The Optional European Contract Law and Why Success or Failure May Depend on Scope Rather than Substance

Abstract:     
In October 2011, the European Commission will present a draft regulation for an optional European contract law. When parties opt to apply it (opt-in), it will set aside all national rules, including mandatory rules of the Member States. The level of consumer protection of the optional instrument will be very high. A choice will only be possible for the entire instrument, preventing parties from cherry picking. The result should allow businesses to overcome the current legal fragmentation in Europe, providing them with the possibility to contract with one single set of rules throughout Europe. In other words, the objective is to eliminate one of the obstacles the internal market currently faces.

This Paper will show that the choice for the optional instrument, unlike what is sometimes discussed, will be exercised by businesses, not consumers. It will be argued that a broad scope is essential to secure the possibility of cost savings and efficiency gains. A limited scope will make the choice of the optional contract law entirely unattractive for businesses, not least, because of the high level of consumer protection. No reason is apparent why the scope, and therefore the choice of the parties to apply the new regime, should be limited to cross-border, e-commerce, or B2C contracts. Finally, this paper will analyze the issues of costs relating to the implementation and cost savings. Possibly, the potential for cost reductions may be limited in e-commerce but substantial for businesses operating through retail outlets in many European Member States. This underlines the necessity to allow the use of the optional instrument in domestic transactions as well as for cross-border contracts.

Please note that this is an article written in English; a French translation ("De quelques conditions de succès d'un instrument optionnel en droit européen des contrats") was published in Revue des Contrats, Vol. 2011, No. 4, pp. 1313-1342, October 2011.

Number of Pages in PDF File: 27

Keywords: harmonisation, unification, European law, optional contract law, contract law, European contract law, optional regime, optional instrument, regulatory competition, choice of Law, internal market, fragmentation, common frame of reference, DCFR, policy options, blue button, choice of law, DCFR, PECL

Accepted Paper Series