DIRECTORATE-GENERAL FOR INTERNAL POLICIES

POLICY DEPARTMENT C: CITIZENS RIGHTS AND

CONSTITUTIONAL AFFAIRS

LEGAL AFFAIRS

Remedies under the proposal for a

regulation on a

Common European Sales Law

the view of French businesses

NOTE
Summary
The substantive provisions of the Common European Sales Law, particularly on remedies, will
be acceptable to businesses only if they meet certain conditions. The rules must be easily
accessible and ensure legal certainty for transactions. They must also provide a balanced
package that does not lead to excessive costs for businesses and that ensures a stable
contractual relationship.

PE 462.461

EN

This note was requested by the European Parliaments Committee on Legal Affairs.

AUTHOR
Anne-Laure Constanza, President of Envie de Fraises, on behalf of the Mouvement des
entreprises de France (MEDEF French Business Confederation)

ADMINISTRATOR RESPONSIBLE
Danai PAPADOPOULOU
Policy Department C: Citizens rights and Constitutional Affairs
European Parliament
B-1047 Brussels
Email: danai.papadopoulou@europarl.europa.eu

LINGUISTIC VERSIONS
Original: FR
Translation: EN

ABOUT THE PUBLISHER

To contact the Policy Department or to subscribe to its monthly newsletter, please write to:
poldep-citizens@europarl.europa.eu
European Parliament, June 2012.
European Union, 2012.
This document is available on the Internet at:
http://www.europarl.europa.eu/studies

DISCLAIMER
The opinions expressed in this document are the sole responsibility of the author and do
not necessarily represent the official position of the European Parliament.
Reproduction and translation for non-commercial purposes are authorised, provided the
source is acknowledged and the publisher is given prior notice and sent a copy.

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TABLE OF CONTENTS
LIST OF ABBREVIATIONS

SUMMARY

1. INTRODUCTION

2. THE ACCESSIBILITY OF THE RULES AND THE LEGAL CERTAINTY OF

TRANSACTIONS

The accessibility of the rules

Legal certainty

3. THE BALANCE BETWEEN THE PARTIES AND THE STABILITY OF THE

CONTRACTUAL RELATIONSHIP

The level of consumer protection

The stability of the contractual relationship

4. CONCLUSION

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LIST OF ABBREVIATIONS
B2B Business-to-Business
B2C Business-to-Consumer

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SUMMARY
The substantive provisions of the Common European Sales Law, particularly the provisions
on remedies, will be acceptable to businesses only if they meet certain conditions.
First, the rules must be easily accessible and ensure legal certainty for transactions.
However, because of the complexity of the provisions relating to remedies, these rules are
not easily accessible to businesses. Furthermore, some provisions do not meet the legal
certainty requirements so there is a risk of disputes, either because their meaning is open
to interpretation or the terms used are too vague.
Secondly, the provisions for a Common European Sales Law must form a balanced package
that does not lead to excessive costs for businesses and that ensures a stable contractual
relationship. While a high level of consumer protection is necessary, this should not be to a
point that leads to excessive costs for businesses. Removal of the hierarchy of remedies, as
proposed by the Common European Sales Law, presents difficulties in that businesses could
be obliged to reimburse items sold even if they could have been repaired or replaced. In
addition, the Common European Sales Law must promote the stability of the contractual
relationship, which is essential for economic actors, and not encourage breaking contracts
that were validly concluded. Very wide acceptance of unilateral termination, particularly in
transactions between consumer and trader, such as acceptance of early unilateral
termination because of the risk of non-performance, would weaken the contractual
relationship.

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1.

