438 BGB.  = 
= 
No longer than 2 years. 

169

 
 
 
 
 
 
 
 
 
 
 
ES 

FR 

HU 

IT 

LU 

NL 

Under Spanish Law – Art. 123 RD 1/2007 – the seller responds for the 
lack of conformity of the product for 2 years after the delivery. If the 
product is second hand, this period could be reduced to a minimum of 1 
year.  
However, general rules on breach of contract may be used, and here the 
limitation period is very generous (15 years). 
Under the French Consumer Code, the action resulting from lack of 
conformity lapses two years after delivery of the product.  
However, it must be noted that a claim under the Consumer code does 
not preclude the consumer from using the rights deriving from general 
sales law of the Civil Code. Then according to those general rules 
(Articles 1641 and following) the buyer has 2 years to bring a claim after 
having discovered the defect (Civ. Code, Art. 1648, para. 1). This means 
that the guarantee is prescribed by the general prescription duration (5 
years, under Art. 2224 of Civ. Code: 'personal or movable actions 
prescribe in 5 years from the date on which the holder of a right knew or 
should have know of the facts to enable him to exercise it'). 
However, the buyer must be particularly vigilant when taking delivery of 
the product because many decisions have considered that the silence of 
the buyer when faced on delivery with a product which had an apparent 
vice or was not conform to what had been contractually agreed upon 
could be interpreted as a tacit acceptance of the non-conformity, thus 
depriving the buyer of any future claim for non-performance of the 
obligation of conform delivery relating to the said non-conformity. 
In general the time limit is 2 years, but if the consumer is unable to 
enforce his claim for an excusable reason, particularly if lack of 
conformity, owing to its character or the nature of the goods, is not 
apparent within the 2-year time limit, in the case of goods designated for 
long-term use the consumer may enforce his rights within 3 years of 
delivery. If the statutory use period exceeds 3 years, this time limit shall 
apply to the enforcement of such a claim (Art. 308 and 308/A of the Civil 
Code). This extended (long) guarantee period can only be found in 2 
current regulations: the first is a Common Decree from 1985, which 
states that the statuary use date in case of building materials is 5 years or 
in certain cases 10 years (e.g. walls, balusters). The second is the 
Government Decree of 151/2003 on the obligatory express warranty 
regarding goods designed for long-term use. 
The seller is liable if the defect occurs within 2 years after delivery (Art. 
132 Consumer Code). It must be noted that a claim under the legal 
warranty does not preclude the consumer from using the rights he derives 
from sales law as a buyer and from general contractual rules. According 
to Art. 135 Consumer Code, consumers' rights under other statutory 
instruments shall not be limited or repealed by the provisions relating to 
the legal warranty. In principle, the consumer can also recover the 
damages according to the conditions of Italian sales law (Art. 1494 of the 
Civil Code). In this last case the ordinary limitation period (10 years – 
Art. 2946 of the Civil Code) applies. 
Consumers may invoke the hidden defects (vices cachés) provision of 
Art. 1641 sequ. Code Civil which is not limited in time. This is a 
mandatory right for B2C contracts (Art. 1645 of the Civil Code). 
NL law does not contain a fixed liability period after which the consumer 
can no longer claim lack of conformity with the contract (see Art. 7:21-
23 BW). Whether or not a consumer can still claim lack of conformity 

= 

- 

= 

= 

- 

= 

170

 
 
PL 

RO 

UK 

depends on which expectations he could reasonably have, given the 
circumstances of the case.  
There is no such provision in Polish law. Under Art. 10 (1) of the  
Consumer Sales Act, the seller is liable where the lack of conformity 
becomes apparent within 2 years from the delivery of the goods, unless 
the seller knew about the lack of conformity at the time of conclusion of 
the contract and did not inform the consumer. 
The seller’s liability is engaged for lack of conformity if the defect 
becomes apparent within 2 years of the delivery of the good (in second-
hand goods, within 1 year). 
The UK has not introduced the 2-year time limit for business liability 
(from the time of delivery of the goods). UK law relies on the general 
limitation period for commencing a legal action for a breach of contract, 
from the date of the contract (the Limitations Act 1980 allows a 
consumer to claim for up to 6 years after the date of purchase). Once the 
defect is discovered, then the consumer may lose his right to terminate 
the contract because of the rules on acceptance. 

= 

= 

- 

Assessment of impacts  

Costs and benefits for consumers 
Costs for 
consumers 

In a small number of countries e.g. the FR and the UK where the current liability 
period during which the consumer can still claim lack of conformity is more favorable 
to consumers (the UK law allows a consumer to make claims regarding non-
conformity up to 6 years after the date of purchase and in FR, the business would be 
liable 5 years from the moment the consumer has knowledge of the defect) the 
consumer might be slightly disadvantaged. However, considering that most failures 
are likely to occur once the consumer starts operating the product after buying, the 
costs for consumers are likely to be minor. 
Consumers would be able to assert their rights over a 2- year period from the moment 
the consumer has knowledge of the defect, but no later than 10 years from the 
moment the goods were delivered. This would increase the level of consumer 
protection in e.g. PL, RO and HU. 

Benefits for 
consumers 

Costs and benefits for businesses 
Costs for 
businesses 

No major additional costs for businesses as in practice the current 2-year substantive 
period which applies in most MS at present and the proposed 2-year prescription 
period provide for a similar result as regards level of consumer protection. This is 
because most defects appear once the consumer starts operating the product after the 
purchase and the consumer would still need to undertake the necessary steps before 
the end of the 2-year prescription period in order to prevent its effects.  

Benefits for 
businesses 

 There would be some minor benefits for businesses from e.g. UK and FR where at 
present consumers can claim lack of conformity for the longer period of time. 
Retailers in general would benefit from increased consumer confidence. 

Period for notifying the seller of non-conformity in B2C contracts 

Issue: 

171

 
 
 
 
 
 
 
 
Under the acquis, Member States may provide that, in order to benefit from his right, the consumer 
must inform the seller of the lack of conformity within a period of 2 months from the date on which 
he detected such lack of conformity. 17 Member States have implemented such a limitation433.  
A Common European Sales Law could introduce a rule that the consumer does not have to give 
notice to the seller of a lack of conformity within a certain period after which the consumer 
discovered it. The lack of notice within a certain time would therefore not deprive the consumer of 
his remedies based on the lack of conformity. 

Legal comparison: 

Country  Provision comparison 

DE 
EE 
ES 

FI 

FR 

HU 

IT 

LU 

MT 

NL 

There is no 2-month-rule. 
The obligation to notify is limited to reasonable time. 
Under Spanish law – Art. 123.5 RD 1/2007 – the consumer must notify 
the seller of the non-conformity within 2 months. In case of failure to 
notify within 2 months, the consumer loses his right to damages but does 
not lose his substantive remedies for non-conformity. 
Section 16 – Notice of defect (16/1994) 
(1) The notice of defect may always be given within 2 months of the 
buyer’s discovery of the defect; it may also be given to the business that 
has sold the goods on behalf of the seller or assumed liability for the 
characteristics of the goods.  
There is no rule in French law compelling consumer to notify non 
conformity within 2 months.  
Under the general sales rules of the Civil Code, Art. 1648, the consumer 
has to bring his legal action within 2 years of the discovery of the defect. 
The general rule is that the trader must be informed of any lack of 
conformity within the shortest time permitted by the prevailing 
circumstances. However, according to Art. 307 (2) of the Civil Code in 
the case of consumer contracts, if notification of the lack of conformity is 
made within 2 months of the time it is detected, it shall be deemed that 
notification was made in due time. Any agreement of the parties to the 
contrary shall be null and void.  
The consumer loses the rights to claim for the legal warranty if he does 
not inform the seller of the lack of conformity by no later than 2 months 
after the date on which he discovered it. This notification shall not be 
required only in case the seller has acknowledged the existence of the lack 
of conformity, or has concealed it. 
There is no rule in Luxembourgish law with such a time limit to notify the 
defect.  

Art 79. 1 of the Consumer Affairs Act provides a 2 month time limit to 
notify the defect.  

Under Art. 7:23 BW, the consumer loses his rights if he does not inform 
the seller of the discovery of the defect within a reasonable time. In case 
of a B2C contract a notification within 2 months is considered to be 
reasonable.  

433 Consumer Law Compendium, http://www.eu-consumer-law.org/directives_en.cfm 

Impact on 
the level of  
consumer 
protection 
= 
+ 
Slightly + 

+ 

= 

+ 

+ 

= 

+ 

+ 

172

 
 
 
 
 
 
                                                 
PL 

PT 

RO 
UK 

Under Art. 9 (1) of the Consumer Sales Act the consumer must inform the 
seller of the lack of conformity within period of 2 months from the date on 
which he detected it, unless the seller knew about the non-conformity with 
the contract and did not inform the consumer (Art. 10 (4)). 
The consumer must notify the seller of a non-conformity within 2 months 
of when he detected it for movable goods and within one year for 
immovable goods. 
Obligation to notify within 2 months 
There is no such provision under UK law. 

+ 

+ 

= 
= 

Assessment of impacts  

Costs and benefits for consumers 
Costs for consumers 
Benefits for 
consumers 

No costs for consumers. 
Consumers in the 17 Member States (i.e. BG, CY, DK, EE, ES, FI, HU, 
IT, LT, MT, NL, PL, SL, PT, RO, SL, SE) where currently the 
notification within a given deadline is a precondition for the exercise of 
their right to remedies in case of lack of conformity would find 
themselves in a more advantageous position. They could rely on the 
remedies for the lack of conformity irrespective of the notification given. 
Thus, consumers who would not have been able to exercise their right to 
remedies because of missing the notification deadline would not lose their 
rights.   
Costs and benefits for businesses 
Costs for businesses 

The number of consumers now legitimately relying on the lack of 
conformity claims for remedies made later than 2 months after the 
consumers discovered the lack of conformity for these MS with a 
notification period is likely to increase only marginally (e.g. defects that 
seemed to be fixed, but then reappearing etc.). In 10 Member States where 
at present such a period is not set,  businesses would not bear any 
additional costs. Business operating costs would increase (especially if the 
order of remedies will be freely chosen by consumer- see point 2.17), but 
the increase is likely to be insignificant. The risk of consumers 
discovering faults and claiming redress after the previous deadline of 2 
months is not high, considering that most faults are likely to occur once 
the consumer starts operating the product after buying it.   

Benefits for businesses  Businesses would benefit from the increased consumer confidence. 

Remedies in case of lack of conformity   

Issue: 

Current EU consumer protection rules provide a hierarchy in which remedies can be invoked. 
According to Art. 3(3) of Directive 1999/44/EC, the consumer is obliged in the first instance  to 
claim repair or replacement before being able to terminate the contract and return the faulty product. 
Termination of the contract or reduction in price can only be invoked if repair and replacement are 
impossible, or if repair or replacement could not be completed within a reasonable time or without 
significant inconvenience to the consumer. Art. 3(6) of Directive 1999/44EC provides that 
consumers cannot rescind the contract, if the lack of conformity is minor.  

Member States however, are still allowed to regulate differently in favour of consumers; several 
countries have not adopted the two-stage hierarchy of remedies and made all four remedies available 

173

 
 
 
 
 
 
 
 
to the consumer.  The harmonised rules on hierarchy of sales remedies have been introduced in the 
CRD (chapter IV). However, the final version to be adopted very soon does not contain Chapters IV 
and V anymore. 

A Common European Sales Law could provide: 

•  no hierarchy of sales remedies: consumers could freely choose a remedy in the case of a 

faulty product. 

•  possibility to terminate the contract in the case of any lack of conformity of the goods 

purchased, unless the lack of conformity is insignificant. 

