Matt Lonsdale is a graduate of the Schulich School of Law at Dalhousie University.
European Union contract law may receive a shot in the arm next October, if Viviane Reding, EU Justice Commissioner and Vice-President of the European Commission, makes good on her promise to introduce a legislative proposal for a new legal instrument aimed at harmonizing contract law in the more than 27 legal systems which currently comprise the EU.
While the European Single Market is now approaching its 20th anniversary, contract law has continued to be developed at the national level. This has lead to problems in the development of the single market. Consider the various contracts that might come into play in one of the most basic and common of cross-border transactions: the online purchase of a small consumer good. A number of services must be performed in order for the purchase to successfully reach the consumer. The web site must be hosted and maintained, the payment must be processed and the goods must be retrieved and shipped. It’s unlikely that even the largest of multinational corporations will perform all of these services themselves; most will retain the services of other, specialized companies and so even a simple transaction can involve multiple contracts in multiple jurisdictions. In order to minimize the potential for unexpected liability under unfamiliar laws, some companies have elected not to make their products and services available to all EU residents.
Commissioner Reding addressed this and similar problems in a recent speech at the “Towards a European Contract Law” conference in Leuven, Belgium. “The idea of a single market is that products and services of higher quality and lower price become available to consumers because of economies of scale. However, it appears that we do not have economies of scales yet in all fields, and that contract law is one of the reasons for this”. While numerous solutions on how to best address this have been discussed over the years, the European Commission on European Contract Law has settled on a set of “voluntary and optional” guidelines which would exist alongside existing national contract law. Although the details of this new legal instrument have not yet been determined, Commissioner Reding has pledged to deliver a legislative proposal by October 2011. Her efforts were approved by a vote of the European Parliament on June 8, 2011.
As the basis for economic transactions both large and small, contract law is pervasive in the daily life of consumers. In addition to the upcoming legislative proposal, EU residents’ shopping experience will also be affected by the Consumer Rights Directive, which was approved by the European Parliament on June 23, 2011. The result of years of lobbying and negotiation, the directive seeks to establish a “compromise between necessary consumer rights and justified business interests”. Among other things, the legislation establishes harmonized rules for electronic contracts and withdrawal rights for off-premises sales. As can be the case with attempts to harmonize laws across the European Union, in certain respects consumer rights law will actually be weakened in some jurisdictions. However, these small losses are more than offset by the gains and the new legislation has largely been supported by consumer advocacy organizations.