STEPS TOWARDS A EUROPEAN SALES LAW
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Viola Heutger, Steps towards a European Sales Law,
vol 7.5 ELECTRONIC JOURNAL OF COMPARATIVE LAW, (December 2003),
At the meeting in Edinburgh, only a few hours were reserved for discussing contract law. Therefore, there was no time to present information on the recent projects aiming at the harmonization of European Sales Law. Some scholars from Utrecht University participate in these projects. They are part of a European-wide project that elaborates principles on European Sales Law.(2) In this contribution I would like to outline the main activities of this academic working group.
2. The Study Group on a European Civil Code
The working group of which I am speaking is part of the Study Group on a European Civil Code (SGECC).(3) The aim of the SGECC is to produce a codified set of Principles of European Patrimonial Law complete with a commentary and comparative annotations. The Utrecht working team is only one of its various research teams, which started carrying out comparative research on sales contracts in 1999.(4) Some other working teams are currently drafting principles on services, long-term contracts, extra-contractual liability, credit securities, transfer of moveable property and insurance contracts.
For the time being, the outcome of the research is presented in English, and will later be translated into other languages.
3. The working method of the Working Team on Sales Law
The team elaborated its own working methods. At the beginning, the members started with a position paper to outline the team's approach. Later on, they elaborated various questionnaires on very detailed problems related to sales contracts. After analysing the national reports following several questionnaires, the working team presented a position paper on Principles of European Sales Law to the Co-ordinating Committee of the SGECC, composed of about 45 prominent European scholars.
There is a bulk of information concerning sales law. In order to deal with the different issues relating to sales contracts, the relevant topics were divided into brief subchapters making up the final set of rules. During the first stage, the working team elaborated these subchapters, such as general provisions, conformity, remedies, obligations of the buyer and the seller, preservation of the goods, guarantees, etc. By the end of 2000, the working team was able to present the first indicative black-letter rules on sales law, which were based both on their comparative research and on the support and expertise provided by their advisors. This preparatory initiative has been refined throughout the last few years; as a matter of fact, the core topics characterizing a sales contract are in the final drafting stage.(5) The final result will have to be approved by the so-called Drafting Committee, consisting of about five lawyers who are experienced in drafting legislation, which will ensure consistency with other drafts prepared by the SGECC as well as coherence with formal requirements.(6)
4. Sources of inspiration
As one can imagine, the drafting process did not focus only on the national reports, but somewhat more on the international and European instruments available such as the United Nations Convention on the International Sale of Goods (CISG)(7) and Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees (Sales Directive).(8) The CISG served as the starting point for the drafting process because of its wide acceptance(9) and its influence on various national sales laws and on the Sales Directive itself. However, deviations from the CISG were considered necessary insofar as a given rule posed certain problems in a non-commercial or a European context. Besides, the working team considered the Sales Directive to be a minimum standard of consumer protection. In other words, the choices made in the Sales Directive were accepted as being compelling for consumer sales law at least. Through the implementation of the Sales Directive into the various European national legislations, the solutions offered by the Sales Directive were emerging under the Directive itself as well as in the national legislative reports. The Sales Directive itself was already following the solutions provided by the CISG, and therefore one can well imagine the enormous impact which the CISG has had in the whole drafting process of the Principles on European Sales Law. But the CISG was not slavishly followed, because of the fact that the sales chapter is designed to operate within the framework of general contract law as promulgated by the Principles of European Contract Law (hereinafter: 'the PECL'). Thus, certain subject matters of general, i.e. non-sales-specific interest, such as validity, formation, or damages, are regulated in the PECL and will not be repeated in the sales chapter. The PECL also influenced the choice of concepts and of terminology. In cases where two or even more possibilities were foreseen by the different systems, the sales team mostly opted for the PECL solution.