Legal comparison: 

Country 

Provision comparison  

AT 

BE 
DE 

EE 
ES 

FI 

FR 

There is a hierarchy of remedies. The buyer must first ask for repair or 
replacement, unless repair/replacement is impossible or too big a burden 
for the seller (§ 932(2) ABGB). § 8 KschG contains an additional rule on 
the way the repair should be done. The buyer can then ask for a  
reduction of price or, if not a minor defect, termination of the contract 
('Wandlung'). 
- Right to terminate by notice (§ 918 ABGB).  
The Civil Code follows the hierarchy of the Directive. 
Hierarchy of remedies in place.  
Hierarchy of remedies in place. 
According to Sections 119.1 and 121 TRLGDCU, there is a hierarchy of 
remedies.  
The termination of a contract is not possible in the case of minor faults. 
Furthermore, Spanish Civil Code and case law make a clear difference 
between minor faults that give rise to a reduction of price and greater 
faults that entitle the purchaser to terminate the contract.  
If a termination of contract is not accepted by the business, the consumer 
must ask the court to declare it (case law is not always unanimous as far 
as how termination of contract due to non compliance of the other party 
must be executed. However most courts will require a court’s decision if 
termination is contested). 
There is a hierarchy of remedies. 
Consumer Protection Act Chapter 5 Section 9 — Cancellation of the 
contract:  
(1) The buyer may cancel the contract on account of the seller’s delay if 
the breach of contract is essential. 
Chapter 5 Section 19 — Reduction of price and cancellation of contract 
If rectification of the defect or the delivery of a non-defective good is not 
possible or if it has not been performed (…) the buyer shall have the 
right to: 
(1) demand a price reduction proportionate to the defect; or 
(2) cancel the contract, except if the defect is of minor significance. 
If the consumer makes a claim under the legal warranty provided by the 
Consumer Code (Art. L 211-1 et seq.), he shall be faced with a hierarchy 
of remedies: he must first settle for repair or replacement, and if such 
remedies are impossible, he may terminate the contract (return the goods 

Impact on 
the level of  
consumer 
protection  
+  

+  
+ 

+  
+  

+  

= 

174

 
 
 
 
 
 
 
 
 
and obtain restitution of the price) or obtain a price reduction while 
keeping the goods. 
Art. L 211-10 of the Consumer Code provides a delay between consumer 
demand and the resolution: if the repair or replacement cannot be 
implemented within one month following the claim of the buyer, he may 
rescind the contract.  
In addition, termination may be required if the repair or replacement of a 
specific good may give rise to a major damage to the consumer. 
In any case the right of termination cannot be performed in case the lack 
of conformity is minor.  
However, under the general provision of the Civil Code (Art. 1641 s), 
there is no hierarchy of rights (right to rescind the contract immediately). 
In general, under Art. 306 (1) and (2) of the Civil Code there is a 
hierarchy of remedies (repair, replacement, price reduction and 
termination of the contract). Consumers may, in the first place, be 
entitled to choose either repair or replacement unless this is impossible or 
it results in disproportionate expenses on the part of the seller as 
compared to the alternative remedy, taking into account the value the 
goods would have if there had been no lack of conformity, the 
significance of the lack of conformity, and whether the alternative 
remedy could be completed without significant inconvenience to the 
consumer. Any repair or replacement must be completed within a 
reasonable time and without any significant inconvenience to the 
consumer, taking account of the nature of the goods and the purpose for 
which the consumer required the goods. If the consumer is entitled to 
neither repair nor replacement or if the seller refuses to provide repair or 
replacement or is unable to meet the conditions mentioned above, the 
consumer may require an appropriate reduction of the price or have the 
contract terminated.  
Ireland has a hierarchy of remedies: Regulation 7(2) and 7(3) EC Sales 
Regulations 2003 (repair or replacement first; then reduction of price or 
rescission of the contract).  
If the consumer claims the legal guarantee of conformity provided by the 
Consumer Code (Art. 128 seq.), he shall be faced with a hierarchy of 
remedies: He must first settle for repair or replacement, and if such 
remedies are impossible, he may obtain restitution. Art. 130, par. 7 of the 
Consumer Code provides three different cases in which the consumer can 
demand the termination of the contract: 1) if repair or replacement are 
impossible or disproportionate 2) if the seller has not completed the 
remedy within a reasonable time or replaced the goods within the 
appropriate time 3) if the replacement or repair carried out previously 
caused significant inconvenience to the consumer.  
In any case the right of termination cannot be performed in case the lack 
of conformity is minor (Art. 130, par. 10).  
Luxembourgish law has a hierarchy fixed by Directive 1999/44 but 
contains one addition, namely that the repair or replacement of the goods 
is done within 1 month. Afterwards, the consumer is entitled to rescind 
the contract or claim a price reduction (Art. L.212-5 Code 
consommation). However, under the general provision of the Civil Code 
(Art. 1641 s), there is no hierarchy of rights (right to rescind the contract 
immediately). 
Art. 74 of the Consumer Affairs Act provide a hierarchy (repair or 
replacement first; reduction of price or rescission of the contract). 

+  

+  

+ 

= 

+ 

HU 

IE 

IT 

LU 

MT 

175

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NL 

PT 

PL 

RO 

UK 

Under Dutch law, there is a hierarchy: buyers are generally obliged to 
first ask for the faulty product to be repaired / replaced (7:21 BW). 
Among the secondary remedies (termination of the contract, reduction of 
price), however, no hierarchy exists. 
There is no hierarchy of remedies (Art. 4 Decree-Law 67/2003). 
There is a hierarchy of remedies: buyers are generally obliged to first ask 
for the faulty product to be repaired/replaced. For secondary remedies, 
the buyer can require an appropriate reduction of the price or the contract 
to be rescinded, unless the lack of conformity in the latter is minor. (Art. 
8 of Ustawa  z dn. 27 lipca 2002 r. o szczególnych warunkach sprzedaży 
konsumenckiej). 
In Polish law specific performance remains the primary content of the 
obligation. Although there is no special provision, the principle of 
specific performance was strongly emphasised.  However, currently, one 
can observe that importance of specific performance has decreased. 
Under Romanian consumer protection legislation, when products do not 
conform to the contract, consumers can choose among their reparation or 
replacement unless one of these options is impossible objectively or 
disproportionate. Reduction of price and termination of contract will be 
used when consumers cannot ask for reparation or replacement or when 
they have not been satisfied in a reasonable period of time or without 
inconvenience for consumers. 
A hierarchy of remedies is in place (complying with Directive 1999/44), 
but these provisions operate alongside the existing rules which i.e. grant 
a consumer a right to terminate the contract if he does so within a 
reasonable period of delivery (consumers have the choice between 
invoking remedies under the national legislation transposing Art. 3 Dir. 
99/44 or to rely on the remedies available under general sale of goods 
legislation). 

+  

=  
+  

+  

+  

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts  

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumer prices may rise in particular for complex products with a high failure 
rate. 
Consumer protection would be increased in the EU countries where at present less 
favourable rules on the order of remedies are in place (i.e. AT, BE, DE, EE, ES, 
FI, HU, IE, IT, LU, MT, NL, PL, RO).  
The study on 'sales remedies'434 shows that the preferred order of remedies is 
influenced by the type of product, as well as its age. For consumable items 
including foodstuffs, clothes, shoes, accessories and cosmetics as well as smaller 
durable items such as CDs, DVDs, games, mp3 players and jewellery, most 
respondents would like to be offered sales remedies in the following order: 
replacement then termination of the contract. In some instances consumers may 
opt for a termination as the first option, especially in situations where they have 
lost trust in a brand, product or the seller. For recently purchased (less than 6 
months ago) larger durable items such as cars, large home appliances and 
furniture, most respondents would like to be offered sales remedies in the 
following order: replacement, repair, termination. If the larger durable item has 
already been used for ‘a while’, consumers would accept the order: repair, 

434 EB Qualitative study on sales remedies, December 2009 http://ec.europa.eu/consumers/rights/docs/aggregate%20report_dec2009_en.pdf 

176

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Costs and benefits for businesses 
Costs for 
businesses 

replacement, termination.  
Where items have been purchased cross-border, the order in which consumers 
would like to be offered sales remedies remains largely the same as for domestic 
purchases. However consumers appear to be more likely to think carefully about 
whether or not replacement is worth the trouble and possible cost involved in 
returning the product. As a result, the number of consumers opting for a refund in 
the case of cross-border purchases tends to be higher. 
Consumer confidence would increase significantly in particular in countries where 
at present 'the hierarchy of remedies' is in place (e.g. AT, BE, DE, EE, ES, FI, 
HU, IE, IT, LU, MT, NL, PL, RO).  
The boost in confidence would result not only in an effective increase in the level 
of protection but also from having uniform rules across the EU. Consumers losing 
their trust in a trader would have the opportunity to terminate the contract, while 
potentially also benefiting from having the opportunity to use the refund for a 
better and/or cheaper alternative available on the market. 

The cost to businesses in the Member States currently employing a two-level 
structure (hierarchy of remedies) could increase slightly, due to increased requests 
from consumers to rescind the contract and refund the price. In case of refund 
after termination of the contract, the loss is the sale price (plus returns handling) 
minus the remaining value of the good returned. The loss in case of replacement is 
considered to be the production cost of the replacement good concerned (plus 
returns management) minus the remaining value of the goods returned. However, 
for certain goods e.g. cars, where the value of a new car diminishes significantly 
on the first day of use, the loss in case of replacement could be also significant. 
As confirmed by the study on sales remedies consumers are aware that the need to 
offer sales remedies has implications for traders and there was recognition that, in 
some instances, repair is the ‘fairer’ option for the trader.  Hence, it is likely that 
consumers would continue to ask for a replacement of consumable goods and 
replacement or repair in case of larger durable goods and therefore minimise the 
potential burden on businesses compared to the baseline scenario. 
SMEs which currently rely on (multiple) repair can be more disadvantaged and 
may be more cautious to sell abroad using a European Common Sales , as distance 
consumers might be more likely to ask for a termination of the contract resulting 
in a refund (not accepting the inconvenience of lengthy repairs or waiting for a 
replacement). 
Retailers would benefit from increased consumer confidence. 

Benefits for 
businesses 

Digital content products 

Issue: 

Digital content products are excluded from the scope of the Sale of Consumer Goods and Guarantees 
Directive. The CRD however covers digital content products. It should be noted nevertheless, that 
the material scope of the Directive will be limited to withdrawal rights and pre-contractual 
information obligations.  

The European Commission conducted a study called 'Digital Content Services for Consumers: 
Assessment of Problems Experienced by Consumers - LOT 1.'435 The objective of the study was to 
provide an evidence-based analysis of: 

435 Not yet published. 

177

 
 
 
 
 
 
                                                 
• 
• 

the possible problems consumers are experiencing with digital services; and 
the cause of these problems. 

The study shows the growing popularity of digital content products, problems suffered by consumers 
and related detriment. The combined value of financial losses and the value of lost time resulting 
from problems encountered in the previous 12 months with the digital content services was 
estimated at approximately €64 billion for the online population in the EU27. The financial loss and 
value of lost time across the eight digital product types examined ranged between €1 billion and €23 
billion. The box below shows the key data from the study. 

Usage of digital content products 
From the eight digital product types covered in the survey (email, music, social networking sites 
(SNS), anti-virus software (AVS), games, positioning and navigation services (PNS), e-learning and 
ringtones) email music and SNS are the most popular product types used (93%, 79% and 67% 
respectively). 
Games and anti-virus software, while not as popular as email, music and SNA, were still relatively 
popular with approximately 60% of respondents citing that they had used these products over the 
previous 12 months. E-learning and ringtones were the least popular with only 12% to14% of people 
using these types of products. 

Occurrence of problems 
While most people (57% to 71%) had not experienced a problem over the last 12 months, up to 36% 
of users of the eight products had. The actual figures, may be higher as 8% to 9% of respondents did 
not know or were unable to recall whether they had had a problem or not. 

Type of problems 
Overall, access was by far the most common type of problem experienced followed by lack of 
information and unclear/complex information. Access problems were most common for email, lack 
of information problems were most common for ringtones, while unclear/complex information 
problems were much more evenly spread across service type. The proportion of problems that 
related to privacy (0% to 4%) and unfair terms and conditions (1% to 6%) was the smallest across all 
service types. 

Of the information respondents expect to receive, ‘user instructions’ and ‘terms of use’ were the 
most common across all service types. These were also the two types of information in which the 
gap between expectations and outcomes (i.e. what was actually received) were the smallest. Even in 
these cases, however, up to a third of respondents across service types did not have their 
expectations realised.   

Impacts of problems 
The most dominant types of impacts experienced as a result of the problems encountered were anger, 
annoyance, loss of time and inconvenience. The proportion of respondents that suffered a financial 
loss was small compared with the other types of impacts suffered (2% to 5%). Ringtones were the 
exception, as a much higher proportion of problems with that service type resulted in a financial loss 
(18%). 

Although problems associated with ringtones were those most likely to have resulted in financial 
loss, the actual value of the financial losses per person from problems experienced with this service 
was the lowest across the service types (on average €87 per person/problem that resulted in a 
financial loss), particularly when compared to email and SNS (average from €519 to €563). Time 
lost in addressing problems tended to be much larger for problems related to email, antivirus 
software and ringtones and more generally for digital services accessed through CD/DVD/blu-ray 
and TV. 

178

 
 
 
 
 
 
 
 
 
For those that had experienced problems, only a very small minority (i.e. up to 6%) had received 
compensation, financial or otherwise. 

Consumer detriment 

The consumer detriment for digital content products was estimated at approximately €64 billion for 
the online population in the EU27. The financial loss and value of lost time across the eight 
individual services ranged between €1 billion and €23 billion with the highest detriment for e-mails, 
followed by music and social networking sites. 

Service type  

Gross loss (€m) 

Music 

Games 

SNS 

Ringtones 

Email 

AVS 

PNS 

E-learning 

Total for the EU 27 

9,952 

7,850 

8,631 

2,224 

23,276 

7,578 

3,700 

1,244 

64,454 

The most detrimental type of problem was the lack of information which accounted for one third of 
the total consumer detriment with digital products (€18.7 billion), followed by unclear/ complex 
information (€15 billion) and access (€10 billion). 

