EUROPEAN COMMISSION Brussels, 11.10.2011 SEC(2011) 1165 final COMMISSION STAFF WORKING PAPER Impact Assessment Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law on a Common European Sales Law {COM(2011) 635 final} {SEC(2011) 1166 final} Disclaimer This impact assessment report commits only the Commission's services involved in its preparation and the text is prepared as a basis for comment and does not prejudge the final form of any decision to be taken by the Commission. 1 TABLE OF CONTENTS 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES ........................................... 4 1.1. POLICY BACKGROUND ............................................................................................................................................. 4 1.2. ORGANISATION AND TIMING .................................................................................................................................... 4 1.3. CONSULTATION AND EXPERTISE .............................................................................................................................. 5 1.3.1. Public consultation...................................................................................................................................... 5 1.3.2. Outside expertise.......................................................................................................................................... 6 1.3.3. Consultation of the Impact Assessment Board........................................................................................... 7 2. PROBLEM DEFINITION....................................................................................................................................... 7 2.1. INTRODUCTION ......................................................................................................................................................... 7 2.2. CURRENT EU LEGAL FRAMEWORK IN THE AREA OF CONTRACT LAW ................................................................... 7 2.3. PROBLEM 1: DIFFERENCES IN CONTRACT LAW HINDER BUSINESSES FROM CROSS BORDER TRADE AND LIMIT THEIR CROSS-BORDER OPERATIONS....................................................................................................................... 10 2.3.1. Negative impact of contract law differences on cross-border trade......................................................... 10 2.3.2. Driver 1: Additional transaction costs stemming from differences in contract law hinder cross-border trade .................................................................................................................................................................... 12 2.3.3. Driver 2: Perceived increased legal complexity hinders cross-border trade............................................ 17 2.4. PROBLEM 2: CONSUMERS ARE HINDERED FROM CROSS-BORDER PURCHASES AND MISS OPPORTUNITIES ......... 17 2.4.1. Driver: Contract law differences impact negatively upon cross-border shopping .................................. 18 2.5. NEED FOR ACTION AT EU LEVEL AND SUBSIDIARITY ............................................................................................ 22 3. POLICY OBJECTIVES ........................................................................................................................................ 22 4. POLICY OPTIONS................................................................................................................................................ 23 4.1. OPTIONS FOR TYPE OF INTERVENTION .................................................................................................................. 23 4.2. OPTIONS FOR SCOPE AND CONTENT....................................................................................................................... 25 4.2.1. Sub-option 1 for scope: B2C / B2B contracts........................................................................................... 25 4.2.2. Sub-option 2 for scope: Cross-border / domestic contracts...................................................................... 25 4.2.3. Sub-option 3 for substantive content: areas of law covered..................................................................... 26 5. ANALYSIS OF IMPACTS .................................................................................................................................... 27 5.1. MAIN IMPACTS OF POLICY OPTION 1: BASELINE SCENARIO............................................................. 27 5.2. MAIN IMPACTS OF POLICY OPTION 2......................................................................................................... 29 5.2.1. 2a: Toolbox as a Commission Document ................................................................................................. 29 5.2.2. Main Impacts of Policy Option 2b: Toolbox as an Inter-Institutional Agreement ................................. 31 5.3. MAIN IMPACTS OF POLICY OPTION 3: RECOMMENDATION OF A COMMON EUROPEAN SALES LAW ....................................................................................................................................................................... 32 5.4. MAIN IMPACTS OF POLICY OPTION 4: REGULATION/DIRECTIVE SETTING UP AN OPTIONAL COMMON EUROPEAN SALES LAW............................................................................................................... 33 5.5. MAIN IMPACTS OF POLICY OPTION 5A AND 6 .......................................................................................... 44 5.5.1. Policy Option 5a: Directive on a mandatory CommonEuropean Sales Law (full harmonisation) and Policy Option 6: Regulation establishing a mandatory Common European Sales Law ....................................... 44 5.5.2. Main Impacts Of Policy Option 5b: Directive on a mandatory Common European Sales Law (minimum harmonisation) ...................................................................................................................................... 48 6. COMPARATIVE ASSESSMENT OF OPTIONS .................................................................................................... 49 7. MONITORING AND EVALUATION ARRANGEMENTS ................................................................................... 56 ANNEX I: PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES................................ 58 ANNEX II: THE CURRENT LEGAL FRAMEWORK............................................................................................... 62 ANNEX III: CALCULATION OF OPPORTUNITY AND TRANSACTION COSTS............................................. 71 ANNEX IV: ECONOMIC MODEL APPLIED TO THE ASSESSMENT OF POLICY OPTIONS ....................... 87 ANNEX V: DETAILED ANALYSIS OF IMPACTS OF POLICY OPTIONS.......................................................... 95 ANNEX VI: IMPACTS OF THE COMMON EUROPEAN SALES LAW ON FUNDAMENTAL RIGHTS ...... 127 ANNEX VII: ADMINISTRATIVE COSTS ................................................................................................................ 130 2 ANNEX VIII: ANALYSIS OF IMPACTS OF MAJOR SUBSTANTIVE PROVISIONS OF A COMMON EUROPEAN SALES LAW ................................................................................................................................................. 144 ANNEX IX: RANKING OF BARRIERS TO TRADE............................................................................................... 208 3 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 1.1. Policy Background The European Commission (Commission) has been working on European contract law since 2001 (see Annex I). With its 2001 Communication on European contract law,1 the Commission launched a process of extensive public consultation on the problems arising from differences between Member States' contract laws and on potential actions in this field. As a follow-up, the Commission issued an Action Plan in 2003,2 with a proposal among others to establish a Common Frame of Reference containing common principles, terminology and model rules to be used by the Union legislator when making or amending legislation. Via a grant under the 6th Framework Programme for Research, the Commission financed the work of an international academic network which carried out the preparatory legal research. This research work was finalised at the end of 2008 and led to the publication of the Draft Common Frame of Reference3 as an academic text.4 In parallel to this, analytical work was also carried out by the Association Henri Capitant des Amis de la Culture Juridique Française and the Société de Legislation Comparée drafting the Principes Contractuels Communs.5 In July 2010 the Commission launched a 'Green Paper on policy options on progress towards a European contract law for consumers and businesses' (Green Paper)6. The Commission's Work Programme for 20117 provides for a legal instrument of European contract law as a strategic initiative to be proposed in the last quarter of 2011. 1.2. Organisation and timing The Commission adopted a Decision8 on 26 April 2010 to establish an Expert Group (EG) to conduct a feasibility study on a draft European contract law instrument covering the life-cycle of a contract. The EG was composed of European legal scholars, legal practitioners and representatives of consumer and business organisations (acting in their personal capacity). The backgrounds of the EG members also reflected the main legal systems and traditions