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Reiner Schulze, Fryderyk Zoll - European Contract Law (Third Edition) - Nomos Verlagsgesellschaft (2021)
Reiner Schulze, Fryderyk Zoll - European Contract Law (Third Edition) - Nomos Verlagsgesellschaft (2021)
Third Edition
Schulze / Zoll
European
Contract Law
04.09.2020
Schulze / Zoll
European Contract Law
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
by
Reiner Schulze
Fryderyk Zoll
prepared by
Jonathon Watson
Co-published by
Verlag C.H.Beck oHG, Wilhelmstraße 9, 80801 München, Germany,
email: bestellung@beck.de
and
Hart Publishing, Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, United Kingdom,
online at: www.hartpub.co.uk
This work is subject to copyright. All rights are reserved, whether the whole or part of the
material is concerned, specifically those of translation, reprinting, re-use of illustrations,
broadcasting, reproduction by photocopying machine or similar means, and storage in data
banks. Under § 54 of the German Copyright Law where copies are made for other than private
use a fee is payable to »Verwertungsgesellschaft Wort«, Munich, Germany.
Many fields of European contract law have changed considerably in recent years and
indeed since the second edition of this book. The legislative responses to digitalization
have resulted in several directives and regulations, changing the shape of the acquis com-
munautaire: Digital Content Directive, Sale of Goods Directive, Modernization Direc-
tive, Platform Regulation, Portability Regulation, and the Geo-blocking Regulation.
European contract law thus not only covers new topics but is also influenced by new
concepts and principles (such as the role of data in contracting, the features of digital
content, control of contract terms in B–B contracts). European case law surrounding
contract law has also experienced considerable developments (especially in the field of
unfair contract terms).
A new edition of ‘European Contract Law’ is therefore necessary due to the demand
for structured insights into the extensive contract law acquis as well as the rapid and
broad development of European contract law itself. Accordingly, it was necessary to re-
vise and update the second edition (2018) to accurately present the structure of modern
EU contract law, its law on unfair terms, performance obligations and the consequences
of breaches thereof.
In light of the changes to contract law from, above all, the new challenges presented
by digitization, this third edition strives to fulfil an aim already outlined in the foreword
to the first edition: to allow legal scholars and practitioners, as well as law students, to be
a part of the on-going development of European contract law as a core element of Euro-
pean private law. Accordingly, the following volume conveys fundamental information
on the content, methods and objectives of European legislation in this field and explains
the interaction between legislation, case law, and legal science in the origins and devel-
opment of European contract law. In particular, it attempts to outline the qualities of this
supranational law and its innovative features in comparison to traditional concepts in
contract law. In so doing it serves as a guide to unfamiliar territory and promote an un-
derstanding of the characteristics of a new legal development.
The new edition is once more the product of numerous discussions between the au-
thors. The chapters §§ 1; 3 II 1–6, III; 5; 6 I, IV, and 8 were written by Reiner Schulze,
§§ 2, 3 I, II 7, 4, 6 II, III, and 7 by Fryderyk Zoll. The chapters authored by Fryderyk Zoll
were part of the project ‘Made in Europe – European Legal Standards of Quality for Ser-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
vices on the Global Competitive Market’ and funded by the Narodowy Centrum Nauki
(National Science Centre) on the basis of decision No. DEC-2012/04/A/HS5/00709.
The content and structure are based on the third German edition of ‘Europäisches
Vertragsrecht’ (Nomos 2021) and take into account developments prior to 1 December
2020. The authors kindly thank Dr. Jonathon Watson, without whom this adapted Eng-
lish language version would not have been possible.
V
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Contents
Foreword ............................................................................................ V
Abbreviations ........................................................................................ XI
Legislation and Other Sources ...................................................................... XV
List of Cases ......................................................................................... XXI
VII
Contents
VIII
Contents
IX
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Abbreviations
XI
Abbreviations
edn Edition
EEC European Economic Community
e.g. Exempli gratia; for example
ELI European Law Institute
EP European Parliament
ERCL European Review of Contract Law
ERPL European Review of Private Law
et al. Et alia; and others
etc. Et cetera; and the rest
et seq. Et sequentia; and the following
EU European Union
EuCML Journal of European Consumer and Market Law
EUI European University Institute
EULA End User Licence Agreement
EU Sales Directive Bianca/Grundmann (eds), EU Sales Directive: Commentary
(Intersentia 2002)
EuZW Europäische Zeitschrift für Wirtschaftsrecht
EWS Europäisches Wirtschafts- und Steuerrecht
FEDSA Federation of European Direct Selling Associations
German Civil Code Dannemann/Schulze (eds), German Civil Code – Commen-
tary (C.H. Beck 2020)
GPR European Union Private Law Review
Handbuch Europarecht Schulze/Janssen/Kadelbach (eds), Europarecht – Handbuch
für die deutsche Rechtspraxis (4th edn, Nomos 2020)
HanseLR Hanse Law Review
HK-BGB Schulze et al., Bürgerliches Gesetzbuch – Handkommentar
(9th edn, Nomos 2017)
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HZ Historische Zeitschrift
ibid. Ibidem; in the same place
i.e. Id est; that is
IMCO Internal Market Committee (European Parliament)
IWRZ Zeitschrift für Internationales Wirtschaftsrecht
JR Juristische Rundschau
JURI Legal Affairs Committee (European Parliament)
JZ JuristenZeitung
LQR Law Quarterly Review
M-EPLI Maastricht Faculty of Law European Private Law Institute
MJ Maastricht Journal of European and Comparative Law
MLR Modern Law Review
MMR Multimedia und Recht
XII
Abbreviations
XIII
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Legislation and Other Sources
Common European Sales Proposal for a Regulation of the European Parliament and
Law of the Council on a Common European Sales Law
COM(2011) 635 final.
Consumer Credit Direc- Directive 2008/48/EC of the European Parliament and of
tive the Council of 23 April 2008 on credit agreements for con-
sumers and repealing Council Directive 87/102/EEC
[2008] OJ L133/66
Consumer ODR Regu- Regulation (EU) No 524/2013 of the European Parliament
lation and of the Council of 21 May 2013 on online dispute reso-
lution for consumer disputes [2013] OJ L165/1
XV
Legislation and Other Sources
XVI
Legislation and Other Sources
XVII
Legislation and Other Sources
XVIII
Legislation and Other Sources
XIX
Legislation and Other Sources
XX
List of Cases
Ch mn.
European Union
Court of Justice
Joined cases C–43/59, 45/59 and 48/59 Von Lachmüller 3 3
ECLI:EU:C:1960:37
C–6/64 Costa/E.N.E.L. ECLI:EU:1964:66 1 25
C–11/70 Internationale Handelsgesellschaften ECLI:EU:C:1970:114 1 25
C–106/77 Simmenthal II ECLI:EU:C:1978:49 1 25
C–66/81 Pommerehnke ECLI:EU:C:1982:130 1 25
C–215/88 Casa Fleischhandel ECLI:EU:C:1989:331 2 161
C–362/88 GB INNO BM ECLI:EU:C:1990:102 3 6
C–26/91 Handte/TMCS ECLI:EU:C:1982:130 1 30
C–91/92 Faccini Dori ECLI:EU:C:1994:292 3 126
C–24/95 Aclan Deutschland ECLI:EU:C:1997:163 3 3
C–269/95 Benincasa ECLI:EU:C:1997:337 1 48
C–45/96 Dietzinger ECLI:EU:C:1998:11 2 88
C–51/97 Réunion européenne ECLI:EU:C:1998:509 1 30
Joined cases C–240/98–244/98 Océano ECLI:EU:C:2000:346 4 9
Joined cases C–240/98–244/98 Océano ECLI:EU:C:2000:346 4 30 et seq.
Joined cases C–240/98–244/98 Océano ECLI:EU:C:2000:346 4 56
Joined cases C–240/98–244/98 Océano ECLI:EU:C:2000:346 4 72
C–203/99 Veedfald ECLI:EU:C:2001:258 6 107
C–478/99 Commission/Sweden ECLI:EU:C:2002:281 4 27
C–481/99 Heininger ECLI:EU:C:2001:684 3 45
C–481/99 Heininger ECLI:EU:C:2001:684 3 140
C–96/00 Gabriel ECLI:EU:C:2002:436 1 48
C–96/00 Gabriel ECLI:EU:C:2002:436 3 64
C–168/00 Leitner ECLI:EU:C:2002:163 6 107
C–168/00 Leitner ECLI:EU:C:2002:163 6 114
C–334/00 Tacconi ECLI:EU:C:2002:68 (AG Geelhoed) 1 30
C–400/00 Club-Tour ECLI:EU:C:2015:538 5 5
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XXI
List of Cases
XXII
List of Cases
XXIII
List of Cases
XXIV
List of Cases
General Court
T–24/90 Automec ECLI:EU:T:1992:97 2 108
T-203/96 Embassy Limousines ECLI:EU:T:1998:302 3 30
T-307/1 François ECLI:EU:T:2004:180 6 107
National courts
Germany
BGH, 30.5.2011, VIII ZR 70/00 6 80
BGH, 16.3.2016, VIII ZR 146/15 3 123
LG München I, 1.3.2018, 12 O 730/17 3 76
United Kingdom
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 3 90
Walford v Miles [1992] 2 AC 128 3 16
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XXV
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CHAPTER 1
FOUNDATIONS
Literature: von Bar/Clive (eds), DCFR Full Edition (Sellier 2009); Basedow/Hopt/Zimmermann (eds), The
Max Planck Encyclopedia of European Private Law (OUP 2012); Heiderhoff, Europäisches Privatrecht (5th
edn, C.F. Müller 2020); Jansen/Zimmerman (eds), Commentaries on European Contract Laws (OUP 2018);
Kötz, Europäisches Vertragsrecht (2nd edn, Mohr Siebeck 2015); Riesenhuber, EU-Vertragsrecht (Mohr
Siebeck 2013); Schulze/Schulte-Nölke (eds), European Private Law – Current Status and Perspectives (Selli-
er 2011); Schulze/Janssen/Kadelbach (eds), Europarecht – Handbuch für die deutsche Rechtspraxis (4th edn,
Nomos 2020); Schulze/Staudenmayer (eds), EU Digital Law – Commentary (Nomos 2020); Twigg-Flesner
(ed), The Cambridge Companion to European Union Private Law (CUP 2010).
