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