CYIL 2012

LARRY A. DĎMATTEO CYIL 3 ȍ2012Ȏ that a business can avoid by placing a contrary rule (term) in its contract. In the area of B2C contracts, CESL is decidedly not flexible with most of its consumer rules being immutable or unchangeable rules (“mandatory provisions”). This is not as true in B2SME contracts. The fact that consumers are given more protections than SMEs under CESL leads to the presumption that in the B2B context the parties have greater freedom to derogate or change CESL rules. The 27 billion euro 51 question is whether a substantial number of businesses will opt into CESL given its litany of mandatory provisions. The decision to opt in will come down to an “irrational” benefit-cost analysis. A business will weigh the benefits unitary sales and consumer protection laws useable throughout the EU against perceived costs such as numerous pro-consumer rules, including a liberal right to withdraw after delivery, strict pre contractual informational duties, post-formation duties (confirmation), removal of any duty to inspect in B2C transactions, and prolonged prescription periods in B2C transactions as well as new protections for SMEs. In B2SME contracts, will larger businesses be willing to enter into more balanced contracts in favor of SMEs (unfair terms regulation) than they would otherwise be required to do under some existing national laws? Only time will tell if the business community embraces CESL. A note of caution is that the decision to not use CESL may be an irrational one people often exhibit status quo bias. So, if the net benefit to using CESL is small, then a businessperson may elect not to choose the law because of the comfort or familiarity of the current law regimes and to avoid the additional transaction costs related to the imposition of a new law regime. An alternative perspective is to ask whether CESL is “user-friendly”. Professor Bénédicte Fauvarque-Cosson notes that CESL, as it now stands, is less user-friendly than it could and should be. He notes that: (1) “it is odd to have the seller’s right to cure in the chapter on buyer’s remedies”, (2) “the structure should make clearer which texts apply only to B to C contracts”, (3) “the distinction between mandatory and non-mandatory rules is not always clear”, 52 (4) the enunciation of only three “general principles” is problematic, “especially in view of the fact that the ‘Principles underlying’ the Instrument will be the primary reference in order to interpret and complete the instrument when necessary”, (5) the overuse of the term “reasonable” creates uncertainty, (6) due to the constraints of the existing EU consumer acquis , many of the B2C provisions are unruly and not user-friendly”, and (7) some of the rules relating to B2SME although protective of SMEs contracting, such as the provision on “unfair 51 Twenty-nine billion euro is the EU Commission’s estimation of the additional transborder trade that would be generated by CESL. See European Commission, DG Justice, “Common European Sales Law to boost trade and expand consumer choice” (11 October 2011) (press release and accompanying documentation), available at http://ec.europa.eu/justice/newsroom/news/20111011_en.htm. See also, European Commission, Staff Working Paper: Executive Summary of Impact Assessment (Brussels, 11. 10. 2011), at 2.3. 52 See Appendix I.

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