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Cross-border contract proposals: Society raises practical concerns

12 October 2011

The Law Society is concerned that EU proposals for a Common European Sales Law could lead to uncertainty for businesses and consumers.

We will consider carefully and in depth the European Commission's proposal, which was announced yesterday. In the current debate, we will endeavour to provide technical comments and input from a practical perspective.

However, while we support efforts to improve the functioning of the internal market and to increase cross-border trade, we are not convinced that these proposals will achieve this. We note that there are a range of issues that determine whether or not businesses and consumers wish to engage in cross-border dealings, including differences in language, VAT rates, and whether it will be possible to obtain practical redress if something goes wrong.

Law Society president John Wotton said:

'From a practical perspective, an 'optional instrument' (OI) of contract law would have no underlying jurisprudence and practitioners are concerned that this would lead to uncertainty for businesses and consumers as to how it would be interpreted and applied. Even once such a body of case-law had been developed (requiring much litigation on the part of private parties), it would be difficult to ensure the uniform application of the new system across the 27 EU Member States with their different legal cultures.

'The Society supports freedom of contract, but notes that on a practical level there is a lack of clarity as to how parties would opt for the OI and this would require resolution.

'In cross-border dealings, while there will be an agreement between the parties, the laws in relation to a range of issues, such as advertising, packaging requirements, product liability and non-contractual representations, as well as tort law and property law, may be equally relevant and important. It is also unlikely that the instrument itself would be self-standing from a contract law perspective. Businesses would therefore still need to consider national laws when entering into cross-border contracts.'

We will continue to represent practitioners' views and engage in the current debate as we have done throughout the consultation process.

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