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Contract law

Successful handshake to seal a business deal in an office © pressmaster, fotolia

One of the European Union’s most significant achievements is the Single Market. Its fundamental freedoms entitle businesses and citizens to move and interact freely in a borderless Union.

The steady lowering of the barriers between EU Member States has brought numerous benefits to citizens. Citizens in their capacity as consumers have enjoyed a number of economic benefits such as lower air fares and mobile telephone roaming charges and the possibility to access a larger variety of products. Traders have been able to extend their activities cross-border, by importing and exporting goods, providing services and establishing themselves abroad. Thus they benefit from the economies of scale and the greater business opportunities that the single market offers.

Despite this impressive success, barriers between EU Member States still remain. Many of these barriers result from differences between national legal systems. Among the barriers that hinder cross-border trade are differences between the national contract laws.

All economic transactions are based on contracts. This is why the differences in the contracts rules on how a contract is concluded or terminated, or on how the delivery of a faulty product has to be remedied, are felt in the daily life of both traders and consumers. For traders, these differences generate additional complexity and costs, notably when they want to export their products and services to several EU Member States. For consumers, these differences make it more difficult to shop in countries other than their own, in particular when shopping online.

Furthermore unclear, complex and legally uncertain contracts deter traders and individuals from using digital products offered in the cloud. The existing regulatory environment of national contract laws might not be fit for cloud based services.

The Commission has therefore taken several initiatives in the area of sales law, insurance contract law and cloud computing contracts to strengthen the Single Market.