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. European contract law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Aim and structure of this book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Sources and literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. Contract law as part of European private law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2. Dualism of national and supranational law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
III. Contract law in the acquis communautaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1. Types of rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. Primary law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3. Directives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4. Selected legislation and case law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
IV. Coherency of European contract law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
1. Academic approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2. Commission Action Plan and the Common Frame of Reference . . . . . . . . . 50
3. The CESL as a codification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
V. Focus on the Digital Single Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
2. Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
3. Reshaping contract law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
I. Introduction
the provision of all forms of goods and services in market societies. In this respect, one
cannot overlook that the economic and political integration in Europe since the
mid-20th century has resulted in one of the world’s largest internal markets.1 In addi-
tion, the EU internal market offers almost 445 million consumers the possibility to ac-
quire goods and services from 27 EU Member States without customs fees or other simi-
lar charges. The benefits therefore concern all EU citizens. In other parts of the world,
from China to the United States, such common markets of comparable size have long
had at their disposal a common trade law (such as the Uniform Commercial Code in the
United States) or a common contract law. In contrast, the European internal market
lacks a comparable legal answer to the economic potential that can be reached by remov-
ing internal barriers.
The law of contract in Europe has certainly been subject to many more changes than 2
may seem at first glance; indeed one may be initially unaware of how or even the extent
to which European law impacts on the law of contract in each of the Member States. Ex-
1 Approximately 3061 billion euro in goods were traded in 2019, see https://ec.europa.eu/eurostat/statis
1
Chapter 1 Foundations
amples include the EU-wide application of the same requirements for the consumer’s
withdrawal from a distance contract or the same minimum rights available to con-
sumers in relation to defective products; contracts concerning payment transactions and
rules on electronic signatures follow a uniform model; consumer credit contracts feature
the same central provisions; air passengers have the same rights if their flight is cancelled
or delayed; and businesses in all EU Member States can, in principle, demand interest on
late payments (30 days after billing, at the latest). Each of these aspects, as well as many
others, have been created and developed by European legislation in the area of contract
law, though are still greatly shaped by the numerous differences between the individual
laws of the Member States. Although the influence of European legislation has created
Europe-wide standards, the internal market lacks a comprehensive set of rules regulating
cross-border contracts and thus an instrument that could be decisive in easing the sale
and provision of goods and services in the internal market. In this respect, the European
Commission estimates that a business must pay an average of 10,000 euro in order for its
contract terms to be amended to comply with the law of another Member State.2 Such
high transaction costs prevent mainly SMEs from entering the internal market and thus
their capacity to trade cross-border. Private international law does not provide any relief
in respect of a choice of law clause in a consumer contract as Art. 6(2) Rome I Regu-
lation stipulates that the consumer may not be deprived of the protection afforded by the
law of its country of habitual residence. The deficits in European contract law in relation
to cross-border contracts therefore prevent the internal market from reaching its full po-
tential.3
3 EU legislation and court decisions, not to mention academic practice, therefore face
considerable challenges in the field of contract law. The challenges concern not only the
incoherency of the numerous legislative provisions but also the need for a complete and
functioning set of rules for cross-border contracts. In one respect, academic drafts such
as the ‘Acquis Principles’ (ACQP)4 and the ‘Draft Common Frame of Reference’
(DCFR)5 outlined possibilities for a coherent European contract law. In a second respect,
the European Commission used these drafts as sources of inspiration for the proposed
‘Common European Sales Law’ (CESL)6 – a proposal for a codification of a law of con-
tract for cross-border sales contracts. The Commission has since withdrawn this propos-
al due to its rejection by a number of Member States. However, at almost the same time
one can observe the efforts towards preparing and drafting legal responses to the press-
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ing challenges for the internal market resulting from the rapidly developing digitaliza-
tion in the field of contract law. More specifically, new European legislation with a par-
ticularly broad scope (e.g. the Digital Content Directive, which in principle covers all
contracts with consumers for the supply of digital content and digital services, irrespec-
tive of the traditional categorization as sale, hire, etc.).7 European contract law has there-
fore not ceased in its development,8 but rather seems to have gained new momentum
through the digital revolution and its necessary innovative responses and the inclusion
of further aspects are linked to the development of existing core concepts and princi-
2 See Press Release from 11 October 2011, available online under http://europa.eu/rapid/press-release_I
2016).
2
I. Introduction
ples.9 It can therefore be stated that for the foreseeable future European contract law will
remain a law in progress, both at academic as well at legislative level.
lation.
3
Chapter 1 Foundations
– Decisions of the General Court and of the Court of Justice of the European Union
(CJEU). The decisions until 2011 are published in the European Court Reports
(ECR). The citation begins with the case reference number, followed by the short ti-
tle, the year, the ECR volume (since 1990) and the page number. The ECR volume
number is indicated in roman numerals. Reports from 1 January 2012 are available
in digital format only. All decisions from both European courts can be accessed via
the websites http://eur-lex.europa.eu and http://curia.europa.eu. Decisions have a
‘European Case Law Identifier’ (ECLI): a uniform identification format for all Mem-
ber States and the EU Courts. The ECLI comprises five mandatory elements: ECLI, a
country code (EU for European Courts), a court code (C = Court of Justice, T =
General Court), the year of the judgment, and a unique number for the individual
case.
8 bb) The Digital Content Directive 2019/770, the Sale of Goods Directive 2019/771
and the Platform Regulation 2019/1150 belong to the most important legislation for
contract law. The Digital Content Directive, as well as several other EU provisions re-
sponding to the challenges of digitalization, are explained in-depth in Schulze/Stauden-
mayer (eds), EU Digital Law – Commentary (Nomos 2020). The new legislation refers
greatly to concepts and approaches outlined in 2011 in the European Commission’s pro-
posal for a Common European Sales Law. The proposal is published in COM(2011) 635
final and, inter alia, in Part III of Radley-Gardner/Beale/Zimmermann/Schulze (eds),
Fundamental Texts on European Private Law (2nd edn, Hart 2016). Schulze (ed), Com-
mon European Sales Law (CESL) – Commentary (Nomos 2012)11 contains a more de-
tailed explanation of the proposal’s content. Further publications on this topic include:
Dannemann/Vogenauer (eds), The Common European Sales Law in Context (OUP
2013); Deshayes, Le droit commun européen de la vente – Examen de la proposition de
règlement du 11 octobre 2011 (Société de législation comparée 2012); Schmidt-Kessel
(ed), Der Entwurf für ein Gemeinsames Europäisches Kaufrecht – Kommentar (Sellier
2014)12.
9 cc) Further sets of rules that are not legally binding but are of considerable impor-
tance for European contract law include, inter alia, the Principles of European Contract
Law (PECL)13, the Principes du Droit Européen du Contrat14, the Principles of the Exist-
ing EC Contract Law (Acquis Principles)15, and the Draft Common Frame of Reference
(DCFR)16. These sets of rules exercised some influence on the content and structure of
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the CESL and several other pieces of legislation, however they do not (or only minimal-
ly) consider the changes to contract practice and EU law as a result of digitalization. A
comprehensive, systematic overview of the provisions of several of such sets of rules to-
gether with a commentary and critical analysis may be found in Jansen/Zimmermann
(eds), Commentaries on European Contract Laws (OUP 2018).
11 References to the comments in this publication are cited as ‘Schulze CESL/contributor’ followed by
EC Contract Law (Acquis Principles) Contract I (Sellier 2007) and Contract II (Sellier 2009). References to
the comments in the latter are cited as ‘Contract II/contributor’ followed by the relevant article.
16 von Bar/Clive (eds), DCFR Full Edition (Sellier 2009).
4
II. Contract law as part of European private law
b) Literature
aa) Journals on European contract and private law include: 10
– Contratto e impresa/europa (CIEU)
– European Review of Contract Law (ERCL)
– European Review of Private Law (ERPL)
– European Union Private Law Review (GPR)
– Journal of European Consumer and Market Law (EuCML)
– Zeitschrift für europäisches Privatrecht (ZEuP)
bb) The following works adopt a comparative law perspective – in part – on the topic 11
of European contract law:
– Alpa/Andenas, Fondamenti del diritto privato europeo (Giuffrè 2005)
– Beale/Fauvarque-Cosson/Rutgers/Vogenauer, Cases, Materials and Text on Contract
Law (3rd edn, Hart 2019)
– Kadner-Graziano, Comparative Contract Law (2nd edn, Edward Elgar 2019)
– Kötz/Flessner, European Contract Law vol I (Clarendon 1998)
– Ranieri, Europäisches Obligationenrecht (3rd edn, Springer 2009)
In addition, further information on the implementation of consumer contract directives
into national law can be obtained online under http://eur-lex.europa.eu/n-lex/.
cc) The Max Planck Encyclopaedia of European Private Law (Basedow/Hopt/Zimmer- 12
mann (eds), OUP 2012) is a highly useful reference work for various aspects of European
contract law.
1. Concept
a) Overview
European contract law has been subject to increasing attention from academia and 13
European institutions17 since the 1980s. Subsequent studies by the ‘Commission for
European Contract Law’18 and early policy documents19 placed this area of law at the
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17 Initially the European Parliament with the Resolution on action to bring into line the private law of
vatrecht in der Europäischen Gemeinschaft (2nd edn, Nomos 1999); Schulze, ‘Allgemeine Grundsätze und
europäisches Privatrecht’ (1993) ZEuP 442; Tunc, ‘L’unification du droit des contrats en Europe: avec ou
sans loi?’ (1993) RIDC 877; Zeno-Zencovich, ‘Il diritto europeo dei contratti’ (1993) Giurisprudenza ital-
iana 57.
20 On the current status and perspectives see Schulze/Schulte-Nölke (eds), European Private Law – Cur-
français des contrats (PU Aix-Marseille 2000); Beale, ‘The “Europeanisation” of Contract Law’ in Halson
(ed), Exploring the Boundaries of Contract (Dartmouth 1994) 23–24; Coing, Europäisches Privatrecht, vol II
5
Chapter 1 Foundations
cized in 1964 by Walter Hallstein23), comparative law,24 private international law,25 and
legal history.26
b) Variations
14 The new field of research was, however, confronted by the absence of a uniform con-
cept of ‘European private law’. In essence, there are four meanings underlying this con-
cept. These thus have to be distinguished from the notion of ‘European contract law’.
15 aa) Firstly, European private law may be understood as the private law of the Euro-
pean Communities and, as such, of the European Union. The Community law under-
standing of European private law can be traced back to the aforementioned works since
Walter Hallstein.27 European private law was initially expressed as ‘Community private
law’,28 though the terms ‘EU private law’ or ‘Union private law’ (and thus ‘EU contract
law’ or ‘Union contract law’) have become customary since the transition from Euro-
pean Community to European Union through the Treaty of Lisbon29. The use in this
book of ‘European private law’ and ‘European contract law’ will adopt this meaning, un-
less stated otherwise.
16 ‘European contract law’ used in this context comprises the acquis communautaire in
contract law.30 The relevant rules belong partly to EU primary law and partly to EU sec-
(C.H. Beck 1985); Lewis, ‘A Common law fortress under attack: is English law being Europeanized?’
