10 November 2011
Today the Scottish Law Commission published, jointly with the Law Commission, its advice on the Common European Sales Law.
What is the CESL?
The Common European Sales Law, or CESL, forms part of a very recent European Commission proposal for a set of rules for cross-border sales of goods. It covers business to consumer (B2C) as well as business to business (B2B) transactions, but only applies to small and medium sized enterprises (SMEs). In addition to traditional sales of goods it also covers the supply of digital content. Related services, such as installation or maintenance, are within its ambit too.
The CESL is an optional instrument, so only applies where deliberately chosen by the contracting parties. Member states are able to apply it to domestic transactions, if they wish, and also to business parties other than SMEs.
The CESL forms part of a draft Regulation published on 11 October 2011. The European Commission has long been mindful of the barriers to trade between the various member states, and a good deal of work has been done in recent years, including the publication of a Feasibility Study in May 2011 which was revised in August 2011. Differences between the rules of contract law across the Union are seen as constituting one of the barriers. The CESL will provide a uniform set of rules, available in all official EU languages, for trade across borders.
Why the reference to the Law Commissions?
The Ministry of Justice and the Department for Business, Innovation and Skills requested, in May 2011, that the Law Commission and the Scottish Law Commission advise them on the potential advantages of and problems with an optional system of European contract law. One of the main purposes of the advice is to assist the UK Government with considering what position to take in negotiations over future developments in this field. The advice was to cover, amongst other matters:
- B2C contracts, with particular reference to consumer protection and the desirability of combating barriers to trade; and
- B2B contracts, with particular reference to SMEs.
At the time of the publication of the European Commission's proposal on 11 October 2011, the advice, which was based on the proposals in the Feasibility Study mentioned above, was in a relatively advanced state. We then required to revise it to take account of the CESL.
What does the advice say?
The advice contains a summary at the beginning. We make a number of observations, including the following:
- The primary focus of the CESL in the B2C context should be on distance sales and the text may require some amendment to deal better with that context
- The UK should extend the CESL to domestic B2C sales, with the exception, if possible, of doorstep and other off-premises sales, where we perceive some practical and legal difficulties
- Although we have doubts about how attractive the CESL will prove to be in the B2B context, and there could be benefits in separating this subject from the B2C contract more specifically, we think that may be left to the market to decide
- The Regulation should be capable of applying to businesses other than SMEs
- The UK should extend the CESL to domestic B2B transactions, without the limitation to SMEs if possible
For more information about this and the SLC’s other work in the field of contract law please see the project page