Service type  

Value of lost time 
(€m) 

Lack of information 

Unclear/ complex information 

Quality 

Access 

Unfair terms and conditions 

Privacy 

Security 

Total for the EU 27

18,775 

15,042 

7,498 

10,273 

1,969 

376 

9,277 

63,211

The scale of the problem with digital services has also been confirmed by ECC-NET which receives 
numerous consumer complaints about the sector concerning functionality, safety and user rights. 

The European Consumer Centres have indicated that the main areas of concern regarding the digital 
market in 2008 and 2009 were the following:436 

Intellectual property and copyright 
The legitimate use, copying and distribution of intellectual property and copyrights appeared to be 
one of the most problematic issues for consumers. Traders very often tend to apply overly restrictive 

436 http://www.consumenteninformatiepunt.nl/bin/binaries/13-102-ecc_brochure2010-final-lage-resolutie--2-.pdf 

179

 
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
 
 
provisions in contract terms when it comes to the regulation of legitimate copying and/or playing of 
the digital content to be purchased.  

Unclear information provided to consumers 
One cause of cross-border consumer disputes when purchasing digital content is very often unclear 
or lacking information on terms and conditions, price, withdrawal or contact information for the 
traders.  

Withdrawal based on the regulations regarding distance-selling 
While regulations for distance selling allow consumers a cooling-off period during which they can 
withdraw from the contract, traders may seek to restrict consumers’ withdrawal rights when 
purchasing digital content. 

Privacy- and data protection of consumers 
There are an increasing number of problems related to the privacy and data protection of consumers 
in the digital world. The ability to protect, particularly from third parties, the information one reveals 
on the internet is a growing area of concern. The general experience is that consumers tend to be less 
cautious when giving out their personal data (for example when registering on websites), but then 
object to the unauthorised usage of their personal data. 

Non-functioning digital content/ Digital content restricted to some hardware 
The problem is that it is unclear what, if any, remedies are available to consumers in cases of  non 
functioning digital content products.  Traders at times restrict the usage of digital content contrary to 
the consumers’ expectations. In other words, some business models restrict the usage of digital 
content to specific hardware.  

Given the problems mentioned above, digital content products could be included in the scope of a 
European Common Sales and could provide for issues included by the legislator in the fully 
harmonised CRD and in addition for instance 
Coverage of 'cost-free' products; a Common European Sales Lawcould cover digital content 
products not only those which are offered for remuneration, but also those which are 'cost-free'. In 
practice, this means that the consumer will have the same remedies whether he gives remuneration in 
exchange for a digital content products, or some other benefit (such as personal data). 

Sales remedies for digital content products; clear rights to consumers in case a digital content 
product is defective, irrespective of the way it has been supplied (online or for instance by means of 
a CD or DVD). If a European Common Sales also covered the sales of digital products, the 
classification under service or sales contracts in certain national laws would not be relevant. 

Conformity in long-term contracts; insofar as the digital content is not provided on a one-time 
permanent basis, the trader must ensure that the digital content remains in conformity with the 
contract throughout the contract period. This is relevant for example where updates of software 
contain bugs. This provision ensures that the consumer has a right to remedies for non performance 
for each defective update. 

The analysis of the above provisions is provided separately: 

180

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
'Cost-free' products  

Legal comparison: 

Country 

Provision comparison  

DE 

FR 
HU 

IT 

NL 

PL 

There is no specific consumer law pertaining to digital content products  
German courts have applied sales law to digital products. According to § 
480 of the Civil Code the provisions on sales apply to barter as well. 
There is no specific provision on cost-free products in French law.  
At present there is no such regulation in Hungary. Currently it is only 
possible to act against a cost-free product provider if the product has 
caused damage.  
There is no specific provision on cost-free products in Italian law. The 
consumer sales law protection cannot be invoked for cost-free products. 
Art. 7:1 BW defines sales in relation to a price in money but also apply 
to barter (Art. 7:50 BW), thus in case of any other benefit than payment. 
The Consumer Sales Act applies only to the sale of tangible goods 
between a professional seller and a consumer  (Art. 1 of Ustawa o 
szczegolnych warunkach sprzedazy konsumenckiej). The provision has 
to be interpreted strictly; it does not apply to other (non-sale) contracts 
on the basis of which the consumer becomes an owner of a good or to 
sale contracts of digital content products. Contracts that have no 
monetary consideration but where the parties exchange one service or 
privilege for another (barter) are not defined in the Civil Code.  

Impact on 
the level of  
consumer 
protection  
+ 

+ 
+ 

+ 

+ 

+ 

Assessment of impacts  

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumers may be adversely affected by a decrease in the number of 'cost-free' 
products available on the market. 
At present, in most Member States there are no specific provisions for 'cost- free' 
products (DE, FR, IT, PL) and the consumer sales law cannot be invoked for 'cost-
free' products as the law applies only to tangible goods or there is no monetary 
value of the product. The provision would result in an increase in consumer 
protection as the consumer would be entitled to certain rights, for instance in case 
of lack of conformity. According to ECC-NET (2010)437, there are numerous 
consumer complaints about 'cost-free' products.  
The 'free' product might also contain dangerous bugs that can damage a 
consumer's hardware. In such a case, a consumer would be able to seek remedies 
asking for compensation. 

Costs and benefits for businesses 
Costs for 

Businesses providing 'cost-free' products would have additional costs as at present 

437 http://www.consumenteninformatiepunt.nl/bin/binaries/13-102-ecc_brochure2010-final-lage-resolutie--2-.pdf 

181

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
businesses 

Benefits for 
businesses 

there are no obligations to provide remedies in cases of defective 'cost-free' 
products.  
An increase in costs associated with offering 'cost-free' digital products could lead 
to a decrease in the number of 'cost-free' product providers especially in small 
countries where the market is not large enough to provide profits from other 
sources (media, advertisement). 
Retailers would benefit from the increased consumer confidence. More consumers 
could download 'cost-free' products and as a result businesses would increase their 
profits (e.g. advertisements linked with cost- free products). 

Sales remedies for digital content products 

Issue: 

The current acquis does not deal with the rights of a buyer if a digital product contains a defect. One 
of the reasons is the uncertainty regarding the qualification of contracts concerning digital content 
products. Depending on the national laws and the circumstances of a case, those contracts might be 
qualified as a contract of sale or a service contract.  

Most legal systems apply rules on consumer sales law in the case where a consumer purchases a 
piece of software on a DVD and the DVD fails to function in his computer as a consequence of a 
defect in the software on the DVD. However, this is not the case for instance in Finland and in 
Scotland, and it is still uncertain in France. In the scenario where the software was downloaded 
through an online (automated) update service or a real-time (remote) software support service, the 
contract is most likely classified as a sales contract for instance in Germany, Italy and in the UK, but 
as a service contract in other countries (e.g. Finland). For instance in Hungary and Spain, the 
contract will possibly be classified as a service contract, but sales rules may be applied by way of 
analogy. In any case, in many of the national legal systems, the classification of the contract – and 
thus the question of which legal rules apply to the contract – is far from settled.  

Under most legal systems, irrespective of the classification of the contract, the remedies of repair 
and replacement, termination and price reduction are available to the dissatisfied consumer, as well 
as a claim for damages. In most of these legal systems, the hierarchy of these remedies stemming 
from the Consumer Sales Directive applies as well, with the exception of France (in so far as 
remedies under general contract law may be applied), Italy (with regard to tailor-made software) and 
Poland. In the UK, only the remedies of termination and damages are available if the contract is not 
classified as a consumer sales contract. If the contract may be classified as a consumer sales contract, 
the consumer may also resort to the regime of the vices cachés (hidden defects) in France or to the 
right to reject the ‘goods’ in the UK.  

A possible European Common European Sales Law could provide clear rights to consumers if a 
digital content product is defective, irrespective of the way it has been supplied (online or for 
instance by means of a CD or DVD). If a European Common Sales  also covered the sales of digital 
products, the classification under service or sales contract in certain national laws would not be 
relevant. 

Legal comparison: 

Country 

Provision comparison  

Impact on the 
level of  
consumer 
protection 

182

 
 
  
 
 
 
 
 
 
 
 
 
DE 

ES 

+ 

+  

No specific consumer law pertaining to digital content services has 
been developed in Germany. German courts have applied sales law to 
digital products on hardware since the mid-1980s and Germany has, 
in principle, extended the sales law to contracts concerning the sale of 
other than movable tangible products, such as intangible products, in 
2002. Thus, the sale of software comes under sales law – if the 
contract is a sales contract and not any different type of contract, such 
as a contract on works and services, a licensing contract or a rental 
contract.  
According to § 435 BGB the provisions on the purchase of goods 
apply with the necessary modifications to the purchase of rights and 
other objects. This was explicitly meant to apply to software in 
tangible form, i.e. on a computer or a CD ROM, amongst others. For 
software that was transmitted online, courts have applied sales law in 
many instances with certain modifications. However, the scope of 
application of the specific consumer sales rules has been restricted to 
'tangible movable items'. Despite this, some legal doctrine sources 
endorse its application to the online purchase of software.  
In case of defectiveness of the software on a CD/DVD a consumer 
can take recourse to consumer sales law. When the defective software 
was transmitted online the contract will be treated in accordance with 
the rules for contracts for the sale of goods. Thus, the rules on 
conformity and the remedies of the Consumer Sales Directive 
1999/44/EC apply. The German legislator has maintained the 
hierarchy of remedies as provided for in Art. 3 of the Directive. 
However, case law as to whether the rules of §§ 474 ff. BGB that are 
reserved to consumer sales contracts and which are mandatory and 
contain some specific provisions, e.g. the reversal of the burden of 
proof, apply, is not yet available.  
In case of non-performance the normal remedies of the general law of 
obligations apply. The purchaser may rescind the contract after 
having set a reasonable additional period for performance (§ 323 
para. 1 BGB) or claim damages (§ 280 para. 1 BGB). He can also do 
both: rescind the contract and claim damages (see § 325 BGB). The 
hierarchy of consumer sales law does not apply since the consumer 
sales law remedies do not apply to non-performance. 
Except in some very particular cases (e.g. Art. 102 TR-LGDCU, 
LSSICE), Spanish legislation does not have any specific rules 
governing digital content services. The provisions of the Civil Code 
may be applied to a contract for services (e.g. the provision of 
information services), contract for work (services of streaming, video 
on demand, etc.), lease of goods and sale contracts. The same can be 
said of the sale of consumer goods (Arts. 114-127 TR-LGDCU), 
especially considering the broad definition of 'product' adopted in Art. 
6 TR-LGDCU of 2007 (movable good or chattel in the general sense 
of Art. 335 CC. and not just a 'tangible movable item' of Directive 
99/44/EC), although the question is disputed. Also applicable are the 
TRLPI provisions of intellectual property in relation to the user 
license (music downloads, video software, and any other digital 
content susceptible to being filed on durable medium, etc.). 
Software and hardware on a CD or DVD are independent items from 
each other, but constitute a single asset or product (never a service). 
Despite this, its acquisition will not be treated as an instance of sale, 

183

 
 
but as a licensing agreement for a non-customised use of a computer 
program, as the real property of the whole is not acquired. The license 
terms will govern the rights and duties of the user and, as for the 
topics not foreseen in the contract terms, the general provisions of the 
Civil Code regarding contracts will apply.  
In relation to the existence of any software malfunctioning as a 
consequence of an error not attributable to the hardware or medium 
(CD, DVD), the provisions on the contract of sale will not be applied 
but a series of regulations that are not just applicable to this (mainly 
the TR-LGDCU in relation to the liability for defective products and 
in relation to lack of conformity), but also to any form of distribution 
of market assets (including the licensing contract for use of software). 
The same applies when software is transmitted online. 
In accordance with the provisions in Art. 119 TRLGDCU the 
consumer may claim specific performance. Such a remedy, regulated 
by Arts. 119 and 120 TRLGCU will enable consumers to choose 
between repair and replacement of the product provided that the 
choice is not impossible or disproportionate. Furthermore, if the seller 
refuses to abide by the consumer requirement, the latter may exercise 
the corresponding remedies through a third party at their own 
expense. In cases where after repair or replacement the digital content 
does not function properly, the consumer may choose (Art. 121 TR-
LGDCU), between termination or a price reduction of the product. 
Moreover, under (Art. 117 TR-LGDCU) the consumer may use the 
civil law legislation (specifically Arts. 1101 of the Civil Code. and 
related provisions) in order to obtain damages.  

