Common EU Sales Law

As much as €26 billion in trade between EU countries is missed out on because of the cost, complexity and perceived risk of conducting cross border trade within the EU.

Earlier this week the Commission proposed a Common European Sales Law aimed at ameliorating this state of affairs. The proposal aims to simplify cross border transactions and give consumers more choice and a high level of protection by establishing a single set of rules for cross-border contracts in all 27 EU countries.

Scope of the proposal

EU contract rules would not replace national contract rules, but would be an alternative to them. They would be applied on a voluntary basis by the contracting parties, but when applied, would be binding for both sides.

The proposed Regulation would apply: 
• Only to cross-border contracts 
• To contracts for the sale of goods, as well as digital content contracts, such as music or movies
• To both business-to-consumer and business-to-business transactions 
• If both parties voluntarily and expressly agree to it and 
• If one party is established in a Member State of the EU
It would not cover: 
• Mixed-purpose contracts including elements other than the sale of goods or the supply of digital content 
• Contracts linked to a consumer credit

Pre-contractual terms

Traders would be obliged to inform consumers that the Common European Sales Law is being applied before any agreement takes place. If traders do not comply with this requirement, they will be penalised.

Pre-contractual information for off-premises and distance contracts

Before any contract is concluded, traders must inform consumers of the following:
• The main characteristics of the goods
• The total price and additional charges and costs
• The identity and address of the trader, including the  trading name, the geographical address at which the trader is established and his telephone number
• The contract terms concerning payment arrangements, delivery of goods, duration of contract, deposit conditions and the rights of withdrawal
• The trader's after-sale customer assistance and 
• In cases of digital content sold, the rules concerning its function

Pre-contractual information for distance selling by electronic means

In cases of distance selling by electronic means, traders must provide consumers with information about the following:
• The technical steps to be taken in order to conclude the contract
• Whether or not a contract document will be filed by the trader and whether it will be accessible
• The technical means for correcting errors before the other party makes or accepts an offer
• The languages that can be used for the conclusion of the contract
• The contract terms

Protecting cross border consumers

Annex II of the proposed Common European Sales Law provides a summary of core consumer rights. These include:
• Rights before signing the contract, including information on the product and its price
• Rights after signing the contract, including the right of withdrawal 
• Possibility to claim rights in cases of faulty or undelivered products within 2 years

Under the terms of the contract, consumers can withdraw from off-premises and distance contracts concluded with traders without giving any reason and without paying any extra costs, within fourteen days. However, they must bear the cost of returning goods, and are required to send back products within fourteen days of notifying traders of their decision.

When there is lingering doubt about the meaning of a contract term between a trader and a consumer, the term is interpreted in favour of the consumer, unless the latter added the term themselves. In cases where the contract is drafted in two or more languages, the official language is considered to be the language in which the contract was originally drafted, unless specifically stated otherwise.

According to the proposal, contract terms added by traders that are not negotiated by consumers and create more obligations will be regarded as unfair. Such contract terms will not be considered mandatory for consumers.

Main obligations of sellers and buyers

The seller of goods or the supplier of digital content must: 
• Deliver goods or supply digital content
• Ensure that goods or digital content are in conformity with the contract in terms of quality, quantity and description and that they can be used as defined in the contract 
• Deliver goods or digital content not later than 30 days from the conclusion of the contract, unless agreed otherwise
• Provide documents representing or relating to goods or digital content supplied
Concerning the obligations of buyers, they must: 
• Pay the price
• Receive the goods or the digital content and 
• Take over documents relating to the goods or to the digital content 

Resolving disputes

In case where the seller does not fulfil an obligation, the buyer may choose one of the following remedies: 
• Require the contract performance of the seller, which includes the free of charge repair or replacement of the goods or digital content
• Postpone the execution of his own contract obligations until the seller fulfils his obligations 
• Terminate the contract and ask for the return of any price paid 
• Reduce the price 
• Claim damages and ask for compensation

If, on the other hand, the buyer does not comply with the contractual obligations, the seller has the right to do one of the following: 
• Ask the buyer to pay the price of the product or of the digital content
• Terminate the contract
• Claim damages and ask for compensation

Next Steps

The proposal will now be sent to the European Parliament and Council for examination according to the ordinary legislative procedure. Discussions are expected to take place at the beginning of 2012.