Common European Sales Law: does it have any future?

What does the future hold?

Tricky to say really. When I was a wee child we were supposed to be living on the moon by now wearing metallic jumpsuits.

That didn't quite happen.

I also recall the episode of Tomorrow's World where they said that CDs were scratch proof.

Ha! That didn't quite happen either.

So what about the proposed Common European Sales Law (CESL)? This proposal has gone through so many iterations we may indeed be living on the moon polishing our jumpsuits and listening to scratchless CDs by the time it comes into force. 

That said, the CESL did recently receive strong backing for its implementation by the European Parliament.

So what is it and why should you care?

This optional EU-wide contract law is designed to promote the 'Digital Single Market' by providing a single set of rules for the marketing of digital products and related services, if traders and consumers decide to opt for it instead of the 28 sets of national rules from member states.

In theory, the CESL should cut transaction costs for small businesses, while giving consumers greater choice at cheaper prices when shopping across borders.

So what will the impact of the optional CESL be on UK sellers and those further abroad? Here's our interview with Beverley Flynn of Stevens & Bolton (published in our Lexis®PSL Commercial service late last month) where she comments on the possible implications of the proposals.

How will the proposed law affect transactions?

UK seller to UK customer

If implemented, the CESL will apply to cross-border distance and online transactions, therefore domestic sales will continue to be governed by UK sales legislation. Member states would have the option to make this law applicable to domestic contracts, however given the UK’s stance on the CESL to date this may not be exercised.

UK seller to other EU based customer

A UK business selling to another consumer or business established in the EU would have the option to use the CESL provided that certain conditions are met, namely:

  • the transaction is a cross-border transaction with at least one of the parties established in an EU member state
  • the transaction is a distance contract (including online contracts) which is a sales contract, a contract for the supply of digital content or a related service contract
  • the seller of the goods or supplier of digital content is a trader
  • both parties voluntarily and expressly agree that it will apply to the transaction

Where these requirements are satisfied, it would give trading parties an option of doing business using a uniform set of rules rather than within the national laws of the states in which they operate. These rules include the pre-contractual information that needs to be provided, the formal requirements for concluding the contract, the rights and obligations of the parties and the remedies available for non-performance.

The proposed introduction of the CESL will not deal with all of the issues when selling cross-border from the UK to other member states (or vice versa). There will still be challenges including language barriers and delivery times, however the hope will be that adopting uniform legal terms will increase consumer confidence and lower the cost of cross-border transactions.

Other EU seller to UK customer

Provided the EU based seller is a trader and the other conditions explained above are present, it will be open for EU established traders selling cross-border into the UK to use the CESL to govern the transaction.

UK seller to non-EU customer and non-EU seller to UK or other EU based customer

As noted above, the CESL only requires at least one of the parties to have its habitual residence in an EU member state. This means a UK based company selling to another business or consumer located outside the territory can still elect to use the CESL, so long as the other relevant requirements are satisfied.

Does this mean organisations which sell cross-border outside of the EU will still have to operate some sort of dual sales processes (in which case does it really make things easier for SMEs as proclaimed)?

Organisations which are established within an EU member state will be able to take advantage of the CESL even if selling cross-border to consumers or businesses located outside of the EU. The only circumstance where difficulties may arise would be where an organisation is established outside of the EU and wishes to sell cross-border both outside of the EU and into the EU.

To what degree does the CESL go above and beyond already existing EU law?

The proposed CESL rules would maintain or improve the level of protection currently enjoyed by consumers under EU law. The CESL (as currently proposed) would, however, go further than many national laws to the extent that it gives the buyer a free choice of remedies in the case of faulty goods and provides a comprehensive regime for digital products.

How does it interact with the Consumer Rights Directive and the proposed Consumer Rights Bill?

The CESL will sit alongside national contract laws and will complement the harmonisation of consumer protection brought about by the Consumer Rights Directive. The CESL text as currently proposed does however make clear that the adoption of this Regulation should not preclude the revision of the Directive on consumer rights.

Do you think it will actually ever happen?

The recent backing by European Parliament is certainly a step towards the implementation of an optional EU-wide sales law and the proposal will now need to go before the Council of Ministers. However, there are still hurdles to be overcome and even if introduced it will be optional so may not have a major impact.

Beverley Flynn was interviewed by Nicola Laver. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor

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