Sunday, December 5, 2010
With the euro teetering and growing talk about some countries pulling out of the European Unioin, there's still a great deal of effort going on toward standardizing contract law among the members. In a new paper, Walter Doralt of the Max Planck Institute for Comparative and International Private Law notes that the differing contract regimes among member states have slowed down trade. He has a new paper forthcoming in the Archiv für die Civilistische Praxis called Rote Karte oder grünes Licht für den Blue Button ("An Optional Contract Law for Europe?"). The paper is in German, but here's the English abstract:
The European Commission (EC) has made clear its intention to further harmonise private law in Europe. The state of contract law in Europe is fragmentary. Different levels of consumer protection exist from one Member State to another as relevant European directives only establish a minimum level. As a consequence, businesses serving customers in more than one Member State incur higher costs because of various and different rules that must be complied with. Empirical data suggests that businesses frequently avoid cross-border trade for this reason. The EC is proposing as a solution an optional European contract law regime that could be elected by parties. It would embody a high level of consumer protection and its rules would take precedence over all national rules, including mandatory rules.
This paper argues that such a choice would not be exercised by consumers, but rather by businesses, which will opt for it in their standard contract terms - if at all. A lack of court decisions and little academic literature make success far from certain. Nevertheless, the optional regime could be attractive for businesses, depending on the content of the rules (which are currently being drafted). It will also depend on the scope of the instrument and more specifically on whether a business can apply it to most or all contracts if it so wishes. Therefore, the scope should not be limited to cross-border trade or to e-commerce or to B2B or B2C contracts.
Finally, this paper argues that the potential for simplification and, hence, cost reduction through a single uniform contract law regime may be greater in regular trade than in e-commerce for businesses such as large retailers operating through stores as they could streamline their general terms and their contractual duties according to a single set of rules for all contracts concluded in any Member State of the EU.
For those of us who aren’t fluent in German but who think the abstract is interesting, let’s hope an English translation is forthcoming. A wink is as good as a nod to a blind horse.