Hugh Beale(Universities of Warwick, Oxford &

Amsterdam)

Drafting a CFR: the aims and approach of the Expert Group

The DCFR• Study Group

– Thorough comparative study of MS’s laws• Common principles

– Functional approach, strip away differences in terminology and concepts

• “Best solutions”

• Acquis Group– Existing Acquis

• Some improvements• Largely, existing acquis

Coverage of DCFR: obligations• Contracts

– General part (Books I-III)– Specific contracts (Book IV: sales, leasing,

services…)

• Non-contractual liability– Unjust enrichment– Benevolent intervention– Liability for damage (tort/delict)

Coverage of the DCFR: property

• Proprietary questions– Acquisition and loss of ownership of goods – Proprietary security rights in movable

assets – Trusts

“Academic CFR”

• Action Plan:– Toolbox for legislators

• Principles, definitions and model rules• Use in revision of consumer directives

– Basis for possible Optional Instrument• Especially for cross-border contracts• Instead of national law• B2C and/or B2B

• “Political CFR” likely to be narrower

Consumer Rights Directive

• Prioritisation of consumer work

• Proposed CRD (Oct 2008)– “Horizontal”

• Distance selling• Doorstep• Unfair terms• Consumer sales

– Some extension: e.g. damages in sales– Combined, more consistency

“Full harmonisation”• Rome I art 6

– C entitled to protection of own law– B must be prepared to cope with 28+ laws

• FH: MS cannot give additional protection– In some MSs, consumer protection reduced – But only “within scope” of CRD

• Too narrow or too broad• Uncertain

• pCRD now “targeted full harmonisation”• Optional Instrument (Blue Button)

The Green Paper

• Green Paper 1 July 2010: options– Do nothing– Tool box (various forms)– Recommendation to MS– Optional Instrument– Directive on European Contract Law– European Civil Code

Expert Group• Commission Decision 26 April 2010• “As if” basis

– Optional Instrument– Toolbox?

• “Workable Optional Instrument”– B2B and B2C– Sales only but expandable

• General part: suitable for any contract

The OI and PIL• Commission decision, not yet taken• Current thinking:

– Substantive law approach– Regulation introducing into law of each MS– Cf CISG but “opt-in”

• Opt-in = opt-out of CISG

– Rome I art 6 by-passed– ? Exclude use of art 9 for consumer law

B2C sales• Sales provisions• General contract law• Acquis minimum requirements

– pCRD (sales, distance & off-premises selling)

– Consumer Credit Directive (instalment sales)

• Acquis full harmonisation: copy in

“High level of consumer protection”• In MS where protection at minimum level, no

loss if choose Blue Button• In MS where high protection, will reduce

protection– B may offer choice but probably Blue Button or

nothing– To make attractive, high enough level that C

confident that reasonably protected– Higher than minimum harmonisation requirements

“Consumer sub-group” of EG

• Where does DCFR go beyond minimum?• Where do national laws go beyond minimum

on matters within scope? – E.g. blacklisted terms

• Where do national laws have rules outside scope of acquis go beyond DCFR?– E.g. lesion, Nordic Contracts Act s 36

• Which should we include in the CFR?

B2B: who might use it?• Non-national (“neutral”), in many languages• Single “operating system” / platform for

businesses across the EU• Larger firms:

– Sell c/b via subsidiaries– Expertise– Higher value contracts– Often riskier transactions

• Should aim at SMEs

What do SMEs want?

• Suspect:– More risk averse– Would like protection if

• Non-disclosure: Unknown unknowns

• Surprising or harsh general conditions

• Behaviour inconsistent with GF and fair dealing

• Harmonise protection for for SMEs?– Problems of definition

• Self-selection: Option to choose law

An Optional Instrument for SMEs• B2B contracts

– Sales first, then supply of goods and of services

• ? Targetted at SMEs– SME x SME and SME x large business– Way of reducing cost and risk of cross-border

exchanges– “Insurance”– At a premium

Why would other party agree?

• If SMEs prepared to pay “price”, other businesses will find it worth offering the OI

• If other refuses, SMEs know riskier

• Not all SMEs will want this “insurance”– They will not opt for the OI

An OI for domestic use?

• Need not be limited to cross-border contracts– If SMEs prefer the OI for domestic

contracts, why not allow its use?

OI compared to DCFR• Coverage: “re-contractualisation”• Simpler style

– Closer to PECL?

• Many articles omitted– “150 articles”– Some from general contract law– Probably not

• Agency• Assignment and transfer of contract• Conditional contracts• Plurality of parties• Prescription• Set-off

A dialogue

• 5-way dialogue– Expert Group– Commission’s CFR Team– Commission’s CRD Team– Parliament– Stakeholders

Summary and conclusion• Optional Instrument

– Sales and supply of goods and services– Cross-border and ?domestic – B2C: high level of protection– B2B: aimed at SMES

• Also want to see:– Improved consumer acquis

• Limited full harmonisation• To cover contracts outside OI

– A CFR as a toolbox