INTRODUCTION

The proposal for a regulation on a Common European Sales Law is intended to promote
cross-border trade by proposing that businesses and consumers should subject their
contracts to a single set of rules that apply whatever the contractual partners country of
residence.
If this Community instrument is to succeed, businesses must choose it and suggest it to
their commercial partners and clients. They will only do this if the Common European Sales
Law proves of economic interest.
A businesss choice of the Common European Sales Law will thus be subject to two
conditions.
The first depends on how it works. Businesses will choose the Common European Sales Law
only if this offers genuine simplification and consequently a substantial reduction in the
costs that they incur in cross-border transactions.
The second condition depends on the content. The substantive provisions of the Common
European Sales Law will win over businesses only if they meet certain conditions.
Firstly, the rules must be easily accessible and ensure the legal certainty of
transactions. The provisions of the Common European Sales Law must be easily
accessible to businesses, which must be able to understand them without calling in legal
advice. Otherwise, businesses will have to bear substantial costs with the sole aim of
obtaining advice on application of the Common European Sales Law; thus the objective of
reducing costs will not be achieved. Furthermore, rules that are not sufficiently clear and
explicit raise questions and require interpretations that undermine legal certainty. There
again, complexity means costs since questions and interpretations will lead to disputes.
Secondly, the rules must form a balanced package that ensures the stability of the
contractual relationship. A fair balance must be found between the rights and obligations
of the parties to the contract, particularly in the case of transactions between a trader and
a consumer. While a high level of consumer protection should be ensured, this protection
must not be such that it involves businesses in excessive costs. In the same way, it is
essential for business interests that the Common European Sales Law ensures the stability
of the contractual relationship, and does not make it easier to challenge contracts that have
been validly concluded.
From businesses point of view, two aspects of the requirements for remedies open to the
parties under the Common European Sales Law must be envisaged: firstly the accessibility of
the rules and the legal certainty of the transactions and secondly the balance between the
parties and the stability of the contractual relationship.

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2. THE ACCESSIBILITY OF THE RULES AND THE LEGAL

CERTAINTY OF TRANSACTIONS
The accessibility of the rules
Before suggesting using the Common European Sales Law, businesses are going to analyse
the content of the proposed rules. Obviously, easy access to these provisions and making
them easier to understand will encourage businesses to use the Common European Sales
Law.
However, it can be seen, particularly with regard to remedies, that the contents of Annex 1
of the proposal for a regulation are not easily accessible because of the numerous
differentiations and sub-differentiations in the way points are presented. The annex first
makes a distinction between sales contracts and contracts for the supply of digital content
and related service contracts, then, for each type of contract, between the remedies
available to the seller or service provider and those available to the buyer or customer.
Finally, it sets out for each of these remedies the particular provisions for B2C and B2B
relations. It is thus often difficult to decide what type of transaction is covered by each rule.
Also, in general, the fact that Annex 1 sets out provisions common to all types of parties,
provisions appropriate to B2C relations and provisions appropriate to B2B relations does
not make it easier to read. It is therefore regrettable that the Commission did not choose to
set out two sets of rules, one for B2C transactions and the other for B2B transactions,
especially as businesses make a distinction in distance sales between B2C transactions and
B2B transactions.
Legal certainty
The provisions of Annex 1 and particularly the texts on remedies available to the parties do
not always satisfy the legal certainty requirements: either because the wording is imprecise
or because the terms used leave too much open to interpretation, a number of them create
a risk of litigation.
For example, the Common European Sales Law allows the buyer to withhold performance if
he reasonably believes there will be non-performance by the seller, for as long as the
reasonable belief continues. The numerous references to reasonable, which have to be
assessed on a case-by-case basis, do not allow the parties to a contract to determine with
certainty when it is legitimately possible to make use of the special mechanism for
anticipated non-performance. Thus the implementation of such a text is certain to lead to
disputes.

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3. THE BALANCE BETWEEN THE PARTIES AND THE

STABILITY OF THE CONTRACTUAL RELATIONSHIP
With regard to available remedies, businesses will give particular attention to the provisions
applicable to the B2C transactions and the possibility of breaking or amending the contract.
The level of consumer protection
Businesses are well aware of the need to ensure a high level of consumer protection.
However, they will certainly not be able to make use of the Common European Sales Law
and propose it to consumers if the level of protection on offer involves too great an
increase in costs that they cannot support.
An example relating to remedies that illustrates this is the removal of the hierarchy of
remedies available to the consumer.

