Academic journal article Nottingham Law Journal

Harmonisation of European Contract Law through an "Optional Instrument": Principles and Practical Implications

Academic journal article Nottingham Law Journal

Harmonisation of European Contract Law through an "Optional Instrument": Principles and Practical Implications

Article excerpt

INTRODUCTION

One of the main objectives of the European Union is to ensure the effective functioning of the internal market. This, in effect, means the "bringing down of barriers and simplifying existing rules to enable everyone in the EU ... to make the most of the opportunities offered to them by having direct access to [28] countries ... " (1) To this end, the Union has enjoyed some of success in the harmonisation of Member States' laws, in the areas of equality law, and the implementation of the four principles of the union: namely, the free movement of goods, workers, persons and provision of services. Yet, its attempts to harmonise member states' private laws have been far more sporadic and drawn-out. In the field of contract law, the approach adopted by the Union has involved issuing directives in specific areas of contract law. These have been predominantly related to consumer contracts. Examples include doorstep (2) and distance selling (3) directives. The reasons for harmonisation are well-rehearsed: divergence in European contract laws creates obstacles for businesses and consumers engaging in cross-border trade. (4)

Nonetheless, harmonisation by directives has been ineffective, and has resulted in market fragmentation within the European Union. (5) Owing to this, the European Parliament has long called on the European Union to take the necessary action needed to ensure greater convergence. (6) In 1999, the Tampere European Council conducted "an overall study on the need to approximate Member State's legislation in civil matters". (7) Following this, the European Commission issued a Communication in 2001 (8) which aimed at gathering information on whether there was a need for EU action in the area of European contract law. Further action was taken by the Commission in 2010 when it issued a Green Paper on policy options for progress towards a European Contract Law for consumers and businesses, in which it proposed different approaches. (9) This has led some commentators to the view that the Commission clearly favours an optional contract law instrument. (10) It is envisaged that the optional instrument would be based on rules of the Draft Common Frame of Reference (DCFR). (11) The DCFR was the result of work done by networks of academics. It contains principles, definitions and model rules of European Private Law.

In the area of sales of goods and digital content, a similar approach is being taken by means of a proposal of a Regulation setting out a Common European Sales Law (CESL). (12) This has been approved by the Parliament, and is awaiting consideration by the Council. If approved, the CESL would be available for adoption by the parties to a relevant contract.

The purpose of this article is to critically assess the harmonisation of European contract law through the creation of an optional instrument. Because of the more limited scope of the CESL the focus will be on the DCFR, but some reference will be made to specific provisions of the CESL where these are particularly relevant to the situation being discussed.

This paper will start with an overview of the European Commission's existing approach to contract law. In doing so, the article will highlight the various problems associated with the harmonisation effort to date. The limitations of minimum and maximum harmonisation by directives are successively taken into account. In the second section of this paper, the various practical and constitutional issues associated with the optional instrument are examined. The third section seeks to analyse, through comparative law (German, English and French laws), the extent to which divergence in general contract law impedes cross-border trade. In addition to this, the viability of the Draft Common Frame Reference (DCFR) as a potential basis for the optional instrument will be assessed. Finally, since the success or failure of the optional instrument may largely depend on businesses willingness to use it, the views of the business community are also noted. …

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