Under general contract law, there is no hierarchy between the 
remedies that the consumer may invoke in the case of non-
performance by the provider of the digital content service. In the case 
of synallagmatic obligations (Art. 1124 of the Civil Code), the 
consumer may choose between specific performance and termination 
of the contract, with compensation for damages and payment of 
interests in both cases. 
In Finland no specific consumer protection rules pertaining to digital 
content services exist. The provisions on consumer sales, included in 
the Consumer Protection Act (Chapter 5, Sale of Consumer Goods, 
16/1994), apply to the sale of goods: services fall outside this Chapter 
and therefore cannot apply directly to digital content services.  
The physical platform (CD/DVD) can be regarded as goods but the 
main subject matter of the purchase is treated as a service. If the CD 
fails to function because of defective software the consumer sales 
provisions cannot be applied. Instead the provisions of the EULA 
(End-User License Agreement) will be applicable as far as they 
cannot be regarded as unfair.  
In Finland no specific remedies of non-performance have been 
developed in relation to digital content services. This issue has not 
been discussed in the literature and there is no relevant case law in 
relation to this issue. A specific hierarchy between the remedies in the 
case of non-performance of digital content services has not been 
developed in Finland. If digital content services were classified as 
goods (which is not the case in Finland), the hierarchy of remedies 
indicated in the Consumer Sales Directive would apply. 

+ 

FI 

184

 
 
 
FR 

+  

In French law, the qualification of a contract determines the legal 
regime which is applicable. The qualification of the purchase of a CD 
or DVD containing software is not envisaged by French law, and case 
law as well as legal doctrine diverge on the matter. Some decisions 
and authors consider the operation to be a sales contract, while others 
see it as a variant of a contract of hiring, and yet others consider it to 
be a sui generis operation. As for the purchase of software on material 
support, the question of the purchase of software through purely 
immaterial means has not been envisaged by French law.  
If the contract is qualified as a sales contract, the buyer has several 
legal actions available under sales contract law and consumer sales 
law in case of a defect of the sold product. The legal actions are 
available for consumers who buy software on a CD or DVD. When 
the software is downloaded, the buyer can take the above mentioned 
actions as well as  additional ones (general sales law, automatic 
liability in e-commerce contracts and, if he is a consumer, the 
automatic liability in distance contracts): 

- Sales contract law; claim for non conformity: Arts. 1603 et seq of 
the French Civil Code require the seller to deliver a product which 
conforms to what has been agreed upon contractually and is exempt 
of any apparent defects. If this is not the case, the seller will be 
considered to have violated his obligation of conformed delivery. The 
buyer will have all the remedies in general contract law for non-
performance.  
- Warranty against hidden defects: Arts. 1641 et seq of the Civil Code 
protects the buyer against a hidden defect in the good provided three 
conditions are met: 1) the defect must be hidden, 2) it must exist prior 
to the sale  and 3) must render the good unfit for its normal use, 
insofar as the defect must be of a certain gravity. The buyer has an 
option between keeping the good and asking for a price reduction or 
returning the good and asking for a refund. If the seller knew of the 
defect, , he may owe damages to the buyer (the professional seller is 
irrefutably presumed to be of bad faith).  
- Automatic liability (responsabilité de plein droit) in e-commerce 
contracts: Art. 15, I of the LCEN foresees that any natural or legal 
person offers or guarantees at a distance and through electronic 
means the supply of goods or services, is automatically liable towards 
the buyer for the correct execution of the obligations resulting from 
the contract. 
- Consumer sales law: Legal warranty of conformity. This warranty 
only applies to tangible goods. It is thus improbable it would apply to 
defect in software. When software is placed on a CD or DVD, French 
case law distinguishes between the sale of the support and the sale of 
the software. If Arts. L. 211-1 et seq. of the Consumer Code are 
strictly applied, it is necessary to determine if the defect is due to the 
support or to the software. As the support is a tangible good, the legal 
warranty of conformity can be invoked. Conversely, if the defect is 
due to the software, the legal warranty of conformity should not be 
used.  
If the consumer makes a claim under his legal warranty, he shall be 
faced with a hierarchy of remedies: he must first settle for repair or 
replacement, and if such remedies are impossible, he main obtain 

185

 
 
 
 
HU 

+ 

restitution.  
- Automatic liability in distance contracts: Art. 15, II of the LCEN 
inserted two end paragraphs to Art. L. 121-20-3 of the Consumer 
Code to provide automatic liability of the professional towards the 
consumer. Its regime is almost identical to that of Art. 15, I, except it 
applies to distance contracts in general, and not only those concluded 
through electronic means. 
In general contract law in the case of non-performance, a party has 
several options: withhold performance, require specific performance 
or resolve the contract without prejudice of damages. 
Hungarian law does not contain a specified 'digital content services' 
regulation.  
Software as a product protected by copyright law, cannot be sold, 
only a right of use can be acquired. The right to use and the special 
contract for use of copyright products are governed in the Act no. 
LXXVI of 1999 on Copyright (Copyright Act) and as a secondary 
rule, the Civil Code of Hungary, Act no. IV of 1959, as amended 
(Civil Code).  
If the software on the CD or DCD is faulty, it is a simple breach of 
contract, and the obligor, in this case the seller, who sold the CD 
/DVD is obliged to repair and replace or bound by other remedies 
under the general rules of the Civil Code. The European Consumer 
Sales Directive has been incorporated into the Hungarian contract law 
in such a way that the consumer protection provisions of the said 
Directive are applicable to a variety of contracts and are not limited to 
sale and purchase contracts. Due to this legislation, Hungarian 
contract law has an extensive consumer protection character which 
applies to all contracts entered into by consumers. Under the Civil 
Code, the subject of the consumer contract can be 'movable property' 
(chattel). However, the 'consumer contract' can be applied for other 
goods as well, including intangible assets. This view is supported by 
the former practice of the Supreme Court. Based on this legal regime, 
a software license agreement can also be considered as a consumer 
contract and the general rules on consumer contract of the Civil Code 
are applicable. No case has been published yet where a software 
licence agreement was qualified as a consumer contract. 
The method and way of the contracting does not challenge the 
qualification of the contract itself. Should the contract be entered into 
by an online update service or real-time software support service, this 
contract cannot be qualified as sale and purchase. 
If the software is defective the consumer may seek remedies under 
the general rules of the contract law (Civil Code).  
Irrespective of the special rules for consumer contracts, the remedies 
of the Civil Code can apply, as follows: repair or replacement; repair 
of the goods by the customer themselves or have the goods repaired 
by others at the expense of the obligor; price (fee) reduction; 
rescission from the contract; seeking  damages, if any. Section 306 
(5) states that any deviation from the law of the statutory guarantee 
(implied warranty) is null and void in consumer contracts which 
differs from the hierarchy of these rights. The list of the rights is a 
hierarchy, but the beneficiary has a right to select first between repair 
or replacement, after that he has a right to switch from the remedy he 
has selected to the alternative remedy. The costs of the switch shall be 

186

 
 
IT 

+ 

reimbursed by the obligor unless it was made necessary by the 
obligor's conduct or for other reasons (Section 306/A of the Civil 
Code). 
No specific set of rules / specific remedies have been developed in 
Italy for contracts of digital services.  
Currently, on some occasions, the Civil Code section on Sales (Art. 
1470 ff) will apply, on others the contract of Services (Appalto) rules 
(Art. 1650 ff). There is little case law, because these contracts mainly 
involve small transactions, which are most of the time settled out of 
court.  
The sale of software, according to courts, falls within the notion of a 
tangible good intended for the consumer. Therefore, the purchaser has 
to report the lack of conformity of the software within 2 months from 
the date of the discovery of the defect (Art. 1519  of the Civil Code, 
now in Title III of the Consumers’ Code). This rule, however, should 
not apply where the object is the arrangement of some specific 
application software for the production of data bases. In such cases,  
there would be a tailored service which would be excluded from 
consumer regulation. The Court of Appeal of Rome has clarified, on 
the point, that the contract for the provision of electronic services 
shall be qualified as a contract of services (contratto di appalto), 
rather than sale of tangible goods, when the required services do not 
concern the transfer of a 'pre packaged' digital product, but rather the 
arrangement of a specific application software for the production of 
database therefore, being a provision of works, and not the transfer of 
a good already made according to standard procedures, Art. 1667.II 
of the Civil Code shall be applied, instead of Art. 1495 of the Civil 
Code. 
According to some legal scholars, reference should be made to the 
rules on lease contracts (1578-1579-1581 of the Civil Code), since the 
transfer of software is defined as a licence agreement. In this case, if 
at the moment of the delivery the leased good is affected by defects 
that considerably decrease the suitability for the use agreed upon, the 
consumer can request the cancellation of the contract or a reduction 
of the price, unless the consumer was aware or could have easily been 
aware of the defects. The provider has to compensate the lessee for 
the loss resulting from the defects of the good, unless he proves that 
he was not aware of the defects at the moment of delivery, without 
any fault on his part. 
The rules on e-commerce can be applied where the parties enter into a 
digital contract, which was concluded by means of contractual 
statements sent by electronic means and in a context of standardised 
negotiation (point and click modality). The software’s failure due to 
defects or bugs will allow the consumer to invoke the consumer sales 
law protection. In a formalistic approach, sometimes adopted by a 
few Italian courts, the contract can be seen as a service contract but 
this would prevent the consumer to benefit from the more effective 
remedies of consumer law. Although at present there is no significant 
case law involving a consumer as a plaintiff, it is unlikely that in the 
future the courts will reduce the broad scope of consumer law 
protection. 
Under general contract law: the consumer can invoke the execution or 
the termination of the contract, as well as claim for damages (Art. 

187

 
 
NL 

+ 

1453 of the Civil Code). If the professional fails to fulfil his own 
obligations arising from the contract, the consumer can always refuse 
the fulfilment of his obligation.  

No specific consumer or contract law regarding digital content 
services.  
In the case of standard software on a CD or DVD that is offered for 
sale in retail shops, consumer sales law is applicable, irrespective 
whether the failure to function is caused by a defect in the CD/DVD 
itself or by a defect in the software. This seems to be the prevailing 
opinion in legal doctrine. In a recent judgment, which questioned 
whether the producer of software could still invoke its copyright 
against the (professional) buyer of software, the District Court of 
Dordrecht confirmed this view by indicating that sales law applies to 
the contract whereby not only computers but (also) the (much more 
valuable) installed software were transferred. 
Others regard standard software contained on a CD or DVD as 
‘rights’ Art. 3:6 BW. This implies that to such contracts, by virtue of 
Art. 7:47 BW, sales law is applied ‘to the extent that this conforms to 
the nature of the right’. There is no established authority indicating 
whether, if this view were followed, this would mean that the specific 
provisions on consumer sales law would or would not apply as 
mandatory law.  
According to a minority view in legal doctrine, contracts where 
standard software is contained on a CD or DVD cannot be considered 
as sales contracts because of the applicability of copyright law. In a 
recent judgment, the court of Appeal of Amsterdam, in a case in 
which the software failed to function properly as a consequence of a 
defect in the software, not in the CD/DVD itself, underlined ( in 
accordance with the common opinion in the Netherlands) the fact that 
the software was not a good in the sense of Art. 3:2 BW. The court 
continued that sales law nevertheless applied by virtue of the 
provision of Art. 7:47 BW. However, as the case concerned two 
professional parties, the court was not asked whether or not the 
specific protective provisions of consumer sales law would apply.  
Where software is downloaded over the internet, sales law may only 
be applied by way of analogy or by qualifying the standard software 
as rights in the sense of Art. 3:6 BW, to which by virtue of Art. 7:47 
BW sales law applies as well. In both these views, contracts 
concluded through distance selling would be qualified as sales 
contracts.  
However, a minority view in Dutch legal doctrine rejects the 
qualification of the purchase of standard software as a sales contract, 
which would imply that the contract would be qualified as a (specific 
type of) service contract, to which consumer sales law would not 
apply. If the contract could not be qualified as a sales contract, the 
question arises which type of service it is. It would seem that 
qualification as a contract for work (Art. 7:750 BW) is not possible, 
as that would require the creation of  tangible work. However, if the 
digital content could be considered as tangible work, the contract 
would have been qualified as a sales contract. This implies that if 
sales law is not applicable to the contract, the contract for the supply 
of digital content would have to be qualified as a service contract in 

188

 
 
