Will Firms Consider a European Optional Instrument in Contract Law?
Singapore Management University - School of Law; Maastricht European Private Law Institute
October 1, 2011
European Journal of Law and Economics, Forthcoming
The diversity of contract laws is said by the Commission to discourage cross-border trade and hinder the development by SMEs of a pan-European commercial policy. An optional instrument containing both facilitative general contract rules and mandatory consumer protection rules, one of the solutions proposed by the Commission, is gaining rapid support from key stakeholders. Drawing from firms’ own views on the problems of legal diversity, and insights from organizational science, this article sets out the circumstances in which firms will likely consider a European optional code. Results are mixed: some firms may consider it, while others may ignore it. Much depends the firm’s aspirations (i.e. SMEs cannot be assumed as-yet to have pan-European aspirations), how the firm perceives the problems of legal diversity, and how it searches for and decides upon solutions. It would appear that a European optional instrument may not be as useful or widely considered as its proponents would like to believe.
Number of Pages in PDF File: 20
Keywords: contract law, harmonisation, behavioral analysis
JEL Classification: K12, D03, F15
Date posted: November 2, 2011