5. The purpose of the Principles of European Sales Law
The set of principles on European sales law seeks to serve different purposes. On the one hand, they will be an academic answer to the ongoing process relating to the EU-wide harmonization of contract law and will therefore offer their own dogmatic system. On the other hand, they could also be a model law for further comparative and legislative activities within European contract law. The Principles of European Sales Law may serve as an optional instrument in cross-border transactions, allowing the parties to simply refer to this instrument as the applicable law. In addition, the principles may provide a solution when it proves impossible to establish the relevant rules of the applicable law. Like the PECL and the UNIDROIT Principles, these principles may be used to interpret or supplement international uniform law instruments and customs. In sum, the sales draft attempts to create a truly uniform sales law, placing the differentiation into different settings, different parties to the contract, and different objects which are the subject of the sales contract. To that end, a balance is struck between the two poles of the sales spectrum: the commerce-orientated CISG and the consumer-orientated Sales Directive.
Let us return to the parties in a sales contract. In any event, the parties have, for the time being, a free choice to use the European Principles as a lex contractus, which do not supersede national sales laws as such. Later on, the principles may offer a Europe-wide optional instrument.(10) Another option is more far-reaching in that a EU-wide sales law would govern all sales transactions, domestic and transnational alike. Such a European Sales Law would be a real European codification without any local restriction within the internal market and would therefore replace the national legislations on sales law.
6. Spotlighting the proposal
The drafting activities are at a quite advanced stage. The draft starts with a definition whereby an attempt is made to summarize the essence of a sale: the seller undertakes to transfer property and the buyer undertakes to pay the price. Further obligations of the parties are set out in greater detail in separate sections. Rules on barter are to fall under the ambit of this chapter. Here the draft deviates completely from its international and European models; neither the CISG nor the Sales Directive offers a definition of 'sale'.
As mentioned above, the sales draft covers all sales transactions, i.e. commercial contracts, consumer contracts, and private contracts (within the meaning of the activities of a non-professional seller). Consumer sales are addressed by specific rules, which either deviate from or complement the general rules. One important consequence of the consumer protection regime is that the parties may not derogate from the rules to the detriment of the consumer. In contrast, commercial sales are not regulated as a category in their own right.
Along the lines of both the CISG and the Sales Directive, the sales draft focuses on goods. To some extent, this concept is extended by introducing an application with appropriate adaptations also to shares, investment securities, and negotiable instruments. An application with appropriate adaptations is also provided for money, electricity and other forms of energy, information and data (including software) as well as other rights, with the exception of rights in land.
Conformity of the goods is addressed in a separate section which includes the principle of, and the relevant time for, conformity of the goods. Cases of partial delivery and partial non-conformity are also deemed to be non-conformity. Furthermore, the section on conformity contains a regime which regulates the examination and notification of the lack of conformity for non-consumer sales. The draft also includes an absolute time limit of two years running from delivery. The remedial regime is linked to the conformity section. As a general principle, specific performance by means of repair or replacement prevails over the other available remedies, i.e. termination of the contract, price reduction, and damages. The section on remedies is followed by rules on guarantees, in the sense of guarantees providing something in addition to the legal rights of a consumer. This section is only applicable to consumer sales and goes a step further than the Sales Directive. A guarantee as defined by the sales draft is a voluntary instrument used by producers and sellers. The draft provides default rules when the guarantor does not specify the content of the product guarantee.
The section on the seller's remedies, following the CISG, provides for a seller's right to make specifications if the buyer has failed to do so. The risk of loss or damage to the assets passes when control over the assets is handed over to the buyer. The section on the passing of the risk provides special rules for the carriage of assets and sales in transit. Finally, the last section deals with the preservation of the goods, which denotes a refined version of the CISG and the approach adopted by the PECL.
The above-mentioned sequence of sections should not be seen as final. Work is still in progress. Representatives from around eighteen jurisdictions which are members of the Coordinating Committee of the Study Group on a European Civil Code, have agreed on the content of the principles to date. The drafting process which has now commenced will refine the wording, sequence, and definition of concepts. Furthermore, the draft will be brought into coherence with other chapters drafted by other working teams of the Study Group on a European Civil Code.
By next year, the world as such will have the possibility to criticize the attempts of the Study Group on a European Civil Code and particularly the Utrecht working team on sales law. However, critics have often voiced their concern about the legitimacy of private individuals, and scholars in particular, taking it upon themselves to act as legislators. They demand an internationally acting institution at the very least. The recent developments on the European market have shown that there is also a place for an academic approach.