PL 

the sense of Art. 7:400 BW. The provisions that apply to such 
contracts, however, are largely of a default nature. 
If consumer sales law is applied by analogy to digital content 
services, Arts. 7:21 and 7:22 BW establish a hierarchy of remedies. 
According to Art. 7:21(1)(b) BW the consumer may claim that the 
digital content services must be repaired or according to Art. 
7:21(1)(c) BW that the digital content service must be replaced. 
These claims only apply if the digital content service did not perform 
as it should have (in accordance with Art. 7:18 BW). Another option 
is dissolution of the contract in pursuance of Art. 7:22(1)(a) BW in 
situations in which the good is not in compliance with the contract. 
The ability to dissolve the contract only exists if repair or replacement 
is impossible (7:22(2) BW) and if dissolution of the contract is not 
disproportional (7:22(1)(a) BW). 
If the contract is not qualified as a sale of goods, but as a sale of 
rights under Art. 7:47 BW, it is not certain that the consumer sales 
provisions would be applicable. If this is not the case, the hierarchy of 
remedies, embodied in Art. 7:22(2) BW would not apply.  
If the contract is qualified as a service contract, the general contract 
law (Book 6 BW) provisions are applicable: a consumer has the right 
to compensation for damages that was caused by the non-
performance of the service, unless the failure in performance cannot 
be attributed to the service provider (Art. 6:75 BW). Moreover, the 
consumer may terminate the contract if the failure of the digital 
content justifies such termination (Art. 6:265 BW).  
There are no specific rules of consumer law established for digital 
content services in Poland. As far as specific rules of contract law are 
concerned there is the Law of 18 July 2002 on Provision of Services 
through Electronic Means (Ustawa o swiadczeniu uslug droga 
elektroniczna, Dz.U.02.144.1204) which implements the E-
Commerce Directive in Poland. Consumer sales law application is 
limited by Art. 1 of the Law of 5 September 2002 on Special 
Conditions of the Consumer Sale (Ustawa o szczegolnych warunkach 
sprzedazy konsumenckiej, Dz.U.02.141.1176) pursuant to which this 
law applies only to sale of a tangible good (movables) between a 
professional seller and a consumer. In the Polish legal doctrine this 
provision has been interpreted strictly: the law should not be applied 
either to other (non-sale) contracts on the basis of which a consumer 
becomes an owner of a good or to sale contracts of intangible good 
(which means it could be applicable only to digital content 
saved/stored on a tangible good, like CD/DVD and then it would 
apply to the sale of that CD/DVD and not to the sale of the digital 
content). Therefore general contract law regulation of sales contracts 
would be applicable: Art. 535-581 of the Polish Civil Code (Kodeks 
cywilny) since it applies to the sale of either tangible or intangible 
goods as well as to the sale of rights. Moreover, some implemented 
provisions of the E-Commerce Directive and the Distance Selling 
Directive could be applicable to digital content service. 
Most legal scholars endorse that the purchase of software may be 
treated as a contract for the consumer sale of goods, if the software is 
contained on a tangible good (CD/DVD). However, in this case the 
CD/DVD is the subject of the sales contract and not the software 
itself. This means that the recourse to consumer sales law is 

+ 

189

 
 
UK 

+ 

unavailable, in case there is a defect in the software. Recourse may be 
made to general liability rules for faults in goods bought: Arts. 556-
576 of the Civil Code, as well as to general rules on non-performance 
Art. 471 and sub from the Civil Code. In many cases, such a purchase 
of software will be combined with the purchase of license to exploit 
that software (service contract). The grounds for liability for faults in 
the software could then be found only in the contractual relationship 
between the parties. 
The defect of software which was transmitted online will not fall 
under the definition of consumer sales in Polish law which means that 
no recourse in consumer sales law will be available. The purchase of 
software may be treated as a contract for the sale of goods, however, 
in most cases, it will be combined with the purchase of license to 
exploit that software (service contract). The grounds for liability, in 
case the purchase of license is involved, could be found only in the 
contractual relationship between the parties. The legal character of 
such a purchase has not yet been clearly defined in Poland. Besides 
the concept of it being a sales contract, it might be declared a 
purchase of license, or a contract transferring ownership of a copy, or 
a contract of access. Presently it is unclear which rules actually are 
applied to digital content not stored on a DVD/CD. 
In contracts for the sale or supply of goods, there are implied terms to 
the effect that if the goods are sold by description, they comply with 
the description; that they are of satisfactory quality; and that they are 
fit for any particular purpose expressly or implicitly made known. 
These are ‘strict liability' or ‘outcome based’ standards. In contracts 
for the supply of a service, there is an implied term that the supplier 
will carry out the service with ‘reasonable care and skill’. This is a 
‘fault based’ standard. 
Where a consumer purchases a piece of software on a CD or a DVD: 
the basic legal nature of the supply is in question. A physical vector 
such as a CD or DVD is a good, and if such a vector (or any computer 
hardware) is supplied along with software under a single contract this 
has been held (in the English Court of Appeal) to be a contract for the 
sale of goods. If this is the case, then the statutory implied terms as to 
description, quality and fitness will apply.  
There is also equivalent Scottish authority to the effect that such a 
contract should not be viewed as one for the sale of goods; but, rather, 
as a contract sui generis. If this is the case, then the courts would use 
common law to imply similar outcome based standards to those that 
would be applicable under the SGA or SGSA. These would require 
the hardware and software package as a whole to be reasonably fit for 
its intended purpose. 
Such contracts do not seem to be viewed as service contracts (a 
classification that would cause the fault based standard from SGSA, 
s. 13 to apply). Whether or not such contracts are technically viewed 
as being for goods or as sui generis, outcome based standards seem to 
apply. 
Where a consumer purchases a piece of software through an online 
(automated) update service or a real-time (remote) software support 
service: there is a lack of certainty as to how judges will treat this 
question. Again, the basic legal nature of the supply is in question. 
Where the software has been transferred without any durable medium 

190

 
 
being involved, the definition of ‘software’ in a particular contract 
has been held to mean that goods are being supplied; although if the 
software is being licensed and not sold (as is typically the case) the 
contract would be viewed as one for the supply (rather than sale) of 
goods. This would mean that the (outcome based) statutory implied 
terms as to description, quality and fitness from SGSA, Part 1 would 
apply. 
At the same time, one view is that there is neither a sale nor a supply 
of goods in any case where only software is being supplied. This 
would mean that the statutory implied terms as to the description, 
quality and fitness of the goods would not apply. However, it does 
not seem that such a contract will necessarily be treated as being a 
contract for a service either. So, the fault based implied term as to 
reasonable care may not apply. Pure software contracts may be 
treated as contracts sui generis. This being the case, it is possible that 
the courts would imply similar outcome based implied terms to those 
applicable under the SGA or SGSA to goods; i.e. essentially to the 
effect that the software is reasonably capable of achieving its 
intended purpose.  
The above cases deal with business to business, not business to 
consumer contracts. It is very hard to predict exactly what will be 
decided in relation to the latter. 
There are no remedies specific to digital services. If the contract is 
qualified as a contract of sale of goods: the buyer will have a right for 
damages, termination as well as the remedies from the Sales Directive 
–with a hierarchy. UK law allows the consumer to choose between 
this package of remedies and the right to terminate the contract; 
although the right to terminate itself will be lost after a 'reasonable 
period of time', which tends to be a matter of a month or couple of 
months at the most. 
If the contract is one of supply of services or sui generis: only 
damages and termination are available. The termination remedy is 
only available where the breach is shown to be sufficiently serious. 

‘+’ means an increase, ‘-’ means a reduction and '=' means no change in the level of consumer protection 

Assessment of impacts  

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

Consumers might face an increase in prices as businesses could try to compensate 
the higher costs for remedies. 
Consumer certainty in relation to purchases of digital products would increase, as 
consumers would be certain that if a digital content product is defective, a seller 
would be obliged to offer remedies. The consumer detriment stemming from the 
problems related to the quality of digital content products has been estimated at 
€7.5bn and €10bn for problems concerning access to digital content products.  
A Common European Sales Law would increase consumer protection compared to 
many national laws, as it would offer a free choice of remedies for a defective 
digital product. Thus, a consumer could also choose between repair, replacement, 
termination and price reduction for digital products.  As a result consumer 
detriment could be significantly reduced.  
A Common European Sales Law  would ensure certainty in cross-border shopping, 
as well removing the hierarchy of remedies. Thus,  the level of consumer protection 
under a Common European Sales Law would increase compared to the baseline 

191

 
 
 
 
Costs and benefits for businesses 
Costs for 
businesses 

scenario, for instance compared to the laws of DE, ES, FI, FR, HY, IT, NL, PL and 
the UK.  

Businesses would have to bear some additional costs as their customers would be 
able to freely choose the remedies they prefer which is not the case in most 
Member States at present. However, considering that national laws provide at least 
for certain types of remedies (with or without a specific hierarchy), the additional 
costs for business would only be limited to the difference in the cost of a given 
remedy, compared to another. For instance, the additional costs would only be the 
difference between the cost of a remedy that would otherwise apply under a given 
national law (e.g. replacement), as opposed to the cost of an alternative remedy that 
a consumer could choose under a European Common Sales (e.g. reimbursement of 
the cost).  
The costs would mostly affect companies who sell on average more defective 
products than their competitors, as the costs would only occur if the company sells 
a defective product.  
 Businesses would gain legal certainty as to their obligations when selling digital 
content products. At present, depending on the national law and the circumstances, 
contracts for digital content products might be qualified as a contract of sale or a 
service contract. 
Moreover, businesses would be able to develop economies of scale, as they could 
sell their digital products to consumers across the EU, based on the same rules. 
Considering that digital products can easily be sold on the internet irrespective of 
national borders, the expansion of cross-border trade in digital products is likely to 
be even higher in a simplified legal environment where businesses could use a 
uniform contract law throughout the EU compared to the existing situation.  

Benefits for 
businesses 

Conformity in long term contracts 

Legal comparison: 

Country 

Provision comparison  

DE 

FR 

No specific provision requiring the service provider to make after sales 
service available or to fix bugs or updates. The availability of updates is 
subject to the contractual agreement. Whether the seller gave a 
contractual warranty and is therefore liable for non-conformity depends 
on the interpretation of the contract in each single case. The 
jurisprudence often denies such an obligation (OLG Koblenz 6 U 268/08: 
no liability for software-update for camera by producer). It seems, 
however, that there is a time dimension to the conformity with the 
contract if the digital content cannot be used any more after an unduly 
short term (the non-conformity would lie in its lack of sustainability or 
flexibility (examples from DE case-law refer to the year 2000 or the 
introduction of the Euro – systems that could not cope with these 
changes were held not to be in conformity with the contract). The usual 
life cycle would be an indicator of the duration of an update obligation. 
This question is not specifically dealt with under French law. If there is 
an obligation of the trader to update, a lack of conformity can be claimed 
according to the general rules. 

Impact on 
the level of  
consumer 
protection  
+ 

+ 

192

 
 
 
 
 
 
HU 

IT 

NL 

PL 

UK 

+ 

+ 

+ 

+ 

+ 

There is no specific regulation at present, only on the level of General 
Terms and Conditions. Thus the agreement between the parties is the 
governing rule, there are three typical models of updating in contracts: 
1. Regular safety updates for free. 
2. Safety updates are free but other updates or developments are provided 
on payment. 
3. Optional updates. 
This question is not specifically dealt with under Italian law. If there is 
an obligation for the trader to update, remedies for a lack of conformity 
can be claimed. 
No specific provision in Dutch law. General conformity requirements 
apply. 
No specific provisions exist obliging the service provider to make an 
after sales service available. If the consumer concludes a contract for 
having digital content service provided to him for an unlimited period of 
time, it may be assumed that out of the nature of the obligation would 
arise the obligation for the service provider to provide access to the 
digital content and its updates, when necessary. Although consumer sales 
are not applicable, rules of general contractual remedies apply (the 
general regime under Art. 471, Arts. 559, 568, 563 of the Civil Code. 
There is no legal right to after sales service; apart from what is provided 
for expressly in the contract or in any associated guarantee or extended 
warranty. It is in such express provisions of particular contracts that 
conditions relating to how long (and in what form) an after sales service 
will be available can be found. 
This would depend on how the courts interpreted and applied the 
‘durability’ criterion that is relevant to the ‘satisfactory quality’ implied 
term applicable to goods; or how ‘reasonable fitness for purpose’ was 
interpreted (the implied term applicable if the contract was treated as sui 
generis); or what was expected in terms of ‘reasonable care and skill’ if 
the contract was treated as one for services. These various criteria 
provide a significant degree of flexibility and no case law exists on these 
issues.  

Assessment of impacts  

Costs and benefits for consumers 
Costs for 
consumers 
Benefits for 
consumers 

No costs for consumers. 

Warranties are important for consumer protection in the case of digital products. 
Digital content products are excluded from the current EU consumer protection 
law as intangible products. A number of businesses are reported to make 
limitations and/or exclusions in their contract terms, especially regarding warranty 
disclaimers. At present, in most Member States (e.g. DE, FR, HU, IT, UK) there 
are no specific provisions obliging the trader to make an after sales service 
available and only the general rules and the specific contractual agreements apply. 
The provision of conformity with the long-term contract would therefore increase 
consumer rights as remedies could be sought by consumers through the whole 
duration of the contract. 

Costs and benefits for businesses 
Costs for 
businesses 

This provision does not involve a direct burden and cost but nevertheless might 
imply a burden for digital content providers. This burden would stem from the 

193

 
 
 
 
increased liability of digital content providers which as the result could increase 
the cost of after-sales services. However, contrary to tangible products, repair or 
replacement of digital products are not so costly. 
Retailers would benefit from increased consumer confidence in purchasing digital 
content products. 

Benefits for 
businesses 

B2B TRANSACTIONS 

Duty to disclose information about goods and services  

Issue: 

A European Common Sales could introduce a rule that before the conclusion of a B2B contract, the 
supplier would have a duty to disclose to the other business any information concerning the main 
characteristics of any good or service. Breach of the duty might, among other consequences, trigger 
liability for damages. 

