Plans to draw up EU model contracts for cross-border trade, which firms could use to make deals with firms and consumers in other EU Member States, were approved by the Legal Affairs Committee on Tuesday.
The models would be backed by an EU contract law system, offered as an alternative to coping with disparate national laws. MEPs say that this system could boost single market trade by improving consumer protection and certainty as to the law. Its use would be entirely voluntary.
“At the moment, businesses, in particular small and medium-sized ones, are discouraged from engaging in cross-border trade because of the divergences in national contract law. Today’s vote was an important step towards introducing a simplified and flexible optional instrument which will enlarge the choice of parties when drawing up contracts, provide legal certainty across borders and can be put in place relatively quickly. Retailers and consumers alike will be able to benefit from a flexible European contract law option. It is important now to ensure that any new rules created are simple, comprehensible and ready for use”, said Diana Wallis (ALDE, UK), who is leading Parliament’s work on the plan.
MEPs say standard contract terms and conditions based on the EU contract law instrument should be available off-the shelf for firms, so as to provide greater legal certainty about cross-border business transactions. The model contracts would be available in all EU languages. They would be especially useful for e-commerce and distance-selling contracts, but should not be limited to them, say MEPs. They should first be made available for cross-border transactions, but Member States could later decide to make them available for domestic use, too.
The Wallis report says that a regulation establishing “an optional instrument of European Contract Law” would ensure that the single market works better, by benefiting businesses (reduced costs as conflict-of-law rules would not be needed), consumers (legal certainty, confidence, high level of consumer protection) and Member States’ judicial systems (no longer necessary to examine foreign laws).
The European Commission proposal is expected in autumn this year.