CYIL 2012

PARALLEL NATIONAL AND INTERNATIONAL LAWS ȃ CZECH LAW AND THE PROPOSED… terms” should be reviewed and some of them should be deleted to be truer to the freedom of contract principle and to make CESL more attractive to larger businesses. 53 3.2 Distinction between “Larger” Businesses and Small-to-Medium Sized Businesses (SMEs) As noted in the previous section, CESL designates SMEs as businesses in need of protective rules in relationship to their dealings with larger enterprises. The current author does not know of a private law that expressly uses the distinction between large businesses and SMEs. In essence, the consumer protection rationale is extended to certain businesses in B2B transactions. This is the true novelty found in CESL rules. In most legal systems, there is only the traditional classification of consumer (B2C) transactions and commercial (B2B) transactions. Some national laws, such as the German BGB ( Bürgerliches Gesetzbuch ), provide unfair terms provisions that apply to B2C and B2B transactions, but stop short of using the designation of SMEs as a specifically protected class. The pervasive role that the principle of good faith plays in German contract law, together with the idea that some types of terms are inherently unfair, has led to a general policing of “the abuse of a superior position” in German contract law. 54 So, in this sense, the idea that SMEs warrant status-based protection when dealing with large businesses is not a novel concept. Part of the reason why national laws have not been more protective of smaller businesses is the difficulty in defining such businesses. CESL Article 7(2)’s definition of an SME is a bit unruly. It defines an SME as a trader with fewer than two-hundred fifty persons and with an “annual turnover” of less than fifty million euros or an annual balance sheet not exceeding forty-three million euros. Such a bright line rule provides clarity but its arbitrariness fails to deal directly with the problem of power disparities between businesses. The practical problem with the SME designation is that larger businesses will want to avoid the special protections provided to the other contracting party (SME) and simply not opt into CESL. 3.3 Amalgamation of General and Special Bodies of Rules CESL’s coverage of B2C and B2SME transactions, as well as contracts involving different subject matters sale of goods, supply of digital content, and supply of related services has resulted in various types of rules including those that apply to all these types of contracts, specialized rules of consumer protection, specialized rules for SMEs, and specialized rules for goods, digital content, and related services

53 Bénédicte Fauvarque-Cosson, “A Step Further in a Long and Incremental Process: the Feasibility Study of the Expert Group on European Contract Law”, Reiner Schulze & Jules Stuyck eds., Towards a European Contract Law (Munich: Sellier European Publishers 2011), 174-76. 54 Basil Markesinis, Hannes Unberath & Angus Johnston, The German Law of Contract: A Comparative Treatise 2d ed. (Hart Publishing: Oxford 2006), 165.

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