(1995) Columbia Journal of European Law 1, 1–2; Markesinis, ‘Learning from Europe and Learning in
Europe’ in Markesinis (ed), The Gradual Convergence (Clarendon1994) 1–2; Mengoni, ‘L’Europa dei codici
o un codice per l’Europa?’ in Accademia Nazionale dei Lincei (ed), Il codice civile. Convegno del cinquante-
nario dedicato a Francesco Santoro Passarelli (Atti dei convegni Lincei 106 1994) 87–88; Schulze, ‘Le droit
privé commun européen’ (1995) RIDC 7; Schulze, ‘A century of the Bürgerliches Gesetzbuch: German Le-
gal Uniformity and European Private Law’ (1999) Columbia Journal of European Law 461, 461–462; Ul-
mer, ‘Vom deutschen zum europäischen Privatrecht?’ (1992) JZ 1; Vareilles-Sommières, Le droit privé eu-
ropéen (Economica 1998); Trabucchi, ‘Il codice civile di fronte alla normativa comunitaria’ (1993)
Riv.Dir.Civ. 703, 703–704.
23 Hallstein, ‘Angleichung des Privat- und Prozessrechts in der Europäischen Wirtschaftsgemeinschaft’
pean Contract Law, vol I (Clarendon 1998); Lipari (ed), Diritto privato europeo (CEDAM 1997); Institut
Suisse de Droit Comparé in Publications de l’Institut suisse de droit comparé (ed), Le rôle du droit comparé
dans l’avènement du droit européen (Schulthess 2002).
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25 Dicey, Morris and Collins on The Conflict of Laws (15th edn, Sweet & Maxwell 2015) 11–12; Roger-
son, Collier's Conflict of Laws (4th edn, CUP 2013) 8–9; von Hoffmann/Thorn, Internationales Privatrecht
(9th edn, C.H. Beck 2007) mn. 63–64a; Rauscher, Internationales Privatrecht (4th edn, C.F. Müller 2012)
mn. 89–92.
26 For earlier references see Cavanna, Storia del diritto moderno in Europa (Giuffrè 1982); Coing, ‘Das
Recht als Element der europäischen Kultur’ (1984) HZ 1; Coing, Europäisches Privatrecht Vol. I and II
(C.H. Beck 1985/1989); Delmas-Marty/Muir Watt/Ruiz Fabri (eds), Variations autour d’un droit commun.
Première rencontres de l`UMR de droit comparé de Paris (Société de législation comparée 2002); Padoa-
Schioppa, Italia ed Europa nella storia del diritto (Il Mulino 2003); Robinson/Fergus/Gordon, European Le-
gal History (3rd edn, OUP 2005); Schulze, Europäische Rechts- und Verfassungsgeschichte, Ergebnisse und
Perspektiven der Forschung (Duncker & Humblot 1991); Schulze, ‘La renaissance de l’idée de Jus commune’
in Delmas-Marty/Muir Watt/Ruiz Fabri ibid. 181; Watkin, The Europeanisation of Law (Biicl 1998);
Wieacker, A History of Private Law in Europe (OUP 1996).
27 Hallstein, ‘Angleichung des Privat- und Prozessrechts in der Europäischen Wirtschaftsgemeinschaft’
Schulze, ‘Allgemeine Grundsätze und europäisches Privatrecht’ (1993) ZEuP 442; Smits, ‘A European Pri-
vate Law as a Mixed Legal System’ (1998) MJ 328.
29 Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European
European University Press 2005) 20–22; Craig/de Búrca, EU Law (6th edn, OUP 2015) 13–14; Hesselink,
6
II. Contract law as part of European private law
ondary law. EU primary law31 refers particularly to the treaties founding the EU, i.e. the
Treaty on European Union (TEU), the Treaty on the Functioning of the European Union
(TFEU) and the Charter of Fundamental Rights of the European Union (CFR)32. Deci-
sions of the Court of Justice of the European Union (CJEU) regarding the interpretation
of Treaty provisions, including recognized general principles of law, are also considered
primary law.33 In contrast, secondary law comprises EU legislation passed on the basis
of primary law, in particular in the form of regulations, directives, and decisions, accord-
ing to Art. 288 TFEU.
Regulations are binding in their entirety and are directly applicable in all Member 17
States (Art. 288 TFEU), as such they resemble laws at national level. Directives, however,
are addressed neither to individual citizens nor to other private parties but rather only to
the Member States. Accordingly, directives do not have direct effect as they first require
implementation into national law. In so doing the national legislator has the choice of
form and method of transposition in order to achieve the result intended by the directive
(Art. 288 TFEU).34 The Member States can therefore choose to implement European
rules into national law in a manner that causes the least friction. In private law matters,
the European legislator tends to prefer the directive as the form for the legislation.
bb) Secondly, in a broad sense European private law also encompasses provisions of 18
international conventions that apply in the Member States but do not apply to the Euro-
pean Union as an institution,35 for example the ECHR and its effects on fields of private
law, for instance privacy rights, liberty, and family law.36 In this respect, this broad un-
derstanding of European private law corresponds to a wide notion of European law of-
ten used when referring to EU law.37
Furthermore, European private law is occasionally linked to international uniform 19
law that applies not only in the bulk of European countries but also worldwide. Such a
link can be especially seen with respect to the UN Convention on Contracts for the In-
ternational Sale of Goods (CISG), which is the uniform sales law on cross-border con-
tracts in the majority of European countries.38 Moreover, many national laws in Europe,
and indeed reforms of national civil codes, have been based on the CISG.39 At European
‘Contract theory and EU Contract Law’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and
Contract Law (Edward Elgar 2016) 518 et seq.; Herdegen, Europarecht (22nd edn, C.H. Beck 2020) § 6
mn. 6–7, § 8 mn. 3; Streinz, Europarecht (11th edn, C.F. Müller 2019) mn. 101.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
31 See Nowak, Europarecht nach Lissabon (Nomos 2011) I mn. 3; Streinz, Europarecht (11th edn, C.F.
Müller 2019) mn. 3, 453 et seq.; Woods/Watson, Steiner &Woods EU Law (12th edn, OUP 2014) 18.
32 For the importance of the Charter on private law see Busch/Schulte-Nölke (eds), EU Compendium –
Fundamental Rights and Private Law (Sellier 2010); Heiderhoff/Lohsse/Schulze (eds), EU Fundamental
Rights and Private Law (Nomos 2016).
33 For more detail on the concept of primary law and the function of ECJ jurisprudence in this context
see Haratsch/Koenig/Pechstein, Europarecht (12th edn, Mohr Siebeck 2020) mn. 383 et seq.; Herdegen,
Europarecht (22nd edn, C.H. Beck 2020) § 8 mn. 4 et seq.
34 For more detail on the effect of directives and their (exceptional) direct effect see Haratsch/Koenig/
Pechstein, Europarecht (12th edn, Mohr Siebeck 2020) mn. 400 et seq.; Horspool/Humphreys, European
Union Law (8th edn, OUP 2014) 166–168; Handbuch Europarecht/König, Gesetzgebungsakte mn. 44–71.
35 For example Müller-Graff, Gemeinsames Privatrecht in der Europäischen Gemeinschaft (2nd edn,
Nomos 1999); Schulze, ‘Allgemeine Grundsätze und europäisches Privatrecht’ (1993) ZEuP 442; Schulze,
‘Le droit privé commun européen’ (1995) RIDC 7.
36 van Dam, ‘European Tort Law’ in Twigg-Flesner (ed), The Cambridge Companion to European Union
Private Law (CUP 2010) 161–162; Meyer-Ladewig in Meyer-Ladewig (ed), Europäische Menschenrechts-
konvention (3rd edn, Nomos 2011) Art. 8 mn. 1–2; Windel, ‘Die Bedeutung der Europäischen Menschen-
rechtskonvention für das Privatrecht’ (2011) JR 323; see also, for example, Zaunegger v Germany (2009)
ECtHR App no 22028/04 on custodial rights for illegitimate children.
37 Herdegen, Europarecht (22nd edn, C.H. Beck 2020) § 1 mn. 1–2; Handbuch Europarecht/Schulze/
Kadelbach, Zur Einführung mn. 37; Smits, The Making of European Private Law: Toward a Ius Commune
Europaeum as a Mixed Legal System (Intersentia 2002) 6–7.
7
Chapter 1 Foundations
level the work by the ‘Commission on European Contract Law’40, the Consumer Sales
Directive (the most important Directive in the field of sales law), and the Commission’s
proposal for a Common European Sales Law have each used the CISG as a basis for sev-
eral fundamental aspects of European contract law.41 Accordingly, the CISG is to be at
least considered as a prime source of inspiration for the broader notion of European
contract law.
20 cc) Thirdly, comparative law approaches lead to an understanding of European pri-
vate law which does not, or at least not entirely, refer exclusively to the law of the Euro-
pean Union but rather extends beyond EU borders to other European countries. In this
regard common European private law42 can describe the common principles and legal
practices of national legal traditions in Europe. A comparative approach on this scale
formed the basis of the work undertaken by the ‘Commission on European Contract
Law’ and also for the analysis of ‘common principles’ of European contract law. This as-
pect also formed the foundation for, for example, Hein Kötz and Axel Flessner’s publica-
tion on ‘European Contract Law’43.
21 However, the results of comparative research on European private law can be greatly
distinguished by their subject matter, terminology, and methodology. For example, the
concept of ‘common core’ also belongs to the central concepts, alongside ‘common prin-
ciples’.44 The ‘evaluative’ approach towards obtaining common legal content45 is also ac-
companied by rather descriptive statements of the many differences in laws in Europe
that are based on an understanding of European contract law in a geographical con-
text.46 Furthermore, a part of the literature combines the comparative approach with a
historical perspective. In part this contains a specific reference to the ius commune of the
Middle Ages and early modern period,47 but also with partial inclusion of further histor-
ically-founded characteristics of European private law.48 Occasionally the notion of the
38 38 European countries have ratified the CISG since it was passed in 1980, however not the United
tion of the law of obligations, France in its 2016 reform of contract law, and many eastern European coun-
tries in the transition to the market economy; Bien/Borghetti (eds), Die Reform des französischen Ver-
tragsrechts (Mohr Siebeck 2018); Ferrari, The CISG and its Impact on National Legal Systems (Sellier
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
2008); Hartkamp/Tillema/Ter Heide, Contract Law in the Netherlands (Kluwer 2011); Meyer, ‘UN-
Kaufrecht in der deutschen Anwaltspraxis’ (2005) RabelsZ 457; in Romania: Bojin, ‘The Law of Obliga-
tions in Romania’ in Schulze/Zoll (eds), The Law of Obligations in Europe (Sellier 2013) 377; Schwenzer/
Hachem, ‘The CISG – A Story of Worldwide Success’ in Kleinemann (ed), CISG Part II Conference (iustus
2009) 119, 125.