In February 2003, the Commission launched the so-called 'Action Plan on a more coherent European contract law', which is yet another important step towards the harmonization of European Private Law.(11)
In fact, the research undertaken by the Working Team on Sales Law is closely interconnected with the objectives set out in this Action Plan.(12) Accordingly, one of the main issues is to improve the quality of the EC acquis communitaire in the area of contract law. In doing so, a common frame of reference should help to establish European concepts, principles, definitions, and terminology. This compilation, called the common frame of reference in the Commission's terminology, may later even lead to an optional instrument at the European level. The work elaborated by the SGECC is already such an optional instrument, but at the same time the work undertaken also provides a common frame of reference for European Sales Law, as it provides references to national legal systems and jurisdictions next to the actual black-letter rules. Furthermore, the Principles of European Sales Law have defined common concepts and terminology. It is to be hoped that they will meet the expectations of the Commission and can thus contribute to the ongoing process of further developing the acquis communitaire. Ideally, such a set of rules should constitute a compromise between the diverging interests of consumers and commercial parties, which could modernize European sales law by bringing it into line with the economic challenges of the 21st century. Let us see whether the contracting parties will use their free choice to have their contracts governed by the European Principles.
The Sales Team is eagerly awaiting the outcome of the discussions and the process of consultation concerning their sales draft. Practice and dogmatic critics will demonstrate whether the integrated approach of dealing with commercial and consumer sales together will be the future European choice.
1. The author is the team manager of the Working Team on a European Sales Law of the Study Group on a European Sales Law.
2. The group is composed of Ewoud Hondius (team leader), Viola Heutger (team manager), John Dickie (national reporter: English law, until October 2002), Christoph Jeloschek (national reporter: Austrian law), Hanna Sivesand (national reporter: Swedish law), Aneta Wiewiorowska (national reporter: Polish law), and Georgios Arnokouros (national reporter: Greek law, until the end of 2002). The comparative notes have been elaborated with the assistance of members of the Amsterdam and Tilburg Teams covering France (national reporter: Andrea Pinna), Italy (national reporter: Manola Scotton), Germany (national reporter: Viola Heutger and Roland Lohnert, until June 2002), The Netherlands (national reporter: Marco Loos), Portugal (national reporter: Rui Cascao), and Spain (national reporter: Odavia Buenodiaz). The rules have been discussed at the meetings of the whole Dutch team (in addition to the members already mentioned: Maurits Barendrecht, Martijn Hesselink, and Jacobien Rutgers). In particular, the Dutch Team would like to thank Giuseppe Donatiello for his valuable comments and suggestions.
3. See http://www.sgecc.net and Christian von Bar, Die Study Group on a European Civil Code, in P. Gottwald, E. Jayme and D. Schwab (eds.), Festschrift für Dieter Henrich (Bielefeld: Gieseling, 2000), pp. 1 ff.
4. Recently an overview of the results so far achieved have been published by Viola Heutger, Konturen des Kaufrechtskonzeptes der Study Group on a European Civil Code. Ein Werkstattbericht, European Review of Private Law, 2, 2003, pp. 155-173.
6. The final text including a commentary and comparative notes will be published in the course of 2004 by Sellier, Munich.
8. OJ L171, 7.7.1999, p. 12.
9. Most European countries are parties to the convention, Ireland, Portugal, and the UK being the exceptions. Three out of the fifteen Member States have not ratified the CISG. From the ten candidate countries which are about to join the EU in 2004, all but two, Cyprus and Malta, have ratified the CISG.
10. Such an instrument is now the subject of discussion under the Action plan on a more coherent European contract law: http://europa.eu.int/eur-lex/en/com/cnc/2003/com2003_0068en01.pdf.
12. http://europa.eu.int/eur-lex/en/com/cnc/2003/com2003_0068en01.pdf. This Action Plan was the result
of a process of consultation and discussion about the way in which problems resulting from divergences
between national contract laws in the EU should be dealt with at the European level. This initiative dates back
to July 2001, when the Commission launched its Communication on European Contract law.