The buying and selling of goods in the EU is governed by national contract laws. The differences between these laws make cross-border trade more complex and costly than domestic trade.
In particular businesses:
- must identify the provisions of another country's applicable law and/or negotiate this law, and
- accrue additional costs from translation, legal advice and adaptation of contracts to different national laws
These barriers are one of the factors that dissuade many firms from entering into cross-border trade and others from expanding into more Member States. This is particularly true for small and medium-sized enterprises, for which the costs of entering multiple foreign markets can be prohibitively high in relation to their turnover.
The impact of businesses not selling cross border means that consumers are often faced with fewer choices at higher prices in their domestic market, or are even refused access to products from other Member States.
To remedy this, the European Commission has proposed a Common European Sales Law (Commission Communication on a Common European Sales Law to facilitate cross-border transactions in the single market ).
The proposal gives traders the choice to sell their products to citizens in another Member State on the basis of a single set of contract law rules which would stand as an alternative alongside the national contract law of each Member State. Parties to a cross-border sales contract anywhere in the EU would be able to choose, by express agreement, to apply the Common European Sales Law.
Because this law opens up new markets for businesses, it could give consumers more choice of products than they currently have and would offer the following advantages:
- businesses could trade with many Member States at a fraction of the current cost
- the legal environment for cross-border trade would be simpler
- consumers would benefit from more choices at lower prices
- consumers would have better protection and more certainty about their rights when buying products from other Member States.