40 See Lando/Beale (eds), Principles of European Contract Law – Parts I & II (Kluwer 1999) and Lando
et al. (eds), Principles of European Contract Law – Part III (Kluwer 2003).
41 Schulze, ‘The New Shape of European Contract Law’ (2015) EuCML 139–144.
42 Müller-Graff, Gemeinsames Privatrecht in der Europäischen Gemeinschaft (2nd edn, Nomos 1999)
130.
43 Kötz/Flessner, European Contract Law, vol I (Clarendon 1998).
44 ‘The Trento Common Core Project’. The research network was created in 1993 at the University of
Trento and headed by Rudolf B. Schlesing; publications have included, for example, Cartwright/Hesselink
(eds), Precontractual Liability in European Private Law (CUP 2009); Zimmermann/Whittaker (eds), Good
Faith in European Contract Law (CUP 2000).
45 On this ‘evaluative’ approach see Lando, ‘Some Features of the Law of Contract in the Third Milleni-
um’ (2000) Scandinavian Studies in Law 343, 364; Vogenauer, ‘Gemeineuropäische Methodenlehre’ (2005)
ZEuP 234, 253.
46 See the extensive publication by Ranieri, Europäisches Obligationenrecht (3rd edn, Springer 2009); see
also Riesenhuber, EU-Vertragsrecht (Mohr Siebeck 2013) § 1 mn. 2. For a comparison of contract laws in
Europe see Cabrillac, Droit européen comparé des contrats (2nd edn, LGDJ 2016).
47 Zimmermann, Law of Obligations (Clarendon 1996).
8
II. Contract law as part of European private law
‘acquis commun’49 is used to refer to the common stock of legal principles and views in
Europe (i.e. the pendant of the acquis communautaire) and thus including the sets of
rules that have been drafted on the basis of a comparative-historical approach.
dd) Fourthly, in an overarching respect the concept of European private law ultimately 22
serves to describe the differences between the three aforementioned definitions, yet
equally as complementary sources or elements contributing to the development of this
area of law.50
48 See Grossi, Das Recht in der europäischen Geschichte (C.H. Beck 2010); Schulze, ‘Vom Ius commune
bis zum Gemeinschaftsrecht’ in Schulze (ed), Europäische Rechts- und Verfassungsgeschichte (Duncker &
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Humblot 1991) 3; Schulze, ‘Allgemeine Grundsätze und europäisches Privatrecht’ (1993) ZEuP 442, 447–
457.
49 Jansen/Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the “Princi-
ples of the Existing EC Contract Law”’ (2008) MLR 505; Zoll, ‘Die Grundregeln der Acquis-Gruppe im
Spannungsverhältnis zwischen Acquis commun und Acquis communautaire’ (2008) GPR 106.
50 Müller-Graff, Gemeinsames Privatrecht in der Europäischen Gemeinschaft (2nd edn, Nomos 1999) 14–
17; Schulze, ‘Allgemeine Grundsätze und europäisches Privatrecht’ (1993) ZEuP 442.
51 Schulze, ‘Contours of European Private Law’ in Schulze/Schulte-Nölke (eds), European Private Law –
Current Status and Perspectives (Sellier 2011) 3–8; Schulze, ‘Nuevos rasgos del Derecho privado en Europa’
(2015) Revista de Derecho Privado (Publicación Centenario) 139–166.
52 Schuman Declaration – 9 May 1950, available online under http://europa.eu/about-eu/basic-informa
9
Chapter 1 Foundations
European Private Law – Current Status and Perspectives (Sellier 2011); Twigg-Flesner (ed), The Cambridge
Companion to European Union Private Law (CUP 2010).
58 C–6/64 Costa ECLI:EU:C:1964:66; C–106/77 Simmenthal II ECLI:EU:C:1978:49.
59 For more detail see Borchardt, Die rechtlichen Grundlagen der Europäischen Union (6th edn, UTB
2015) 81–94; Handbuch Europarecht/Ehlers, Verhältnis des Unionsrechts zu dem Recht der Mitgliedstaa-
ten mn. 6–8; Heiderhoff, Europäisches Privatrecht (5th edn, C.F. Müller 2020) mn. 8; Oppermann/Classen/
Nettesheim, Europarecht (7th edn, C.H. Beck 2016) 20–23; Streinz/Pechstein, EUV/AEUV (2nd edn, C.H.
Beck 2012) Art. 1 mn. 7–8.
60 C–6/64 Costa ECLI:EU:C:1964:66; C–11/70 Internationale Handelsgesellschaften ECLI:EU:C:
1970:114; C–106/77 Simmenthal II ECLI:EU:C:1978:49; see Craig/de Búrca, EU Law (6th edn, OUP 2015)
266–315; Handbuch Europarecht/Ehlers, Verhältnis des Unionsrechts zu dem Recht der Mitgliedstaaten
mn. 9–10.
61 See C–66/81 Pommerehnke ECLI:EU:C:1982:130 para. 19–20.
62 Handbuch Europarecht/Ehlers, Verhältnis des Unionsrechts zu dem Recht der Mitgliedstaaten mn.
104; Reich, Understanding EU Law (2nd edn, Intersentia 2005) 49–50; Schulte-Nölke/Schulze, Europäische
Rechtsangleichung und nationale Privatrechte (Nomos 1999).
63 Basedow, ‘Der Europäische Gerichtshof und das Privatrecht’ (2010) 210 AcP 157; Handbuch Euro-
10
II. Contract law as part of European private law
(CUP 2010) 101, 110–114. On the role of courts in general see Smits, ‘The future of contract law in Euro-
pe’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward Elgar 2016)
554–556.
64 Rodriguez Iglesias, ‘Gedanken zum Entstehen einer Europäischen Rechtsordnung’ (1999) NJW 1.
65 See, for example, the following proposals from the European Commission, ‘Proposal for a Council
Directive on unfair terms in consumer contracts’ COM(90) 322 final, 9 et seq.; ‘Proposal for a Council
Directive on the protection of consumers in respect of contracts negotiated at a distance (distance selling)’
COM(92) 11 final, 8 et seq.; ‘Commission Green Paper on guarantees for consumer goods and after-sales
services’ COM(93) 509 final, 17 et seq.
66 See mn. 32 et seq.
67 Some Member States (e.g. Germany) extended the scope of the protection under the Doorstep Selling
Directive to include contracts concluded on the street or on public transport although these were not cov-
ered under the Doorstep Selling Directive (see Recital 22 CRD).
68 Schulze, ‘Les divergences franco-allemandes dans la théorie du contrat’ (2013) 4 RDC 1720, 1741;
Schulze, ‘Vertragsverhandlungen – eine kurze Einführung’ in Bien/Borghetthi (eds), Die Reform des fran-
zösischen Vertragsrechts (Mohr Siebeck 2018) 3, 9.
69 For example for the Netherlands Wesseling, ‘The Netherlands’ in Cahill (ed), The Modernisation of
EU Competition Law Enforcement (CUP 2004) 408; Zippro, Privaatrechtelijke handhaving van mededing-
ingsrecht (Kluwer 2009) 15–16.
70 Schulze, ‘The New Shape of European Contract Law’ (2015) EuCML 139, 141.
11
Chapter 1 Foundations
1. Types of rules
28 Contract law is of central importance for the internal market. As such it is not sur-
prising that a comprehensive body of rules concerning contracts is contained in EU pri-
mary and secondary law (the acquis communautaire). Secondary law mostly encompass-
es numerous directives that have been passed to achieve uniformity in different ‘policy’
areas. In comparison, as an instrument of legal unification the regulation has so far
played a relatively lesser role, though it is the preferred form of legislation for European
private international law and procedural law – in particular, the Rome I Regulation71 is
of key importance for the law applicable to contractual obligations. Some regulations are
nonetheless of great significance in aspects of substantive contract law (e.g. the Denied
Boarding Regulation and the Rail Passenger Regulation on passenger rights, and the ex-
emptions to competition law72 for distribution contracts and now also the Portability
Regulation, the Geo-blocking Regulation and the Platform Regulation with regard to le-
gal issues presented by digitalization).
2. Primary law
29 Although primary law regulates the EU’s competences (in particular
Art. 114(1) TFEU as the general provision on harmonization measures serving the de-
velopment of the internal market73) and thus the basis for EU contract law, its impor-
tance in this area is not limited to affording legislative competence to the European leg-
islator. Firstly, primary law also contains provisions directly related to the effectiveness
of contracts and therefore shapes the relationship between the contracting parties (in
particular Art. 101(2) TFEU for competition law). Secondly, primary law includes a se-
ries of central principles of contract law that are to be considered in the interpretation
and systematization of secondary law.
30 The principle of freedom of contract is a central tenet of contract law – as well as in
European private law74 – and has a footing in EU primary law. Freedom of contract is
underpinned by the fundamental freedoms in Art. 28 et seq. TFEU75 and is inseparably
linked with the ‘principle of an open market economy with free competition’ (see
Art. 119(1) TFEU). It is viewed as a necessary requirement in order to give full effect to
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
the fundamental freedoms and, furthermore, is based on additional primary law provi-
and contract law’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward
Elgar 2016) 18–19; see also Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 30 et seq.;
Weatherill, EU Consumer Law and Policy (2nd edn, Edward Elgar 2013) 10 et seq., 62 et seq.
74 See Chapter 2 mn. 83 et seq.; Heiderhoff, Europäisches Privatrecht (5th edn, C.F. Müller 2020) mn.
233–234.
75 The freedoms are the free movement of goods (Art. 28 et seq., 34 et seq. TFEU), free movement of
services (Art. 56 et seq. TFEU), freedom of establishment (Art. 49 et seq. TFEU), free movement of
workers (Art. 45 et seq. TFEU), and free movement of capital and payments (Art. 63 et seq. TFEU).
12
III. Contract law in the acquis communautaire
sions (in particular, Art. 2 and Art. 3(2) TEU and Art. 6 et seq. CFR).76 Freedom of con-
tract has also received judicial acknowledgment in ECJ decisions.77
The protection against discrimination in relation to the conclusion and content of 31
contracts is a further highly important general principle anchored in EU primary law.
Nonetheless, if there is contradictory Member State law the (complex and controversial)
jurisprudence of the ECJ78 requires specificity of the principle of non-discrimination by
means of a directive. 79 The legislative basis for anti-discriminatory measures is, however,
provided by numerous provisions in primary law, in particular Art. 19 TFEU and
Art. 157 TFEU (equal pay) as well as the values enshrined in Art. 10 TFEU and Art. 21
and 23 CFR. Consumer protection – to the extent to which one considers this a principle
of EU law80 – is also based on EU primary law (Art. 12, 169 TFEU and Art. 38 CFR).
