Consumer Policy Section: Consultation

Optional Nature

The proposed Common Sales Law is an optional instrument, and consumers and traders in the EU will be free to decide whether or not to use it as the basis for their transactions. In contracts between a trader and a consumer, the Common Sales Law must apply in its entirely and not selectively. In contracts between traders, the parties are free, with very limited exceptions, to exclude or vary the provisions of the Common Sales Law.

Scope

The scope of the proposed Common Sales Law will be confined to cross-border contracts for the sale of goods, the supply of digital content, and service contracts related to contracts for the sale of goods or the supply of digital content between -

(i) a trader and a consumer, or

(ii) two traders, at least one of whom is an SME (For the purposes of the Regulation, an SME is defined as a trader employing fewer than 250 persons and with an annual turnover not exceeding €50m. (or equivalent) or an annual balance sheet not exceeding €43m. (or equivalent).

Member States will have the option, however, to extend the scope of the Common Sales Law to include domestic contracts as well as contracts concluded between traders neither whom is an SME, and contracts between private individuals.

In order for the Regulation to be applicable, it is sufficient that one party to the contract be based in an EU Member State. In addition to contracts where both parties are from EU Member States, therefore, a trader or consumer will be free to contract on the basis on the Common Sales Law with a trader or consumer from outside the European Union.

Comprehensive Set of Rules

The Common Sales Law aims to provide a comprehensive set of contract law rules. Its one hundred and eighty six Articles seek to cover all of the main issues of practical relevance over the life-cycle of a cross-border contract, including:

• The rights and obligations of the parties to the contract, and the remedies for non-performance;
• Pre-contractual information duties;
• The conclusion of the contract, including formal requirements;
• The right of withdrawal from the contract, and its consequences;
• Avoidance of the contract resulting from mistake, fraud, or unfair exploitation;
• The contents and effects of the contract;
• The assessment and consequences of unfair contract terms;
• Restitution after avoidance and termination of the contract.

Certain topics considered to be less important for cross-border contracts are not addressed by the Common Sales Law, including rules on legal capacity; the determination of the language of the contract; representation; the plurality of debtors and creditors; property law (including the transfer of ownership); and intellectual property law. These matters will continue to be governed by the national law rules applicable in accordance with the Rome I Regulation on the Law Applicable to Contractual Obligations [Regulation (EC) No. 593/2008] or other relevant conflict of law rules.

High Level of Consumer Protection

The proposed Regulation aims to comprise a comprehensive set of provisions capable of ensuring a high level of consumer protection. In contracts between a trader and a consumer, agreement on the use of the Common Sales Law will be valid only if the consumer’s consent is given by means of an explicit statement that is separate from the agreement to conclude the contract.

Consultation on Proposed Regulation

While the Department of Justice and Equality is to take the lead role in discussions on the proposed Regulation at EU level, it has asked the Department of Jobs, Enterprise and Innovation to provide inputs on matters of specific relevance to consumer and commercial contracts.

Views are invited accordingly on all aspects of the proposed Regulation, including:

• The likely level of interest in, and recourse to, the proposed Common European Sales Law by Irish traders and consumers;

• The legal nature of the proposed Common Sales Law as a second regime of national law. Is this sufficiently clear to offer the required degree of legal certainty? Is the relationship between the proposed Regulation and existing private law instruments, particularly the Rome I Regulation, dealt with adequately in the proposal?

• Is the proposed scope of the instrument – cross-border contracts for the sale of goods, the supply of digital content, and related service contracts between a trader and consumer, or two traders, one of whom is an SME - too broad, too narrow or does it strike the correct balance? Do you agree with the proposed application of the instrument to contracts with parties from third countries outside the EU? What are your views on the discretionary provision for Member States to extend the scope of the Common Sales Law to domestic contracts and/or to contracts between two large traders or between private individuals.

• Are the provisions of the proposed Regulation governing consumer contracts sufficient to ensure a high level of consumer protection? Are the provisions on consumer consent to the application of the proposed Common Sales Law adequate to prevent consumers agreeing involuntarily to its use?

• Do the provisions of the proposed Regulation on matters such on good faith and fair dealing, disclosure of information, unfair exploitation, and change of circumstances represent a welcome addition to, or an unwelcome departure from, the rules governing commercial contracts under Irish law? Are such provisions likely to deter Irish businesses from having recourse to the Common Sales Law for transactions with businesses from other Member States?

• Do the provisions of the proposed Regulation on the conformity of digital content with the contract and the remedies for non-conformity, and on the freedom of digital content from third party rights and claims, achieve a fair and workable balance between the rights and interests of buyers, suppliers and third parties?

Views can be submitted by e-mail to conspol@djei.ie or by post to Competition and Consumer Policy Section, Department of Jobs, Enterprise and Innovation, Earlsfort Centre, Lower Hatch St, Dublin 2. The closing date for the receipt of submissions is Friday 6 January 2012.