Action Plan for contract law, February 2003

Consumers and businesses buying and selling products or services in the EU are bound by some form of contract law. Although specific aspects of such transactions are covered by EU legislation (the Sale of Consumer Goods Directive and the Package Travel Directive being two examples) there are still differences between national laws.

For instance, businesses in some Member States, including the UK and Germany, include a 'reservation of title' clause in contracts, meaning that the buyer only owns goods once they have been paid for. 'Reservation of title' is not, however, recognised in all Member States, thereby making it difficult for businesses to enforce their rights in cross-border transactions.

Further, four separate Directives give consumers a 'cooling off period', allowing them time to cancel a contract without giving their reasons. Unfortunately, all four Directives specify different lengths of time, which is potentially problematical if a case is covered by more than one Directive.

Terminology is yet another problem, with some Directives using expressions such as 'contract' without there being agreed EU-level definitions.

On 14 February 2003 the European Commission announced that it had adopted an Action Plan on contract law in the EU. A joint initiative of Commissioners Byrne, Bolkestein, Liikanen and Vitorino, the Commission's Communication is intended to eliminate such problems by ensuring greater coherence of contract law in Europe.

The Plan proposes a long-term strategy based on three main elements:

• improving existing EU contract law, initially by developing a 'common frame of reference' on rules and terminology (work to be funded through the 6th Framework Research Programme) to be used by the Commission when reviewing existing legislation and making new proposals

• promoting the use of EU-wide standard contract terms

• examining the desirability and feasibility of creating a body of EU-level contract law which 'would exist in parallel to, rather than instead of, national contract laws' and could be used to facilitate cross-border contracts

Speaking on 14 February, Commissioner David Byrne, responsible for Health and Consumer Protection, said: 'There is already a significant body of EU acquis on certain aspects of contract law, but the Action Plan we have published today aims for a more strategic and long term approach.'

According to Internal Market Commissioner Frits Bolkestein, 'Differences in contract law need to be addressed if we are to unleash the true potential of the Internal Market.'

Erkki Liikanen, the Enterprise Commissioner, commented: 'This Action Plan will bring about important benefits for European enterprises. It aims to remove red tape and enhance the quality of the legislation.'

The Commission's initiative is a follow-up to a July 2001 Communication on contract law and complements a Green Paper on converting the 1980 Rome Convention on the law applicable to contractual obligations into an EU legal instrument.

The deadline for comments on the Commission's new Communication is 16 May 2003.

Links:

European Commission:
	14.02.03:	More coherence for European contract law: Commission adopts Action plan [IP/03/232]
	Communication - A more coherent European contract law: An Action Plan. COM (2003) 68

Eric Davies
Researcher
Compiled: Monday, 17 February 2003

On 14 February 2003 the European Commission announced that it had adopted an Action Plan on contract law in the EU. A joint initiative of Commissioners Byrne, Bolkestein, Liikanen and Vitorino, the Commission's Communication is intended to eliminate such problems by ensuring greater coherence of contract law in Europe.