These aforementioned examples may increase future significance of the Charter of Fun-
damental Rights in order to determine the EU principles and underlying ideas relevant
to contract law. This concerns, above all, the fundamental protection of human dignity
(Art. 1 CFR), the protection of personal data (Art. 8 CFR), the freedom to choose an oc-
cupation (Art. 15 CFR), the freedom to conduct a business (Art. 16 CFR), the right to
property (Art. 17 CFR) as well as the freedoms anchored in Art. 10 et seq. CFR.
3. Directives
a) Development
Secondary law on aspects of contracts has developed primarily through directives 32
serving to achieve various policy aims anchored in the treaties. One of these aims in-
cludes consumer protection, which has been a prominent subject of European legisla-
tion.81 Since the 1980s, consumer protection legislation has rapidly extended to core
areas of contract law, such as content of contracts (Unfair Terms Directive) conse-
quences of non-performance and non-conforming performance (Consumer Sales Direc-
tive, now the Sale of Goods Directive, Consumer Rights Directive, and Digital Content
Directive) and pre-contractual duties (now in the Consumer Rights Directive). These
Directives brought numerous new features to several Member States, for instance exten-
sive information duties, withdrawal rights, control of standard contract terms or giving
priority to specific performance over other remedies in (consumer) contract law. Fur-
thermore, notable innovate features82 can be seen in contract law directives that (along-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
side consumer protection) also cover numerous policy areas each often linked to the ob-
76 Contract II/Schulze Art. 4:101 mn. 3; Lorenz, Der Schutz vor dem unerwünschten Vertrag (C.H. Beck
C:1998:509 para. 17; see also AG Geelhoed, C–334/00 Tacconi ECLI:EU:C:2002:68 para. 55; C–434/08
Harms ECLI:EU:C:2010:285; C–283/11 Sky Österreich ECLI:EU:C:2013:28 para. 42.
78 C–144/04 Mangold ECLI:EU:C:2005:709; C–427/06 Bartsch ECLI:EU:C:2008:517; C–555/07 Kü-
European Economic Community for a consumer protection and information policy [1975] OJ C92/1; the
first legislative measures in contract law included the Doorstep Selling Directive – (since repealed by the
Consumer Rights Directive) as well as by the Package Travel Directive (1990) (repealed in 2015 by the
Package Travel Directive). See also Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 38 et
seq.
13
Chapter 1 Foundations
jective of promoting the internal market e.g. protection and promotion of SMEs, promo-
tion of information society services and, in particular, e-commerce and the use of online
intermediaries (platforms), payment services and protection against discrimination.83
b) Fragmentation
33 Contract law in the acquis communautaire is thus heavily based on legislation passed
over the course of many decades, in the context of different areas, and to achieve differ-
ent objectives. Such legislation was often a reaction to the challenges for the internal
market in a particular policy area and was driven by varying political priorities without
an underlying overall concept. Consequently, the ‘policy’ and ‘sector-guided’ approach
was not especially appropriate for encouraging the internal market via the creation of a
coherent and overarching contract law. The legislation has thus often been described as
‘fragmented’, ‘pointillist’ and sometimes with contradictions in its values.84 Even the ef-
forts towards a summary and systematization of directives within individual policy areas
came much later and had limited success. The Consumer Rights Directive is an ideal il-
lustration of such an outcome as the original proposal85 intended to give a new, single
structure to four consumer law directives,86 whereas the final version of the Directive
only summarizes two of the original four directives and is, in this respect, only of limited
success.87
tion does indeed set a minimum standard across the EU, however selling goods or pro-
viding services in the internal market requires businesses to draft their contract terms,
calculate their prices, and devise their methods of sale and supply in accordance with the
individual levels of protection in the national laws. In light of this issue one may doubt
the effectiveness of minimum harmonization in achieving internal market objectives.
35 The EU legislator has since adopted a change in approach by selecting full harmo-
nization over minimum harmonization. This transition can be seen in a number of more
82 Schulze, ‘Contours of European Private Law’ in Schulze/Schulte-Nölke (eds), European Private Law –
Current Status and Perspectives (Sellier 2011) 3; Schulze, ‘The CESL's Innovative Features – A Brief
Overview’ (2013) CIEU 485.
83 For more detail see mn. 38 et seq.
84 Honsell, ‘Die Erosion des Privatrechts durch das Europarecht’ (2008) ZIP 621, 630; Schulze, ‘Euro-
pean Private Law and Existing EU Law’ (2005) ERPL 3, 4; Twigg-Flesner, ‘Introduction’ in Twigg-Flesner
(ed), The Cambridge Companion to European Union Private Law (CUP 2010) 8.
85 COM(2008) 614 final.
86 Originally eight directives, see COM(2006) 744 final, 3.
87 See Hilbig-Lugani, ‘Neuerungen im Außengeschäftsraum- und Fernabsatzwiderrufsrecht Teil 1’
(2013) ZJS 44; Hondius, ‘The Proposal for a Directive on Consumer Rights’ (2011) ERPL 163.
14
III. Contract law in the acquis communautaire
recent consumer protection directives88 – for instance, the Distance Marketing of Finan-
cial Services Directive, the new versions of the Consumer Credit, Package Travel, and
Timeshare Directives, the Consumer Rights Directive, the Digital Content and the Sale
of Goods Directives. Art. 288(3) TFEU continues to afford the Member States the free-
dom of choice and form for the implementation (individual legislative acts, consumer
code or civil code),89 however the level of consumer protection may not exceed or be
lower than the level foreseen by the directive. Full harmonization therefore obtains far-
reaching harmonization of the content of national laws and thus offers a better solution
than minimum harmonization for easing cross-border transactions. Nevertheless, full
harmonization excludes the possibility for consumer-friendlier national rules and can
therefore lower the level of protection previously afforded to consumers under national
law.
Furthermore, a problem particular to full harmonization appears to be the lack of 36
scope available to Member States when aligning national law with European standards.
Such an issue may prove to be an obstacle in relation to the voluntary ‘gold-plating’ of
directives, as was seen in the discussion surrounding the Consumer Rights Directive.90
Extensive criticism of the proposal for this Directive ultimately resulted in a reduction of
its scope of application to relatively narrow and clearly definable matters not closely in-
terlinked with other matters of national law (in particular, provisions on information
duties and withdrawal rights, which have often been established in national law on the
basis of EU legislation rather than previous national legal traditions). In contrast, at the
time the proposed full harmonization of the control of unfair contract terms and guar-
antees in consumer sales appeared to have been perceived as an extensive intrusion into
the national legal systems. One may now see that this perception has changed with re-
spect to consumer guarantees due to the full harmonization via the new Sale of Goods
Directive. It therefore remains to be seen whether the transition from minimum to full
harmonization will continue to such an extent in the future. The shift is most likely to be
seen in the legal issues surrounding digitalization or the contractual basis for the unob-
structed transfer of data in the internal market, as far as the Member States’ laws in these
fields have not fully taken shape and harmonization through regulations is not already
sought (e.g. recently for geo-blocking, portability, and online intermediaries91). On the
whole, the approach to contract law legislation via directives may therefore continue be
the combination of both methods: minimum harmonization with its advantages for con-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
sumer protection and disadvantages for internal market objectives, and full harmoniza-
tion in specific fields with its advantages for the internal market and its possible disad-
vantages for the level of consumer protection and respect for individual Member States’
legal systems.
88 Not, however, for the Mortgage Credit Directive. On the shift to full harmonization in consumer law
directives see Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 40–42.
89 For criticism of the appropriate flexibility afforded under full harmonization see Micklitz/Reich,
‘Crónica de una muerta anunciada: The Commission Proposal for a “Directive on Consumer Rights”’
(2009) CMLR 471, 477–478; Twigg-Flesner/Metcalfe, ‘The Proposed Consumer Rights Directive – Less
Haste, More Thought?’ (2009) ERCL 368, 373. On the implementation of the Consumer Rights Directive
into national law see De Cristofaro, ‘After the implementation of the Consumer Rights Directive in the
Member States’ in De Cristofaro/De Franceschi (eds), Consumer Sales in Europe (Intersentia 2016) 5–7.
90 Howells/Schulze, ‘Overview of the Proposed Consumer Rights Directive’ in Howells/Schulze (eds),
Modernising and Harmonising Consumer Contract Law (Sellier 2009) 3; Loos, ‘Full harmonization as a
regulatory concept and its consequences for the national legal orders. The example of the Consumer rights
directive’ in Stürner (ed), Vollharmonisierung im Europäischen Verbraucherrecht? (Sellier 2010) 47; Zoll,
‘The Remedies for Non-Performance in the Proposed Consumer Rights Directive and the Europeanisa-
tion of Private Law’ in Howells/Schulze ibid. 279.
91 See mn. 71.
15
Chapter 1 Foundations
ECJ decision:
C–143/18 Romano ECLI:EU:C:2019:701
– Consumer Credit Directive (Directive 2008/48/EC of the European Parliament and
of the Council of 23 April 2008 on credit agreements for consumers and repealing
Council Directive 87/102/EEC [2008] OJ L133/66).
ECJ decisions:
C–76/10 Pohotovosť ECLI:EU:C:2010:685
C–602/10 SC Volksbank România ECLI:EU:C:2012:443
C–565/12 Crédit Lyonnais ECLI:EU:C:2014:190
C–449/13 Consumer Finance ECLI:EU:C:2014:2464
C–377/14 Radlinger ECLI:EU:C:2016:283
C–42/15 Home Credit Slovakia ECLI:EU:C:2016:842
C–127/15 Verein für Konsumenteninformation ECLI:EU:C:2016:934
Joined cases C–511/15 and C–512/15 Horžić ECLI:EU:C:2016:787
C–58/18 Schyns ECLI:EU:C:2019:467
C–331/18 Pohotovost´ ECLI:EU:C:2019:665
C–383/18 Lexitor ECLI:EU:C:2019:702
16
III. Contract law in the acquis communautaire
17
Chapter 1 Foundations
of contract law:
– Commercial Agents Directive (Council Directive 86/653/EEC of 18 December
1986 on the coordination of the laws of the Member States relating to self-employed
commercial agents [1986] OJ L382/17).
ECJ decisions:
C–184/12 Unamar ECLI:EU:C:2013:663
C–338/14 Quenon ECLI:EU:C:2015:795
C–645/16 CMR ECLI:EU:C:2018:262
C–48/17 ERGO Poist’ovňa ECLI:EU:C:2017:377
C–452/17 Zako ECLI:EU:C:2018:935
92 For the purposes of the Package Travel Directive (1990) the notion of the consumer under Art. 2 No.
4 covered ‘the person who takes or agrees to take the package’ thus allowing businesses to be protected by
the Directive's provisions. The new Package Travel Directive uses the notion ‘traveller’ to refer to the pro-
tected party (which may not necessarily be a consumer as defined in other EU legislation), see Recital 7
PTD.
