MacRoberts e-update 23/03/10

COMMISSION SEEKS AGREEMENT ON NEW CONTRACT REGIME

The European Commission has been keen to create a new European contract law for some time now, but since the appointment of Viviane Reding as the EU Justice Commissioner, it seems that the idea is closer to becoming reality. Viviane Reding believes that the only way to improve rising levels of unemployment and slow market growth in the EU is to strengthen the single market. As contract law underpins all transactions involving the exchange of goods and services in the EU, it is thought that making the law more coherent would result in increased cross-border trade and therefore a stronger internal market.

The current problem with cross-border trade is that there are at least 29 different regimes for contractual relations operating within the EU. This makes business-to-consumer relationships difficult and prevents parties benefiting from the single market.

It has not yet been decided what form this pan-European contract law would take. It has been suggested that a new European civil code should be created which would run in parallel to national laws, however, this is perhaps a goal to work towards rather than an immediate solution. In the meantime, the Commission could take action to ensure that the laws of the member states agreed on certain important points of consumer contract law, for example having standard terms and conditions. Another alternative is to harmonise member state contract laws.

It is debatable how practical and effective a single European contract law would be. Arguments have been advanced that it may not achieve the goal of increased cross-border trade, as the main problem is not the law, but that EU citizens don't see the benefits of a single market. Other factors which stop people from buying abroad include language barriers, the fact that we're not part of a single currency and that it is simply more convenient for consumers to shop locally or regionally. Additionally, there is concern that any weakening of the suitability and attractiveness of Scots or English law as the most popular law for the conduct of commercial business may in fact take business away from the UK.

Watch this space!

For further information, please contact David Flint or Valerie Surgenor on 0141 303 1100.

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