Legal comparison: 

Country 

Provision comparison 

BE 

There is not such a specific and clear provision. However: 
-The principle of good faith (Art. 1134.3 of the Civil Code) obliges 
contracting parties to cooperate loyally and to inform each other in good 
faith. When a party does respect these duties, the judge can decide that 
this contractual party has committed a contractual fault and is liable for 
the loss caused to the other party.  
- In addition the violation of the duty to inform can also lead to pre-
contractual liability: e.g. when there is a defect of consent (fraud (1116 
of the Civil Code) / mistake (1110 of the Civil Code)) the contract can be 
avoided or give rise to damages. As to fraud,  there is no general duty to 
inform the other party (every contracting party has also a duty to 
inquire). Fraud by omission (to provide information) will not be easily 
accepted. Fraud by omission supposes the existence of a special duty to 
inform and the deliberate concealment of the information. A special duty 
to speak can be derived from special legislation (e.g. Art. 4 MPCPA or 
the prohibition in that Act, to mislead the consumer by omitting essential 
information, see Art. 90 MPCPA, in B2C relations), customs, the nature 
of the contract, the special circumstances of the contracting parties (e.g. 
professional expertise, the weakness of a contracting party), the trust that 
a contracting party creates, the circumstances of the preliminary 
negotiations and the obligation of loyalty (e.g. the duty to answer 
correctly on questions). In case of a mistake, the mistake must be 
'excusable': there is only a mistake if a reasonable person in similar 
circumstances would have made the same mistake. The contract cannot 
be avoided if a contracting party is frivolous or negligent when 
contracting. Indeed, both contracting parties have a pre-contractual 
information duty: a contracting party has a duty to inform, but the party 
who made a mistake also has a duty to obtain information. 
If a pre-contractual breach takes place then the following sanctions are 

Impact on 
the level  
of 
protection 
+ 

194

 
 
 
 
 
 
 
 
 
 
 
DE 

EE 

ES 

FI 

FR 

applicable: damages and voiding the contract. 
There is no special provision. The general principle of good faith obliges 
to inform about unusual circumstances which the other party cannot 
expect and which are obviously important for the other party, especially 
when they concern the purpose of the contract. Breach of the duty may 
cause contractual liability for damages. 
- Estonian law has a general obligation to inform:  
LOA § 14. Pre-contractual negotiations 
(1) Persons who engage in pre-contractual negotiations or other 
preparations for entering into a contract shall take reasonable account of 
one another’s interests and rights. Information exchanged by the persons 
in the course of preparation for entering into the contract shall be 
accurate. 
(2) Persons who engage in pre-contractual negotiations or other 
preparations for entering into a contract shall inform the other party of all 
circumstances with regard to which the other party has, based on the 
purpose of the contract, an identifiable essential interest. There is no 
obligation to inform the other party of such circumstances of which the 
other party could not reasonably expect to be informed. 
- Obligation to inform derives also from the rules on mistake (GPCCA § 
92 (3)): A person who entered into a transaction under the influence of a 
relevant mistake may cancel the transaction if: 1) the mistake was caused 
by circumstances disclosed by the other party to the transaction, or non-
disclosure of circumstances by the other party if disclosure of the 
circumstances was required pursuant to the principle of good faith. 
2) the other party knew or should have known of the mistake and leaving 
the mistaken party in error was contrary to the principle of good faith. 
3) the other party to the transaction, entered into the transaction on the 
basis of the same erroneous circumstances, except if the other party 
could have presumed, having the correct perception of the 
circumstances, that the mistaken party would have entered into the 
transaction even if it had known about the mistake. 
- In assessing what kind of information should be delivered, in court 
practice GPCCA § 95 regarding 'Notification obligation' is often used: In 
order to ascertain whether circumstances are subject to disclosure to the 
other party (…), regard shall be had, in particular, to whether the 
circumstances are clearly important to the other party, to the specific 
expertise of the parties, the reasonable opportunities of the other party to 
obtain the necessary information and the extent of the necessary 
expenses to be made by the other party in order to obtain such 
information. 
Amongst other, damages and voiding the contract are remedies available 
under Estonian law.  
There is no specific provision for B2B transactions, but general rules on 
avoidance for a mistake and fraudulent omissions, and good faith, 
determine duties to disclose. However, the duties are much less precise.  
There is no such duty in B2B transactions.  
The Sale of Goods Act (355/1987), Section 18(1) provides that the goods 
are defective if they do not conform with information relating to their 
properties or use which was given by the seller when marketing the 
goods or otherwise before the conclusion of the contract and the 
information can be presumed to have had an effect on the contract. 
The jurisprudence has developed a general obligation of pre-contractual 

= 

= 

+ 

+ 

+ 

195

 
 
 
HU 

IT 
NL 
PL 

PT 

UK 

information (fraud/mistake/good faith) which varies according to the 
circumstances, the quality of the parties or the complexity of the product 
for instance.  
Under Art. 205 (3) of the Civil Code, the parties must inform each other 
regarding all essential circumstances in relation to the proposed contract 
before the contract is concluded. Moreover, according to Art. 367 of the 
Civil Code, the seller must inform the buyer regarding the essential 
characteristics of the goods and all important requirements pertaining to 
the good, particularly any potential rights in connection with or any 
encumbrances on the good. The seller must also convey the documents 
concerning such circumstances, rights, or encumbrances to the buyer.  
Finally, the general duty of good faith is applicable also during the pre-
contractual phase. As a result, a contract could be annulled, for example, 
if the party withholding information leads the other party to enter into the 
contract by mistake. However, the burden of proof lies on the party who 
allegedly made the mistake. 
There is no such rule under Italian law.  
There is no specific provision in Dutch law.  
There is no general duty to provide the other party with information 
prior to the conclusion of a contract. In relation to specific contracts, 
according to Art. 546(1) of the Civil Code, a seller is obliged to inform 
a buyer about all necessary circumstances related to legal and factual 
aspects of the goods being sold. However, it is not certain in legal 
doctrine whether this obligation also covers pre-contractual duties. A 
party may also release itself from a contract entered into on grounds of 
a mistake (Art. 84 of the Civil Code) or fraud (Art. 86 of the Civil 
Code). 
This duty is based on the general duty of good faith in pre-contractual 
relationships – Art. 227 para. 1 of the Civil Code.  
The remedies in general are damages.  
England and Wales: There is no direct general duty. However, 
businesses may have to disclose information on the characteristics of 
goods to avoid liability for non-conformity. 

Scotland: No such duty is directly imposed in the law of Scotland. 
However, there would sometimes be remedies via the rules on error or 
damages for fraud or negligent misrepresentation. Also information may 
have to be given to avoid liability for non-conformity.  

= 

+ 
+ 
+ 

= 

+ 

+ 

Assessment of impacts  

Costs and benefits for consumers 
Costs for consumers 
Benefits for 
consumers 

No costs for consumers. 
The provision does not have a direct impact on consumer wellbeing. 
Consumers might indirectly benefit of an increase in business 
competitiveness and productivity (addressed below). 

Costs and benefits for businesses 
Costs for businesses 

Businesses might incur administrative costs for providing information on 
their products. In this case, these costs are likely to be recurrent, as 
providing product information is a continuous activity. However, it could 
be expected that similar information is provided already in the usual 

196

 
 
 
 
 
 
 
 
 
 
 
 
 
 
course of businesses. 
The costs would affect mostly businesses involved in B2B transactions 
only. Those selling to consumers as well would have lower costs as they 
could use the same pre-contractual information with some adjustments if 
necessary both for their consumer and business customers. 

Benefits for businesses  SMEs would benefit in relations with companies with greater market 

power, as this general disclosure duty and related remedies in case of a 
breach – which currently do not exist or only partially exist in most 
Member States (e.g. DE, ES, FI, FR, IT, NL, PL, UK) – would entitle 
them to information they otherwise may not have received from the other 
party and/or would not have been able to obtain in another way. By being 
better informed, they could strengthen their position in negotiations.  
In general, businesses would be in a better position to judge about the 
characteristics of the products they purchase in advance of concluding a 
deal. This information would enable them to select the products that 
mostly suit their needs. As this would result in a better allocation of 
resources, their productivity and competitiveness would increase. 

Duty to ensure that information supplied is correct 

Issue: 

In addition to the general duty to disclose information about goods and services, a Common 
European Sales Law could introduce a duty for the party who supplies information before or at the 
time a contract is made, to take reasonable care to ensure that the information supplied is correct and 
is not misleading.  

In case of breach of this duty the aggrieved party would have the following remedies: 

- Where the business has not fulfilled his pre-contractual information duty and, as a result a contract 
has been concluded which the other party would not have concluded, or would not have concluded 
on the same terms, the business would be liable for damages.  
- The contract may be void on the basis of a mistake or fraud provisions. 

Legal comparison: 

Country 

Provision comparison 

BE  

There is not a specific provision. However:  
- The principle of good faith (Art. 1134,3 of the Civil Code) obliges 
contracting parties to loyal cooperation and to inform each other in good 
faith. When a party violates one of these duties, the judge can find that this 
party commits a contractual fault and is liable for loss caused to the other 
party.  
- In addition, the violation of the duty to inform can also lead to pre-
contractual liability: e.g. when there is a defect of consent (fraud (1116 of 
the Civil Code)/ a mistake (1110 of the Civil Code)), the contract can be 
avoided and/or damages can be claimed. Especially where a party 
intentionally gives misleading or incorrect information there will often be 
fraud. In the case of fraud, four conditions must be fulfilled: (1) the use of 

Impact on 
the level  of 
protection 
+ 

197

 
 
 
 
 
 
 
 
 
 
artifices; (2) the fraud must be committed by the other contracting party; 
(3) the party that commits the fraud must have the intention to deceive or to 
mislead the other party and finally (4) the fraud must be of an overriding 
importance. Only when the latter condition is fulfilled, a fraud will 
(‘principal fraud’) lead to avoidance of the contract (at the request of the 
party that is victim of the fraud). If the fraud is not of an overriding 
importance and has not led the other party to enter into the contract (but 
could have led him or her only to enter into the contract under different 
conditions, e.g. a lower price) the fraud is 'incidental'. In the latter case 
only damages can be claimed, on the basis of a pre- contractual fault (tort 
liability: Art. 1382 of the Civil Code). The first condition will be fulfilled 
(artifices): 
If the information provided is incorrect, incomplete or misleading, (through 
lies, misleading declarations or overstatements); or 
If there is an omission to provide information, deceit will only be accepted 
if there is a special duty to inform and if the contracting party deliberately 
conceals this information. This special duty to disclose can result from 
special legislation (e.g. Art. 4 MPCPA). Whilst in B2C situations it is 
likely that an omission to give information constitute a fraud, it is less 
certain in B2B situations. 
The first condition of fraud will be fulfilled when the information provided 
is incorrect, incomplete or misleading. The condition that there must be an 
intention to deceive or to mislead the other party, makes the defect of 
consent 'fraud' less protective than the provision envisaged at the European 
level mentioned above. 
Under Belgian law the remedies for fraud consisting in not providing 
information that the other business party needed are limited to avoidance 
and damages.  
Estonian Law of Obligations Act (1.07.2002) provides (§ 14. Pre-
contractual negotiations): Persons who engage in pre-contractual 
negotiations or other preparations for entering into a contract shall take 
reasonable account of one another’s interests and rights. Information 
exchanged by the persons in the course of preparation for entering into the 
contract shall be accurate. 
There are no special remedies provided for in the Art. itself, but all 
remedies mentioned above are available (LOA § 101 (1)). 
There is no such specific provision. But general rules on avoidance for 
mistake, fraudulent omissions and good faith determine such a duty. 
However, the duty is much less precise. 

There is no specific provision for B2B transactions. The remedies based on 
general contract law would, however, be similar. 
No such provision in the Finnish law. 
No corresponding provision in Italian law – extreme cases are however 
dealt with by the general provision on good faith.  
There is no such special provision. There are no such remedies. 
This duty of care follows from the general duty of good faith – Art. 227 
par. 1 of the Civil Code. 

The remedies in general are damages. 
England and Wales: the rules governing misrepresentation, including 
Misrepresentation Act 1967, section 2(1), apply in principle where there 
has been a misstatement of fact. Moreover, the courts are ready to find that 

EE 

ES 

FI 
IT 

PL 
PT 

UK 

= 

+ for the duty 

= for remedies 

+ 
+ 

+ 
= for duty 

+ for remedies 

+ 

198

 
 
 
 
 
 
 
 
 
 
 
 
a statement that literally may be true but which is misleading amounts to a 
false statement. Right to avoid if misrepresentation is serious; right to 
damages unless the person giving the incorrect information shows that he 
had reasonable grounds to believe that the information was correct.  

Scotland: no such duty is directly imposed in Scottish law. However, there 
are sometimes remedies via the rules on error or damages for fraud or 
negligent misrepresentation. Additionally, information may have to be 
given to avoid liability for non-conformity. No such comprehensive 
remedies in Scottish law.  