18
III. Contract law in the acquis communautaire
c) E-Commerce
Three particular pieces of legislation are of importance for promoting information 39
society services, e-commerce and the use of online intermediaries (internet platforms):
– E-Commerce Directive (Directive 2000/31/EC of the European Parliament and of
the Council of 8 June 2000 on certain legal aspects of information society services,
in particular electronic commerce, in the Internal Market [2000] OJ L178/1).
ECJ decisions:
C–292/10 G ECLI:EU:C:2012:142
C–360/10 SABAM ECLI:EU:C:2012:85
C–484/14 McFadden ECLI:EU:C:2016:689
C–434/15 Asociación Profesional Elite Taxi ECLI:EU:C:2017:981
C–521/17 SNB-React ECLI:EU:C:2018:639
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
19
Chapter 1 Foundations
d) Payment services
40 The development of an internal market concerning various important banking ser-
vices (collectively known as ‘payment services’) was formerly the objective of several se-
parate pieces of legislation. This legislation is now comprised in one directive:
– Payment Services Directive (Directive (EU) 2015/2366 of the European Parliament
and of the Council of 25 November 2015 on payment services in the internal mar-
ket, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regu-
lation (EU) No 1093/2010, and repealing Directive 2007/64/EC).
ECJ decision:
C–643/16 American Express ECLI:EU:C:2018:67
e) Non-discrimination
41 Several directives serve to protect against discrimination. The relevance of such pro-
tection in general contract law is highlighted by the extension beyond the employment
sector to include the access to and supply of goods and services:
– Racial Equality Directive (Council Directive 2000/43/EC of 29 June 2000 imple-
menting the principle of equal treatment between persons irrespective of racial or
ethnic origin [2000] OJ L180/22).
ECJ decisions:
C–83/14 CEZ Razpredelenie Bulgaria ECLI:EU:C:2015:480
C–668/15 Jyske Finans ECLI:EU:C:2017:278
– Employment Equality Directive (Council Directive 2000/78/EC of 27 November
2000 establishing a general framework for equal treatment in employment and occu-
pation [2000] OJ L303/16).
ECJ decisions:
C–335/11 HK Danmark ECLI:EU:C:2013:222
C–143/16 Abercrombie & Fitch Italia ECLI:EU:C:2017:566
C–270/16 Ruiz Conejero ECLI:EU:C:2018:17
C–154/18 Hogan & Keegan ECLI:EU:C:2019:113
C–397/18 Nobel Plastiques Ibérica ECLI:EU:C:2019:703
– Gender Directive (Council Directive 2004/113/EC of 13 December 2004 imple-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
menting the principle of equal treatment between men and women in the access to
and supply of goods and services [2004] OJ L373/37).
– Equal Treatment Directive (Directive 2006/54/EC of the European Parliament and
of the Council of 5 July 2006 on the implementation of the principle of equal oppor-
tunities and equal treatment of men and women in matters of employment and oc-
cupation [2006] OJ L204/23).
ECJ decisions:
C–415/10 Meister ECLI:EU:C:2012:217
C–361/12 Carratù ECLI:EU:C:2013:830
C–592/12 Napoli ECLI:EU:C:2014:128
f) Insurance contracts
42 The development of the internal market for several forms of insurance (and to some
extent customer protection) is served by, inter alia, the following Directive relevant to
contract law:
20
III. Contract law in the acquis communautaire
g) Others
Furthermore, the acquis communautaire includes legislation which potentially affects 43
contract law, but which was passed to achieve different objectives – from specific pur-
poses such as the return of cultural objects to the wider purpose of freedom of services.
Further legislation has been introduced in light of the challenges presented by digitaliza-
tion, for instance the Portability Regulation (which affords a customer EU-wide access
to online content services outside of the home Member State) and the Geo-blocking
Regulation (which bans unjustified geo-blocking and similar forms of discrimination).
– Markets in Financial Instruments Directive (Directive 2004/39/EC of the Euro-
pean Parliament and of the Council of 21 April 2004 on markets in financial instru-
ments amending Council Directives 85/611/EEC and 93/6/EEC and Direc-
tive 2000/12/EC of the European Parliament and of the Council and repealing
Council Directive 93/22/EEC [2002] OJ L145/1).
ECJ decisions:
C–604/11 Genil 48 ECLI:EU:C:2013:344
– Services Directive (Directive 2006/123/EC of the European Parliament and of the
Council of 12 December 2006 on services in the internal market [2006] OJ L376/36).
ECJ decisions:
C–57/12 Femarbel ECLI:EU:C:2013:171
C–360/15 X ECLI:EU:C:2018:44
C–434/15 Asociación Profesional Elite Taxi ECLI:EU:C:2017:981
C–320/16 Uber France ECLI:EU:C:2018:221
Joined cases C–473/17 and C–546/17 Respol Butan ECLI:EU:C:2019:308
C–390/18 Airbnb Ireland ECLI:EU:C:2019:1112
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21
Chapter 1 Foundations
1. Academic approaches
a) Principles of European Contract Law
44 The further development of the internal market and the increasing inclusion of as-
pects of private law in EU legislation have provided the background for legal scientists to
develop an overarching system of European contract law. Pioneering work on an overar-
ching system was first undertaken by an international group of scholars headed by the
Danish comparative lawyer, Ole Lando, who together formed the ‘Commission for Euro-
pean Contract Law’ and produced the ‘Principles of European Contract Law’ (PECL)93.
These Principles have above all become a model for subsequent research on European
contract law as they include the most important aspects of general contract law struc-
tured according to the potential sequence of contractual events (i.e. the ‘life cycle of the
contract’ from conclusion and effectiveness, to interpretation, content and the effects, to
performance and remedies for non-performance). The first two parts of the PECL are
limited to contract law,94 abstain from the use of more extensive notions (such as ‘legal
transaction’), and therefore avoid a system based on one individual national tradition.
The PECL are based on a comparison of national laws through which ‘common princi-
ples’, corresponding tendencies or, ultimately, ‘best solutions’ may be discovered.95 Such
an approach allowed for considerable use of the results of comparative studies on sales
law undertaken in the 1930s by Ernst Rabel,96 and the CISG, which was based on Rabel’s
comparative studies. In coordination with parallel work on the UNIDROIT Principles
on International Commercial Contracts (PICC),97 the Lando Commission developed the
CISG model into a general contract law that is generally applicable to all types of con-
tract without regulating a specific contract type.
b) Pavia Draft
45 The Pavia Draft of a European Contract Code’98 completed in Pavia by the Academy
of European Private Lawyers (headed by Guiseppe Gandolfi) is a further pioneering
project for European contract law. In contrast to the PECL the ‘Pavia Draft’ included
several provisions of European consumer law in the general contract law and is designed
to include supplementary rules for specific types of contract.99 However, this project
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
does have several weaknesses, such as its lesser focus on the CISG (which was already
adopted by numerous European countries) and, despite international contributors, a fo-
cus on Italian law rather than a broader comparison.
93 See Lando/Beale (eds), Principles of European Contract Law – Parts I & II (Kluwer 1999); on the
working method see Beale, ‘Towards a Law of Contract for Europe: the work of the Commission of Euro-
pean Contract Law’ in Weick (ed), National and European Law on the Threshold to the Single Market (Peter
Lang 1993) 177; Lando, ‘My life as a lawyer’ (2002) ZEuP 508, 519–522.
94 Part III PECL varies in this respect, see Lando et al. (eds), Principles of European Contract Law – Part
ative method’ in Twigg-Flesner (ed), The Cambridge Companion to European Union Private Law (CUP
2010); Vogenauer, ‘Gemeineuropäische Methodenlehre’ (2005) ZEuP 234, 253.
96 Rabel, Das Recht des Warenkaufs. Eine rechtsvergleichende Darstellung (2 vols, de Gruyter 1936/1957).
97 Bonnell, An International Restatement of Contract Law (3rd edn, Brill 2004); Zimmermann, ‘Kon-
22
IV. Coherency of European contract law
d) Acquis Principles
The aforementioned earlier drafts could however only initially make a small contri- 47
bution to improving the coherency of EU contract law: the drafts were developed at a
time in which consideration of the acquis communautaire was either not possible or very
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
limited. Such drafts instead emerged on the basis of comparisons of national laws
(though the Pavia Draft focused heavily on one national law) and not on the basis of an
analysis of EU law and with consideration of its particular needs. Similarly, a primary or
exclusive emphasis on the comparison of national laws can be seen in research intending
to give an academic account of European contract law, for instance in the context of a
textbook, but without an initial in-depth focus on the features of the new supranational
100 For a comprehensive overview see Schwenzer/Pachem/Kee, Global Sales and Contract Law (OUP
2012) 7 et seq. See also, for the United Kingdom, Rodger, ‘The Codification of Commercial Law in Victo-
rian Britain’ (1992) LQR 570.
101 The Association Henri Capitant was founded in 1935 by a group of jurists from various French-
speaking countries and was directed by Prof. Henri Capitant. For further information see www.henricapita
nt.org (in French).
102 See Association Henri Capitant, The integration of European business law: acquis and outlook (LGDJ
2016). See Schulze, ‘Towards a European Business Code?’ (2016) CIEU 413; also Schulze, ‘Das Europäi-
sche Wirtschaftsgesetzbuch – eine Chance für den Binnenmarkt’ (2016) IWRZ 241. For criticism see
d’Avout, ‘Das erstaunliche Projekt eines europäischen Wirtschaftsgesetzbuches’ (2019) ZEuP 653.
103 Available (in German and French) under www.bundestag.de/resource/blob/682444/c10b7f6beef5a9
23
Chapter 1 Foundations
law in Europe.104 In this respect, there appears to have been a development of two paral-
lel worlds of European contract law: on the one hand an expanding but incoherent ac-
quis communautaire, and different, systematic drafts of an ideal European contract law
far from the reality of a supranational law, on the other.
48 There have been attempts since the 1990s to bridge the gap between legal science and
applicable law by seeking guiding principles and overarching concepts in EU primary
law and legislation on contract law (i.e. the contract law acquis communautaire).105 The
research, primarily initiated by the ‘Research Group on the Existing EC Private Law’
(Acquis Group),106 does not view the contract law of the EU as a series of separate legis-
lative acts for various policy areas but rather as the expression of guiding principles and
notions within the legislation. For example, several directives may express that an agree-
ment between the parties is necessary for the conclusion of contract;107 accordingly one
could state that the principle of agreement for conclusion of contract is valid as an over-
arching principle anchored in EU law. Similarly, various directives may contain provi-
sions concerning good faith and fair dealing108 as a principle of EU contract law that is
not specific to one separate field.109
49 The ‘Acquis Group’ thus drafted its ‘Principles of the Existing EC Contract Law (Ac-
quis Principles)’ through this approach.110 The Acquis Principles are generally quite
broad and therefore allow for application to various different types of contracts, in this
respect they represent – as the PECL – a general law of contract. However, the Acquis
Principles also consider that EU law affords specific rights and duties to particular cat-
egories of contract parties and thus limit the scope of application of several principles,
for instance to commercial or consumer contracts.111 Furthermore, the general rules are
supplemented by rules that are tailored to the needs of particular contracts or circum-
stances covered in existing EU law.112 Each chapter contains the general and specific
rules (in this order) for a particular subject matter e.g. pre-contractual duties, conclusion
of contract, etc. The chapters are structured to reflect the ‘life cycle of the contract’. How-
ever, although the chapters are structured in a manner similar to the PECL, the Acquis
Principles focus on the matters of considerable significance for EU contract law but
which were not (or to a much lesser extent) considered by the PECL, for instance pre-
As an example of this approach see Kötz/Flessner, European Contract Law, vol I (Clarendon 1998).
