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

1. Drafting a CFR: the aims and approach of the Expert Group Hugh Beale (Universities of Warwick, Oxford & Amsterdam)

2. 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

3. 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)

4. Coverage of the DCFR: property • Proprietary questions • Acquisition and loss of ownership of goods • Proprietary security rights in movable assets • Trusts

5. “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

6. 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

7. “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)

8. 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

9. 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

10. 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

11. 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

12. “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

13. “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?

14. 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

15. 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

16. 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

17. 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

18. 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?

19. 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

20. A dialogue • 5-way dialogue • Expert Group • Commission’s CFR Team • Commission’s CRD Team • Parliament • Stakeholders

21. 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