+ 

Assessment of impacts  

Consumers are unlikely to be concerned. 
Consumers are unlikely to be concerned. 

Costs for consumers 
Benefits for 
consumers 
Costs and benefits for businesses 
Costs for businesses 

Some additional costs may be incurred by businesses to adapt the 
information materials to make sure that the information supplied is correct 
and is not misleading. In the case of breach of this duty i.e. where the 
business has not fulfilled his pre-contractual information duty and, as result 
a contract had been concluded which the other party would not have been 
concluded, or would not have been concluded on the same terms, the 
business would be liable for damages. The potential costs for compensating 
damages would however only affect traders providing incorrect or 
incomplete pre-contractual information to other parties. These costs are 
considered as minor as the required standard would correspond to normal 
business practice. 

Benefits for businesses  Businesses would benefit from receiving complete and correct pre-

contractual information that would facilitate the business decision making 
process. In a number of Member States at present there are no specific 
provisions concerning remedies for a breach of information obligations in 
B2B contracts (e.g. PL, FI) or the rules are not so clear and strict (e.g. PT, 
IT, UK). Businesses in these countries would be more protected in case 
they conclude a contract based on incomplete or misleading information.  

Unfair exploitation 

Issue: 

A Common European Sales Law could introduce a provision that a party may avoid a contract if, at 
the time of the conclusion of the contract: (a) the party was dependent on or had a relationship of 
trust with the other party, was in economic distress or had urgent needs, was improvident, ignorant, 
inexperienced or lacking in bargaining skill; and (b) the other party knew or could be expected to 
have known this and, given the circumstances and purpose of the contract, exploited the first party’s 
situation by taking an excessive benefit or unfair advantage. 

Legal comparison: 

Country 

Provision comparison 

Impact on 
the level  of 

199

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BE 

EE 

ES 

FI 

There is not such an explicit provision under Belgian law. However legal 
literature and case law have developed the theory of the 'qualified unfair 
treatment' (gekwalificeerde benadeling/ lésion qualifiée) of a contract 
party. There are three cumulative requirements: 1) there must be a 
manifest imbalance between the obligations of the parties; 2) there must 
be an abuse of the concrete circumstances of the inferiority of the unfair 
treated contractual party (inferiority can be: physical, moral, financial, 
intellectual, functional, a monopoly, …) and 3) the abuse has to be the 
determining factor: without the abuse of circumstances the unfair treated 
party would not have concluded the contract or would have concluded a 
less onerous contract. The sanction under Belgian law is based on the 
culpa in contrahendo (Art. 1382 of the Civil Code) and damages will be 
awarded to the victim. Some scholars have submitted that redress in kind 
can consist out of nullifying the contract or reducing an overstated 
obligation. The text envisaged at European level as mentioned above 
provides for a clear provision. 
Regulation is based on nullity of the contract:   
GPCCA § 96. Transaction contrary to good morals or public order: 
(1) A transaction which is contrary to good morals or public order is void.  
(2) A transaction is contrary to good morals, inter alia, if a party knows or 
must know at the time of entry into the transaction that the other party 
enters into the transaction arising from his or her exceptional need, 
relationship of dependency, inexperience or other similar circumstances, 
and if: 1) the transaction has been entered into under conditions which are 
extremely unfavourable for the other party or 2) the value of mutual 
obligations arising for the parties is out of proportion contrary to good 
morals.  
(3) If the value of mutual obligations specified in paragraph (2) 2) above 
is unreasonably out of proportion contrary to good morals, it is presumed 
that the party knew or should have known of the other party’s exceptional 
need, relationship of dependency, inexperience or other similar 
circumstances.  
(4) If a transaction is void due to the obligation to pay interest which is 
contrary to good morals, the party who is obliged to pay the interest or 
other charge depending on the time during which the loan is used, has the 
right to return that which is received as a result of the void transaction by 
the due date by which the party had, according to the void transaction, to 
repay the whole loan.  In such a case, interest for the time during which 
the loan was used shall be paid in the amount provided for in subsection 
94 (1) of the Law of Obligations Act. 
Under Spanish law, there is no general possibility of avoiding the contract 
for unfair advantage except: (i) there is duress; (ii) there is some 
quantitative disadvantage in very specific cases involving minors and 
similarly situated persons, and no other remedy is available; (iii) in 
certain Spanish regions - Cataluña, Navarra - where the traditional 
rescission by seller for laesio enormis is applicable.  
Section 31 in the Contracts Act: (1) If anyone, taking advantage of 
another’s distress, lack of understanding, imprudence or position of 
dependence on him/her, has acquired or exacted a benefit which is 
obviously disproportionate to what he/she has given or promised, or for 
which there is to be no consideration, the transaction thus effected shall 

protection 

+ 

= 

+ 

= 

200

 
 
 
IT 

PL 

PT 
UK 

not bind the party so abused. 
Under Art. 1448 of the Civil Code the party is entitled to avoid the 
contract when there are specific conditions such as:  
a) 'ultra dimidium' disproportion among the reciprocal obligations;  
b) the party had urgent needs;  
c) the other party exploited the first party’s situation by taking an 
excessive benefit or unfair advantage. 
No judicial revision of the agreement is allowed by the court. 
Under Art. 388 of the Civil Code in a case of unfair exploitation, a party 
may demand a reduction of its own performance or an increase in the 
performance due to it and in the event that one or the other would be 
excessively difficult, it may demand that the contract be declared invalid.  
There is no possibility to avoid contract by notice of the entitled party.   
The same remedy is foreseen in Art. 282 of the Civil Code.  
England and Wales: Where the parties are in a relationship of trust and 
confidence, remedies (for 'undue influence') are readily given. In other 
cases there is the possibility that the contract may be avoided as an 
unconscionable bargain, but the cases are few.  

Scotland: No such express rule exists, but in some cases a contract may 
be avoided on the ground of 'facility and circumvention' or undue 
influence. 'Facility' here means mental weakness. Cases are few.  

+ 

+ 

= 

+ 

+ 

Assessment of impacts  

Consumers are unlikely to be concerned. 
Consumers are unlikely to be concerned. 

Costs for consumers 
Benefits for 
consumers 
Costs and benefits for businesses 
Costs for businesses 

Businesses which exploit the other party’s situation by taking an 
excessive benefit or unfair advantage would need to change their 
businesses practices. In the case of unfair exploitation the other party 
could avoid the contract and this may generate some costs for the 
exploiting party. However, these costs are considered as minor as the 
required standard would correspond to normal business practice. 

Benefits for businesses  At present, in a number of Member States, the rules are less strict i.e. not 

provide for the same remedies or provide for less cases of unfair 
exploitation (e.g. ES, PT, PL, UK). Businesses in these countries would 
benefit from more protection against unfair exploitation. SMEs are likely 
to benefit particularly from this provision as they are often the weaker 
party and are more likely to fall victim of unfair exploitation. 

Unfairness control of standard terms  

Issue: 

A Common European Sales Law could introduce a rule that in B2B transactions, a business cannot 
rely on a contract term included in its standard terms and conditions which grossly deviates from 
good commercial practice, contrary to good faith and fair dealing.  (i.e. unfair term). This rule means 

201

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
that not individually negotiated unfair standard terms and conditions shall be fair, otherwise that 
term cannot be enforced. 

Legal comparison: 

Country  Provision comparison 

BE 
DE 

EE 

ES 
FI 

FR 

HU 

Impact on 
the level  of 
protection 
+ 
= 

There is no such provision under Belgian law. 
The general provision on the reasonableness of unfair terms is also 
applicable to B2B transactions. According to this, provisions in standard 
business terms are ineffective if, contrary to the requirement of good faith, 
they unreasonably disadvantage the other party to the contract with the 
user. An unreasonable disadvantage may arise from the provision not 
being clear and comprehensible. Unreasonableness is, in case of doubt, to 
be assumed to exist if a provision is not compatible with essential 
principles of the statutory provision from which it deviates, or if it limits 
essential rights or duties inherent in the nature of the contract to such an 
extent that the purpose of the contract is jeopardised. To interpret that rule 
the courts take into account the black and grey lists from B2C legislation, 
as an overall grey list for B2B contracts. 

A standard term is void if, taking into account the nature, contents and 
manner of entry into the contract, the interests of the parties and other 
material circumstances, the term causes unfair harm to the other party 
particularly if it causes a significant imbalance in the parties’ rights and 
obligations arising from the contract to the detriment of the other party or 
if the standard term is contrary to good morals. 
No such provision for B2B transactions. 
No such general provision in Finnish law. But under certain circumstances 
contract terms may be considered as unfair (e.g. Supreme Court 2008:53). 
Under Art. L 442-6 of the Commercial Code (introduced in 2008) any 
professional engages his liability and requires him to repair the damage 
caused by the fact that he: 
- submits or attempts to submit a trading partner to obligations which 
create a significant imbalance in rights and obligations of the parties  
- obtains or attempts to obtain undue or disproportionate benefits from a 
trading partner.  
Moreover, Art. L.132-1 of the Consumer Code contains a reference to a 
'non-professional' which might lead, under certain circumstances, to the 
application of the unfair terms control of the Consumer Code to relations 
between businesses. 
There is no such specific provision in the national law. However, Art. 
205/B (2) of the Civil Code provides that the other party shall be explicitly 
informed of any standard terms that differ substantially from the usual 
contract conditions, the regulations pertaining to contracts, or any 
stipulations previously applied by the same parties. Such conditions shall 
only become part of the contract if, upon receiving special notification, the 

+ 

+ 
+ 

+ 

+ 

202

 
 
 
 
 
 
 
 
 
 
IT 

NL 

PL 

PT 

UK 

other party has explicitly accepted it. This is mandatory for B2B contracts. 
No corresponding provision in Italian law.  
Standard terms can be nullified if they are unreasonably burdensome: Art. 
6: 233 BW- of the Dutch Civil Code. The fairness control in Dutch law 
provides a similar protection. 
There is no such specific provision in Polish law 

Terms not individually negotiated are unfair if they are contrary to good 
faith – Art. 15 of the Decree-Law 446/85 –in B2B as well as in B2C. 
There are also black and grey lists of terms specifically for B2B.  
There is no unfairness control, unless the term was an exclusion or 
limitation of liability clause, void under UCTA 1977. Apart from penalty 
clauses, there is currently no control over other unfair terms in B2B 
contracts, but the Law Commissions have recommended Unfair Terms 
Directive-like controls over small business contracts. The Government has 
accepted the recommendation but nothing has been implemented in law.  

+ 

= 

+ 

= 

+ 

Assessment of impacts  

Costs and benefits for consumers 
Costs for consumers 

Benefits for 
consumers 
Costs and benefits for businesses 
Costs for businesses 

No direct costs. There is a potential risk that businesses that use unfair 
terms will pass on the costs of adjustment to consumers. However, this 
risk is low in a competitive market. Moreover, many of the businesses 
may be engaged in B2B relations only and do not sell their products to 
consumers.    
Consumers may indirectly benefit from increased business activity. 

Businesses that impose unfair terms might need to adjust the conditions 
they offer and may incur operational costs. Businesses would no longer be 
reliant that their standard terms and conditions (which include some 
unfair terms) could be enforced and might be faced with some legal 
uncertainty. However the risk and costs are considered minor as including 
terms which grossly deviate from good commercial practices, contrary to 
good faith and fair dealing, do not correspond to normal business practice. 

Benefits for businesses  Businesses would be protected against the enforcement of unfair terms 
and therefore would be able to avoid the detriment stemming from such 
terms in particular in Member States where there are no such specific 
provisions in place (e.g. BE, IT, ES, PL, UK) or where the unfairness 
control covers certain restrictive circumstances (e.g. DE, EE, FR, HU, FI). 
SMEs are likely to benefit in particular, as they usually have less market 
power to oppose unfair terms or legal resources to identify them in a 
contract.  
SMEs would gain a stronger position in negotiating the terms of a 
contract as they would not have to invest resources in negotiating against 
unfair terms.  

Terms which are unfair if not sufficiently drawn to the buyer's attention 

Issue: 

203

 
 
 
 
 
 
 
 
A Common European Sales Law t could protect against standard terms of which the party not 
supplying them could not be aware: contract terms supplied by one party and not individually 
negotiated may be invoked against the other party only if the other party was aware of them, or if the 
party supplying them took reasonable steps to draw the other party's attention to them, before or 
when the contract was concluded.. 