104
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Grundmann, ‘Europäisches Schuldvertragsrecht – Struktur und Bestand’ (2000) NJW 14; Riesenhu-
105
ber, System und Prinzipien des Europäischen Vertragsrechts (de Gruyter 2003); Schulze/Ajani (eds),
Gemeinsame Prinzipien des Europäischen Privatrechts (Nomos 2003); Schulze/Ebers/Grigoleit (eds), Infor-
mationspflichten und Vertragsschluss im Acquis communautaire (Mohr Siebeck 2003); Schulze/Schulte-
Nölke, ‘Europäisches Vertragsrecht im Gemeinschaftsrecht’ in Schulte-Nölke/Schulze (eds), Europäisches
Vertragsrecht im Gemeinschaftsrecht (Bundesanzeiger 2002) 229.
106 On the methods adopted in researching the acquis see Contract II/Dannemann, xxvi–xxviii; Schulze/
EU:C:2002:436.
108 Such as for consumer protection Art. 3(1) UTD; in relation to SMEs Art. 3(1) Commercial Agents
Directive.
109 For more detail on this principle and its limitations in EU contract law see Chapter 2 mn. 130 et seq.
110 Schulze, ‘I Principi Acquis. Situazione attuale e prospettive future della ricerca’ in De Cristofaro (ed),
I « Principi » del diritto comunitario dei contratti, Acquis communautaire e diritto privato europeo (Giap-
pichelli 2009) 1.
111 For more detail see Chapter 2 mn. 159 et seq.
112 For example, concerning off-premises contracts, contracts for the delivery of goods, package travel
contracts, commercial agency contracts, timeshare contracts, service contracts, consumer credit contracts
and payment services contracts.
24
IV. Coherency of European contract law
Common European Sales Law (CESL): An Introduction’ in Plaza Penadés/Martínez Velencoso (eds), Euro-
pean Perspectives on the Common European Sales Law (Springer 2015) 2 et seq.
118 COM(2003) 68 final, 16.
119 Ibid. 17.
120 Ibid. 16; Staudenmayer, ‘Der Aktionsplan der EG-Kommission zum Europäischen Vertragsrecht’
quis Group’ (see n 106); see von Bar/Clive/Schulte-Nölke (eds), DCFR – Outline Edition (Sellier 2009) 1.
123 CoPECL, see cordis.europa.eu/publication/project/id/513351 (last accessed 9 December 2020); Ei-
denmüller et al., ‘The Common Frame of Reference for. European Private Law—Policy Choices and Codi-
fication Problems’ (2008) Oxf J Leg Stud 659, 665; von Bar/Schulte-Nölke, ‘Gemeinsamer Referenzrahmen
für europäisches Schuld- und Sachenrecht’ (2005) ZRP 165.
25
Chapter 1 Foundations
‘Draft Common Frame of Reference’.124 However, this draft incorporated contract law
into a much more comprehensive set of rules that covered further areas of the law of
obligations (such as benevolent intervention in another’s affairs, and tort law125) as well
as property law.126 Book II DCFR is particularly noteworthy as a strong blend of the Ac-
quis Principles and comparative approach (mostly derived from the PECL) was used to
draft rules on the negotiation, conclusion, and content of contracts. In contrast, the
comprehensive DCFR primarily used the Acquis Principles as a basis for the rules on
non-discrimination, marketing and pre-contractual duties, and the right of withdraw-
al,127 whereas the chapters on representation and the grounds for invalidity128 are based
mainly on comparative research. The sections on conclusion of contract, as well as the
interpretation, content and the effect of contracts129 are also mostly founded by compar-
isons of national laws but do include principles of existing EU law. Book III DCFR fol-
lows a similar approach with regard to the obligations and corresponding rights (how-
ever, not just from contracts but generally from all juridical acts 130). Sales law in Book IV
A. DCFR is based primarily on existing EU law (in particular the Consumer Sales Direc-
tive).131 In contrast, other parts of the DCFR are based exclusively, or almost entirely on
comparative research (e.g. parts of Book IV DCFR on individual types of service con-
tracts and on donation132) and therefore with no reference to existing EU law. Despite
the criticisms of particular aspects,133 some core elements of contract law are provided
with a model composed of a possible combination of Acquis Principles and principles
obtained through comparative research.
124 von Bar/Clive/Schulte-Nölke (eds), DCFR – Outline Edition (Sellier 2009); see also Vaquer Aloy/
Bosch Capdevila/Paz Sánchez González (eds), Derecho Europeo de Contratos, Libros II y IV del Marco
Común de Referencia (Atelier Libros 2012).
125 Book V DCFR Benevolent intervention in another's affairs; Book VI DCFR Non-contractual liability
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Policy Choices and Codification Problems’ (2008) Oxf J Leg Stud 659; Schulze, ‘The Academic Draft of the
CFR and the EC Contract Law’ in Schulze (ed), ‘Common Frame of Reference and Existing EC Contract
Law’ (2nd edn, Sellier 2009) 11–12.
127 Book II Chapter 2, 3 and 5 DCFR.
128 Book II Chapters 6 and 7 DCFR; for an overview of invalidity of contract see Luchetti/Petrucci (eds),
Fondamenti di diritto contrattuale europeo, Dalle radici romane al Draft Common Frame of Reference
(Pàtron 2010) 31.
129 Book II Chapters 4, 8 and 9 DCFR.
130 See Chapter 2 mn. 1–5.
131 Book IV Part E DCFR is also strongly based on current EU law (in particular its Chapter 3 on com-
icy Choices and Codification Problems’ (2008) Oxf J Leg Stud 659; Schulze, ‘Gemeinsamer Referenzrah-
men und Acquis communautaire’ (2007) ZEuP 130, 137–141; Schulze, ‘The Academic Draft of the CFR
and the EC Contract Law’ in Schulze (ed), ‘Common Frame of Reference and Existing EC Contract Law’
(2nd edn, Sellier 2009) 12.
134 See the criticisms by Twigg-Flesner, ‘Introduction: EU consumer and contract law at a crossroads?’
in Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward Elgar 2016) 7. See
also Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 62–64.
26
IV. Coherency of European contract law
turned its attention to a project named in the Action Plan as a possible second step after
the completion of a Common Frame of Reference: the development of an optional in-
strument. Such a project aimed at devising a set of European contract law rules (in the
form of a regulation) that would be available to parties as an additional option to exist-
ing national contract laws. The Commission’s change in direction from the Common
Frame of Reference project to an optional instrument cannot be viewed separately from
the discussion surrounding the possibilities and limitations of approximation of laws via
minimum or full harmonization.135 In the Commission’s view, minimum harmonization
was not sufficient to overcome the obstacles to the internal market that were created by
the differences in the national laws. However, the criticism of the original scope of the
Consumer Rights Directive showed that broad full harmonization could indeed lead to
greater coherency of EU law, but at the expense of considerable interference with exist-
ing structures of national law; the Member States were therefore not prepared to follow
this path. Nonetheless, the concept of an optional instrument offered an alternative
route that had previously been paved (albeit in a different form) in company law
through the creation of a European Company (societas Europaea; SE).136 It opened up
the possibility of cross-border trade in the internal market on the basis of a uniform law
that can cover the entire area yet without infringing on national laws and national sys-
tems.
b) Preparation
Experts from academia and practice made the preparations for the optional contract 53
law within a year. The resulting ‘Feasibility Study for a future instrument in European
Contract Law’137 was based largely on corresponding sections from the DCFR and other
previous academic studies, but also contained its own approaches.138 In particular, the
‘Feasibility Study’ set the proposed regulation in the direction of a sales law yet retained
the approach of preceding academic works, i.e. a framework for a general European con-
tract law that could later encompass other types of contracts.
ed the legislative process. Whereas the substantive rules are mainly contained in an an-
nex (CESL), the actual text of the proposed regulation is limited mostly to definitions,
rules on the scope of application and the optional nature of the instrument (CESL-Reg).
The proposed CESL’s material scope of application was to comprise contracts for the 55
sale of goods, related services, and the supply of digital content (Art. 5 CESL-Reg). How-
ever, its personal scope of application was to cover only B–C contracts and B–B con-
tracts if at least one of these parties is a SME (Art. 7 CESL-Reg). The territorial scope of
application was, in principle, limited to cross-border contracts as according to Art. 4
CESL-Reg. However, each Member State would have had the choice to determine
135 Weatherill, EU Consumer Law and Policy (2nd edn, Edward Elgar 2013) 197–199.
136 Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute for a European company
(SE) [2001] OJ L249/1.
137 For further information see https://ec.europa.eu/commission/presscorner/detail/en/IP_11_523
(accessed 9 December 2020); Pfeiffer, ‘Unfaire Vertragsbestimmungen’ (2011) ERPL 835; Reich, ‘EU
Strategies in Finding the Optimal Consumer Law Instrument’ (2012) ERCL 1, 6; Staudenmayer, ‘Der
Kommissionsvorschlag für eine Verordnung zum Gemeinsamen Europäischen Kaufrecht’ (2011) NJW
3491, 3493.
138 On this study see Schulze/Stuyck (eds), Towards a European Contract Law (Sellier 2011).
27
Chapter 1 Foundations
whether the CESL may also apply to domestic contracts and to B–B contracts without
participation by a SME (Art. 13 CESL-Reg). In fulfilling each of these requirements the
parties could have chosen the CESL as the legal basis for their contract (Art. 3 CESL-
Reg) instead of national law. However, valid application of the CESL to the contract
would have required satisfaction of the additional criteria under Art. 8 et seq. CESL-
Reg.139 In comparison to the CISG, the CESL would therefore not apply ipso iure in the
absence of an agreement between the parties. By favouring an ‘opt-in’ rather than an
‘opt-out’ approach the parties to a planned contract would have had to agree on the ap-
plication of the CESL to their contract.140
d) Codification character
56 The substantive rules in the annex covered the phases in the ‘life cycle’141 of the con-
tract: from conclusion to content, to obligations of the parties and remedies for non-per-
formance, restitution, and prescription.