Removal of the hierarchy of remedies available to the consumer

Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated
guarantees makes provision for a hierarchy of remedies available to the consumer, who
must first ask for replacement or repair and who can claim termination of the contract or a
price reduction only when he is not entitled to replacement or repair.
French law has taken over this hierarchy. The French Consumer Code states that, if a
product is not in conformity, the consumer must choose between repair and replacement.
Only when neither remedy is possible can the consumer return the item and obtain
reimbursement or keep the item and obtain reimbursement of part of the price.
The Common European Sales Law removes this hierarchy and offers the consumer a free
choice between the various remedies. The consumer could thus choose unilateral
termination of the contract without first having to ask for repair or replacement.
This represents a significant change in businesses obligations by introducing a new
requirement whereby traders could be obliged to reimburse the cost of the item sold even if
repair or replacement were possible. From an economic viewpoint, removal of the hierarchy
of remedies available to the consumer will thus constitute a cost and it is far from certain
that the possible commercial argument based on consumer protection will compensate for
these additional costs.
The stability of the contractual relationship
From a business viewpoint, it is essential that the law applicable does not too easily
challenge contracts that have been validly concluded. In this respect, the mechanism for

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unilateral termination of the contract provided for under the Common European Sales Law
raises concerns.

Unilateral termination of the contract

In French law termination of the contract for non-performance has judicial implications: the
contract cannot be terminated without the involvement of a judge. Nevertheless,
jurisprudence accepts that in cases of serious non-performance termination can be declared
unilaterally by the party who is victim of the non-performance.
The Common European Sales Law states that the right to terminate the contract is carried
out by notification, which means that it is not necessary to go to court to terminate the
contract: unilateral breaking of the contract constitutes a remedy in the same way as a
request for repair or replacement.
Although we can understand that this solution meets one of the guidelines of the Common
European Sales Law, which aims to limit the need for legal proceedings, it is likely to worry
businesses.

Wide acceptance of unilateral termination

Judicial termination presents the advantage of preventing contracts from being broken
improperly since it is the judges responsibility to assess the seriousness of the breach of
contract before deciding the contract should be terminated. The safeguard of a judges
involvement is removed in the event of unilateral termination. It cannot be ruled out that
unilateral termination will be used dishonestly by a party who simply wants to put an end
to a contract. Businesses could thus be subject to unwarranted unilateral breaking of
contracts, with no other solution than to go to court to challenge them.
The authors of the Common European Sales Law have shown awareness of the difficulties
that could be raised by unilateral termination, since it is laid down that this remedy can be
used only when non-performance of the contract can be considered fundamental nonperformance, i.e. non-performance that substantially deprives the buyer of what he is
entitled to expect from the contact. But this restriction has been removed from the B2C
transactions, in which the consumer can unilaterally terminate the contract for any lack of
conformity unless the lack of conformity is insignificant.
This very extensive acceptance of unilateral termination in the B2C transactions may prove
particularly problematic, particularly when the goods sold are of low value: it would be
difficult and extremely expensive for traders to take legal action to challenge unwarranted
unilateral breaking of contracts, and the cost of a multiplication of such unilateral
terminations would not be insignificant.

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The contractual relationship in B2C transactions will be weakened if contracts can be
broken unilaterally in the same way as other remedies and this is very widely accepted,
while businesses have the opposite need for the contracts that they conclude to be legally
protected.
Early acceptance of unilateral termination
The difficulties raised by the acceptance of unilateral termination are further aggravated by
the fact that the Common European Sales Law admits the possibility of early unilateral
termination, whereby the buyer can unilaterally break the contract when it is clear that the
seller will not perform it.
This possibility of breaking the contract unilaterally, even when non-performance has not
been established, considerably weakens the value of the contract by making business take
on the risk that contracts will be broken, even if they have not failed in their obligations.
This risk is all the more significant in that assessment of the evident nature of nonperformance is subjective and it thus cannot be excluded that early unilateral termination
will occur, even if the business could have fulfilled the contract. Economically, the
possibility of early unilateral termination introduces uncertainty over contracts, which
makes commercial management more complex.

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4.

CONCLUSION

In conclusion, although the creation of a common core of European rules to assist

completion of the internal market is an attractive idea, the Commissions proposal, as it
stands, does not make it possible to achieve this objective.
The Common European Sales Law will be accepted by businesses only if it leads to a real
reduction in their costs and is of economic interest, which assumes not only that the
operation of the Common European Sales Law will bring real simplification but that the
substantive provisions proposed are compatible with business interests. Legal certainty and
the stability of the contractual relationship are essential, and businesses will attach
particular importance to them when they choose the law applicable to the contracts that
they enter into. Use of the Common European Sales Law will thus largely depend on how
these concerns are met.

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