The Feasibility Study of the Expert Group on European Contract Law

European Commission

With reference to the matter above Federation of Finnish Enterprises states the following:

According to the feasibility study of the Expert group the European Commission has stated that no less than 61 % of all initiated cross-border orders fail to succeed, due to the fact that businesses do not want to deliver in the country of residence of the consumer. At this moment only 8% of the European consumers purchase goods or services online in another member state of the EU. To tackle this problem, the Commission established an Expert group in April 2010 with the assignment to analyse existing proposals for a unified European contract law, existing instruments of law on the international level, and to create an easy to understand body of rules, based on those existing proposals and instruments.

The Federation of Finnish Enterprises per se supports all measures that promote cross-border trade, increase competition on the internal market and thereby makes it possible to take further advantage of our internal market. One must bear in mind, however, that the basic principle and backbone of contract law and all contracting is the freedom of contract which consists of several elements that are all of great importance. These elements are for instance the freedom to choose your contracting party, freedom to enter (or not to enter) into a contract, absence of formal requirements and freedom to decide the content (terms) of the contract. Moreover the regulation of contracts and contracting is also based on an extensive national legal praxis in addition to written law.

Therefore it is of great challenge to create a unified system for contract law on European level. In order to find an instrument that will find acceptance by companies as well as consumers, it would be important to create a regulatory framework that ensures a proper balance between a good level of consumer protection and competitiveness of enterprises. An excessively high level of consumer protection is also contrary to the goal of eliminating and avoiding unnecessary burdens on SMEs, as for instance laid down in the Council Conclusions on ”Think Small First – A Small Business Act for Europe” adopted by the Competitiveness Council on 1 December 2008. In our opinion some of the proposed rules will not provide increased protection for consumers they are only a burden on company’s business dealings.

Despite the good intentions of the feasibility study it can be strongly argued that trying to cover both B2B and B2C relations with the same tool is too difficult a task and not realistic. In general for small and medium size companies without an own legal department it would be vital to take detailed legal advice before using the European Contract law otherwise the risks would be enormous. This in turn does not lay in line with the Think Small First principle. Thus, we are not convinced to the potential benefits of such a huge process. We find it absolutely necessary to rigorously assess the impacts of the drafted legislation on SMEs (SME test) and take results into account when further designing proposals in this field

It must, however, be emphasized that there are specific problems in the market related to the contract law and contracting that should be attended to for the benefit of SMEs. These are, for example, unfair commercial practices and even scams that particularly target micro enterprises and sole traders since they lack the needed protection (in comparison to consumers). These issues, however, do not require European level contract law but well planned, assessed and pinpointed legislation.

Finally, what comes to the individual articles proposed on the feasibility study we refer to the UEAPME’s Position Paper on the matter.

Federation of Finnish Enterprises

Rauno Vanhanen
Director

Janne Makkula
Chief of Legal Affairs