Legal comparison: 

Country 

Provision comparison 

BE 

DE 

EE 

ES 

FI 
HU 

IT 

Under general contract law it is generally held that standard terms are 
not accepted (and not part of the contract) until the other party has, at 
the latest at the moment the contract was concluded, knowledge of 
those terms or could have obtained knowledge of those terms, and he 
has accepted those terms. 
A Common European Sales Law would provide a higher level of 
protection because there is also an obligation for the party supplying the 
terms, to take reasonable steps to draw the other party's attention to the 
standard terms. 
Standard terms become part of the contract in B2B by agreement which 
can be explicit, implied or tacit. The incorporation of standard terms 
may be made by reference or derived from commercial practice. The 
party does not have to 'draw the other party's attention' to the terms. The 
other party is however protected by the unfairness control which 
includes transparency and the rule on surprise clauses. 
Estonian law provides this principle as part of the procedural fairness:  
§ 37. Standard terms as part of contract:  Standard terms are part of a 
contract if the party supplying the standard terms clearly refers to them 
as part of the contract before entering into the contract or while entering 
into the contract and the other party has the opportunity to examine their 
contents. Standard terms are also part of a contract if their existence 
could be presumed from the manner in which the contract was entered 
into and the other party was given the opportunity to examine their 
contents. 
A provision in Section 5 of the Standard Form Terms Act (Ley 7/1998, 
de 13 de abril, LCG) determines that a standard term will not be 
incorporated into the contract if the supplier of the term did not 
effectively ensure that the other party knew of the existence and content 
of the term.  
No such provision in Finnish law. 
No such provision in Hungarian law. However, Art. 205/B (1) of the 
Civil Code provides that standard terms become part of a contract only 
if they have previously been made available to the other party for 
perusal and if the other party has accepted the terms explicitly or 
through conduct that implies acceptance. Mandatory for B2B contracts. 
Arts. 1341 and 1342 Italian Civil Code: (1) Standard terms or model 
contracts supplied by one party are effective as against the other party if 
the latter was aware of them at the time of conclusion of the contract, or 
should have been aware of them by using 'ordinaria diligenza' 

Impact on 
the level  of 
protection 
+ 

= 

= 

= 

+ 
- 

+ 

204

 
 
 
 
 
 
 
 
PL 
PT 

UK 

(appropriate care taking objective circumstances into account); (2) 
Terms regarding the limitation of liability or the right to terminate the 
contract or to withhold performance in favour of the supplier of the 
term, as well as terms imposing to the other party cut-off periods, 
limitations as to counter-claims, limitations of freedom of contract with 
third parties, tacit prorogation or renewal of the contract, arbitral clauses 
or derogation to jurisdiction have to be individually approved in writing 
by the other party. This provision introduces a formal requirement of 
signature of the contract (and any specifically indicated unfair clause) 
by the other party, but it does not amount to a substantive test. 
There is no such provision. 
Terms are excluded from the contract if the party supplying the terms 
did not fulfil the duty of communication or the duties of information to 
the other party about the terms– Arts. 5, 6 and 8 of the Decree-Law 
446/85, from the 25th October 1986. When the other party was not 
aware of the terms, they are also automatically excluded if there was a 
lack of communication or information or if, by their context, title or 
presentation, said terms would not be noticed by a normal contracting 
party in the position of the real one (Art. 8 of the Decree-Law 446/85).  
England and Wales: Where the relevant term is not in a signed 
document but, e.g., on a ticket, then it will be incorporated into the 
contract only if the party supplying it gives reasonable notice of the 
term to the other party. Where a term is unusual or onerous, the degree 
of notice required is greater and it may be necessary to draw attention to 
the term specifically.  
Where the term is in a document that has been signed by the other party, 
it will form part of the contract; but the legislation controlling unfair 
terms (Unfair Contract Terms Act 1977; Unfair Terms in Consumer 
Contracts Regulations 1999) are frequently used (when applicable) to 
deal with clauses that are unfairly surprising. 

+ 
+ 

= 

+ 

In Scotland: No such rule. 

Assessment of impacts  

Consumers are unlikely to be concerned. 
Consumers are unlikely to be concerned. 

Costs for consumers 
Benefits for 
consumers 
Costs and benefits for businesses 
Costs for businesses 

Businesses supplying the terms to a contract would be obliged to take 
reasonable steps to draw the other party’s attention to them, before or 
when the contract was concluded. Any additional costs are considered as 
minor as informing the other party about inserted terms would correspond 
to normal business practice. Business from countries where the similar 
rules are in place at present (e.g. EE, DE, ES) would not bear any 
additional costs. In HU where the present rules are more strict i.e. provide 
that standard terms become part of a contract only if they have previously 
been made available to the other party for perusal and if the other party 
has accepted the terms explicitly or through conduct that implies 
acceptance, the protection for businesses would decrease slightly (they 
would need to be informed about such terms, but the explicit acceptance 
would not be required). 

205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits for businesses  Businesses would be protected against terms supplied by the other party 

of which they were not aware. In a number Member States, at present 
there are no such rules or rules are less strict i.e. (e.g. BE, UK, PT, PL, IT, 
FI). Businesses in these countries would gain more confidence as they 
would need to be made aware of all the terms supplied by the other party 
or otherwise they could not be invoked against them. 

Seller's right to cure for fundamental non-performance 

Issue: 

A Common European Sales Law could foresee a seller's right to cure his non-performance in the 
following cases:  
- A seller who has delivered goods early and who is notified that they are not in conformity with the 
contract may make a new and conforming tender if that can be done within the time allowed for 
performance.  
- In other cases a seller who has tendered a performance which is not in conformity with the contract 
may, on being notified of the non-conformity, offer to cure it at the seller’s own expense. 

Legal comparison: 

Country  Provision comparison 

BE 

EE 

ES 

FI 

HU 

Such a provision does not exist under Belgian law. Although some 
roughly similar results may be reached under several legal basis (e.g. 
Arts. 1610, 1630-1637, 1641-1646 and 1184 of the Civil Code), a 
Common European Sales Law would set out a clear provision on the 
seller's right to cure his non-performance, which would be more 
protective towards the seller. 
-No such rule in Estonian law.  
- LOA § 107. Cure: (1) A party who fails to perform a contractual 
obligation may, at the party’s own expense, cure the non-performance, 
including improving or replacing defective a performance, as long as the 
other party has not withdrawn from or cancelled the contract or 
demanded compensation for damage in lieu of the performance, provided 
that: cure is reasonable in the circumstances, and cure does not cause 
unreasonable inconvenience or expenses to the injured party, and the 
injured party has no legitimate interest in refusing a cure. (2) A non-
performing party may cure non-performance within a reasonable period 
of time after the party has given notice to the injured party of the 
intention to cure and of the proposed manner and timing of the cure and 
if the injured party with a legitimate interest in refusing cure has not 
given notice of such refusal within a reasonable period of time. 
No specific provision for B2B transactions, however case law may lead 
to roughly similar results but with less precision and certainty.  
Sale of Goods Act, Section 36: the seller may, at his own expense, 
remedy the defect or deliver substitute goods if this can be done without 
substantial inconvenience to the buyer or uncertainty of reimbursement 
by the seller of any expenses advanced by the buyer. 
There is no such specific provision in Hungarian law.  

Impact on 
the level  of 
protection 
+ 

+ 
= 

+ 

= 

+ 

206

 
 
 
  
 
 
 
 
 
 
IT 

PL 

PT 

UK 

While there is no specific provision in the Italian Civil Code on the 
debtor’s (or seller’s) right to cure non-performance, either in case of 
early performance or in other cases of non-conformity, scholars and case-
law have suggested that the debtor’s (or seller’s) offer for a conforming 
tender should be taken into account in assessing whether parties behaved 
according to fair dealing (Art. 1175 of the Civil Code). Moreover, the 
debtor (or seller) can make a new conforming tender as long as the other 
party has not requested a termination.  
- There is no such provision. 
- There is a similar provision. Under Art. 560 §1 of the Civil Code the 
buyer’s termination of the contract is ineffective if the seller cures the 
non-conformity of goods with the contract (replace or repair the good) 
without unreasonable delay.  
- The seller has a right to cure. 
- The buyer may refuse the cure if he opts for the rescission of the 
contract because of the defects – Art. 913 para 1 of the Civil Code.  
England and Wales: English law contains the same rule.  
Scotland: The rules on the right to cure a defective performance are not 
as clear or developed.  

Slightly + 

+ 
= 

= 
+ 

= 
+ 

Assessment of impacts: 

Consumers are unlikely to be concerned. 
Consumers are unlikely to be concerned. 

Costs for consumers 
Benefits for 
consumers 
Costs and benefits for businesses 
Costs for businesses 

Benefits for businesses 

There could be some additional costs for buyers as the sellers would have 
the right to cure for non-performance whereas at present in some Member 
States a buyer can refuse the cure and opt for the recession of contract. 
However, normally a buyer should be interested in bringing the delivered 
goods in conformity as soon as possible and not having to search for a 
new supplier or becoming involved in disputes with the first supplier. 
In a number of Member States the rules on the right to cure a defective 
performance are not as clear or developed (e.g. HU, ES, EE, IT). These 
rules would give the opportunity to the seller to cure for non-performance 
and thus avoid additional costs if a buyer opts for the recession of contract 
and compensation for damages. 

207

 
 
 
 
 
 
 
ANNEX IX: RANKING OF BARRIERS TO TRADE 

Surveys  among  businesses  who  are  involved  or  interested  in  starting  cross-border  trade 
provided data on obstacles to cross-border transactions in the internal market. Eurobarometer 
320  European  contract  law  in  business-to-business  transactions  (B2B)  and  Eurobarometer 
321  European  contract  law  in  business-to-consumer  transactions  (B2C)  list  and  rank  the 
obstacles that have an impact on the cross-border trade of businesses in the internal market.    

The  barriers  identified  are  of  a  regulatory  nature  (tax  regulations,  contract  law  related 
difficulties, licensing and registration requirements) and of a practical nature (e.g. after-sales 
maintenance). Cultural differences are also accounted for. The obstacles identified below to a 
large extent comprehensively cover the various barriers that businesses may still encounter in 
the internal market. This is proven by the fact that in both surveys the share of respondents 
who  indicated  that  they  were  affected  by  'other  obstacles'  than  those  identified  in  the 
questionnaire was very small.  

For the purpose of identifying how the barriers to trade affect businesses, it is essential to find 
out how businesses perceive these barriers. While perceptions are by nature subjective, they 
are  an  important  driver  determining  the  business  decision  to  enter  into  cross-border  trade.  
The survey method is particularly appropriate for collecting data on perceptions, as it is based 
on the opinions of the respondents.   

1.  Barriers to cross-border B2C transactions (based on EB 321) 

A  contract  law-related  problem  (difficulty  in  finding  out  about  the  provisions  of  a  foreign 
contract law) was ranked as the top barrier for B2C transactions, with 40% of the surveyed 
companies  indicating  that  it  had  an  impact  on  their  decision  to  trade  cross-border.  Other 
contract law related problems are ranking third, sixth and seventh. 

The overall picture of barriers to B2C cross-border trade is illustrated by the figures below, 
with contract law related obstacles indicated in bold: 

I - Difficulty in finding out about the provisions of a foreign contract law, 40% 
II - Tax regulations, 39% 
III  -  The  need  to  adapt  and  comply  with  different  consumer  protection  rules  in  the 
foreign contract laws, 38% 
IV - Language (communication problems, translating documents, etc.), 36% 
V - Formal requirements e.g. licensing, registration procedure, 35% 
VI - Obtaining legal advice on foreign contract law, 35% 
VII  -  Problems  in  resolving  cross-border  conflicts,  including  costs  of  litigation  abroad, 
34% 
VIII - Problems with cross-border delivery, 32% 
IX - After-sales maintenance abroad, 31% 
X - Cultural differences, 27% 
XI – Other, 11% 

The above data shows that a significant percentage of companies who are interested in cross-
border  trade  are  hindered  by  remaining  barriers  in  the  internal  market.  Contract  law  related 
obstacles rank high among the barriers that hinder businesses.  

208

 
 
 
 
 
 
 
 
 
 
 
2.  Barriers to cross-border B2B transactions (based on EB 320) 

Tax  regulations  were  ranked  as  the  main  obstacle  in  B2B  transactions,  closely  followed  by 
formal requirements and a contract law-related barrier, i.e. the difficulty in finding out about 
the provisions of a foreign contract law. Thus a contract law related obstacle ranked among 
the top three barriers to trade with 35% of respondents saying that it had an impact on their 
decision to trade cross-border. Other contract law related problems ranked sixth, seventh and 
ninth. 

The overall picture of barriers to B2B cross-border trade is illustrated by the figures below, 
with contract law related obstacles indicated in bold: 

I – Tax regulations, 38% 
II - Formal requirements e.g. licensing, registration procedures, 36% 
III - Difficulty in finding out about the provisions of a foreign contract law, 35% 
IV - Language (communication problems, translating documents, etc.), 34% 
V - Problems with cross-border delivery, 34% 
VI  -  Problems  in  resolving  cross-border  conflicts,  including  costs  of  litigation  abroad, 
32% 
VII - Obtaining legal advice on foreign contract law, 31% 
VIII - After-sales maintenance abroad, 30% 
IX - Difficulty in agreeing on the foreign applicable contract law, 30% 
X - Cultural differences, 25% 
XI – Other, 12% 

209