Structure of the proposed CESL
Part I Introductory provisions
Chapter 1 General principles and application
Part II Making a binding contract
Chapter 2 Pre-contractual information
Chapter 3 Conclusion of contract
Chapter 4 Right to withdraw in distance and off-premises contracts be-
tween traders and consumers
Chapter 5 Defects in consent
Part III Assessing what is in the contract
Chapter 6 Interpretation
Chapter 7 Contents and effects
Chapter 8 Unfair contract terms
Part IV Obligations and remedies of the parties to a sales contract or a contract
for the supply of digital content
Chapter 9 General provisions
Chapter 10 The seller’s obligations
Chapter 11 The buyer’s remedies
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139 For criticism of the higher standards under Art. 8(2) and 9 CESL-Reg for consumer contracts see
sches Kaufrecht für die EU? (C.H. Beck 2012) 15, 18–19; Schulze CESL/Schulte-Nölke, Art. 3 CESL mn. 2–3.
141 See the explanatory memorandum COM(2011) 635 final, 4, as well as Recitals 6 and 26. Claeys,
‘CESL Tools: Issues Settled, Matters Addressed, Rules, Principles, Objectives and All its Provisions’ in
Claeys/Feltkamp (eds), The Draft Common European Sales Law: Towards an Alternative Sales Law? (Inter-
sentia 2013) 19.
28
IV. Coherency of European contract law
142 Especially avoidance due to mistake, threat, fraud, and unfair exploitation, see Art. 48 et seq. CESL.
143 Part V CESL (Art. 147 et seq. CESL).
144 Part VIII CESL (Art. 178 et seq. CESL).
145 Schulze, ‘The CESL's Innovative Features – A Brief Overview’ (2013) CIEU 485, 495–497.
146 Chapter 8 CESL (Art. 79 et seq. CESL).
147 Annex 1 and 2 CESL.
148 Chapter 2 CESL (Art. 13 et seq. CESL).
149 In particular Art. 69 CESL.
150 Schulze, ‘Die Digitale-Richtlinie – Innovation und Kontinuität im europäischen Vergleich’ (2019)
proposal for a regulation of the European Parliament and of the Council on a Common European Sales
Law (P7_TA-PROV(2014)0159); also Opinion of the Council Legal Service 7139/12. Drawing the same
conclusion see i.a. Moser, ‘Der Kommissionsvorschlag für eine Verordnung über ein Gemeinsames Euro-
päisches Kaufrecht’ in Remien/Herrler/Limmer (eds), Gemeinsames Europäisches Kaufrecht für die EU?
(C.H. Beck 2012) 7; Micklitz/Reich, ‘The Commission Proposal for a ‘Regulation on a Common European
Sales Law (CESL)’ – Too Broad or Not Broad Enough?’ (2012) EUI LAW Working Paper 4–11; Micklitz/
Reich, ‘Wie ,,optional“ ist ein ,,optionales“ EU-Vertragsrecht’ (2011) EWS 113–115; Staudenmayer, ‘Der
Kommissionsvorschlag für eine Verordnung zum Gemeinsamen Europäischen Kaufrecht’ (2011) NJW
3491, 3495; cf, for example, Basedow, ‘Art. 114 AEUV als Rechtsgrundlage eines optionalen EU-
Kaufrechts: Eine List der Kommission?’ (2012) EuZW 1; Max Planck Institute for Comparative and Inter-
29
Chapter 1 Foundations
the principles of subsidiarity and proportionality,153 and the CESL’s nature as a ‘second
contract law regime within the national law of each Member State’154 and the relation-
ship to the Rome I Regulation.155 The legal objections were often tied the legal objec-
tions to political reservations regarding an extensive regulation of contract law –an ‘op-
tional instrument’ would have left the national sales laws intact,156 yet it appears to have
been the notion of a codification in the European legislative process which resulted in
scepticism. The significance of a codification for the unification of national laws and the
emergence of a national identity for several Member States during the 19th century may,
even in the present, be of particular symbolic importance and be perceived as a privilege
held by the national state.
59 The European Parliament did not join the Internal Market Committee (IMCO) in its
objections to the CESL157 but rather shared the view of the Legal Affairs Committee (JU-
RI)158 that the project should, in principle, be approved.159 The European Parliament did
suggest a series of changes to the proposed CESL, which include initially limiting the
scope of application160 and which built on suggestions from academia and legal practice
(e.g. concerning the scope of application, avoidance for defects in consent, remedies and
restitution).161
60 Strong objections and concerns surrounding the CESL raised by several Member
States162 and the Council prompted the newly elected Commission to remove the pro-
posed CESL from its ‘Work Programme 2015’163. At least for the time being, the Com-
national Private Law, ‘Policy Options for Progress Towards a European Contract Law: Comments on the
issues raised in the Green Paper from the Commission of 1 July 2010, COM(2010) 348 final’ (2011)
RabelsZ 371.
153 For example Schulte-Nölke, ‘How to realise the “Blue Button”? Reflections on an optional instrument
in the area of contract law’ in Schulze/Schulte-Nölke (eds), European Private Law – Current Status and
Perspectives (Sellier 2011) 89, 92; cf BT-Drucks. 17/8000 from 30 November 2011, ‘Stellungnahme zum
Vorschlag für eine Verordnung des Europäischen Parlaments und des Rates über ein Gemeinsames Euro-
päisches Kaufrecht’; Riesenhuber, ‘Der Vorschlag für ein „Gemeinsames Europäisches Kaufrecht“ – Kom-
petenz, Subsidiarität, Verhältnismäßigkeit’ (2012) EWS 7.
154 COM(2011) 635 final, 4. See Hesselink ‘How to opt into the Common European Sales Law? Brief
comments on the Commission's proposal for a regulation’ in Claeys/Feltkamp (eds), The Draft Common
European Sales Law: Towards an Alternative Sales Law? (Intersentia 2013) 7–8.
155 COM(2011) 635 final, 19; see Fornasier, ‘»28.« versus »2. Regime« – Kollisionsrechtliche Aspekte
eines optionalen europäischen Vertragsrechts’ (2012) RabelsZ 401; Hesselink ‘How to opt into the Com-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
mon European Sales Law? Brief comments on the Commission's proposal for a regulation’ in Claeys/
Feltkamp (eds), The Draft Common European Sales Law: Towards an Alternative Sales Law? (Intersentia
2013) 2–6; Staudenmayer, Vorschlag für eine Verordnung des Europäischen Parlaments und des Rates über
ein Gemeinsames Europäisches Kaufrecht (C.H. Beck 2012) 18–19; with correct criticisms Corneloup, ‘Der
Anwendungsbereich des Optionalen Instruments, die Voraussetzungen seiner Wahl und das Verhältnis
zur Rom I-VO’ (2012) ZEuP 705, 712–723; Reich et al., European Consumer Law (2nd edn, Intersentia
2014); Stadler, ‘Anwendungsvoraussetzungen und Anwendungsbereich des Common European Sales Law’
(2012) 212 AcP 473, 475–484.
156 On the national perceptions regarding the CESL see, for example, the contributions in De Cristo-
the European Parliament and of the Council on a Common European Sales Law (P7_TA-
PROV(2014)0159).
160 Ibid. amendment 2, Recital 9.
161 See Art. 4, 5, 7, 48, 50 a, 106, 107, 172, Art. 172a CESL; where the latter is concerned see also ELI,
Statement of the European Law Institute on the Proposal for a Regulation on a Common European Sales Law
COM(2011) 635 final (2012) 27–29, 112–114, 308–320 available online under https://www.europeanlawin
stitute.eu/projects-publications/completed-projects-old/proposed-cesl/ (last accessed 9 December 2020).
30
V. Focus on the Digital Single Market
mission has therefore abandoned the project to codify European sales law, but already in
2015 announced that the proposed CESL would be replaced with legislative measures ‘in
order to fully unleash the potential of e-commerce in the Digital Single Market’164. The
development of European contract law has since, to some extent, formed part of the
Commission’s digital agenda.165 Irrespective of the formal effect the Commission’s state-
ment of withdrawal and modified proposals will have on the legislative process, it is nev-
ertheless not to be expected that the CESL will be revived. However, the proposal for the
CESL is not entirely irrelevant for this new phase in the development of European con-
tract law. It can serve as an important foundation for the further development as it, de-
spite the criticisms, nonetheless summarized and structured prior developments, and
was innovative in its inclusion of the supply of digital content into a system of contract
law.
1. Overview
The beginning of new phase, in which the challenges of digitalization have greatly in- 61
fluenced the development of European contract law, was marked by proposals for regu-
lations concerning portability166 and geo-blocking167, but especially by the proposals for
the Digital Content Directive168 and for the Sale of Goods Directive169. According to the
(similar) wording of each proposal, each Directive shall contribute to the faster growth
of the Digital Single Market.170 The provisions of each Directive shall adopt a full harmo-
nization approach (with some exceptions171) with correlations between their respective
scope and content. More significantly, however, through their combination of continuity
and innovation, these twin Directives outline European contract law in light of the chal-
lenges presented by digitalization. Beyond these two Directives, the Modernization Di-
rective modifies several provisions in consumer contract law in order to accommodate
modern practices and legal issues, including those brought about by digitalization. In
this respect, the Platform Regulation is also noteworthy as it responds to the increasing
importance of online intermediaries for internal market trade, notably with provisions
concerns contract terms in B–B contracts.
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2. Legislation
a) Supply of digital content and digital services
The Digital Content Directive is of considerable important for contract practice and 62
contract law in the EU.172 In principle, it covers all types of B–C contracts which concern
162 BT-Drucks. 17/8000 from 30 November 2011, ‘Stellungnahme zum Vorschlag für eine Verordnung
des Europäischen Parlaments und des Rates über ein Gemeinsames Europäisches Kaufrecht’.
163 COM(2014) 910 final.
164 Ibid. Annex II, No. 60.
165 COM(2015) 192 final.
166 COM(2015) 627 final.
167 COM(2016) 289 final.
168 COM(2015) 634 final.
169 COM(2015) 635 final.
170 COM(2015) 634 final, 1.
171 In particular Art. 11(2) DCD (limitation periods for non-conformity), Art. 11(2) SGD (extension of
the reversal of burden of proof) and Art. 12 SGD (introduction of notification obligation). The Digital
Content Directive does not contain corresponding provisions for the reversal of the burden of proof or a
notification obligation and thus follows the full harmonization approach more extensively.
31
Chapter 1 Foundations
the supply of digital content or digital services, irrespective of their traditional cat-
egorization as sale, service, hire, etc. This applies not only when the consumer pays a
price but also in providing personal data to the trader as counter-performance (Art. 3(1)
DCD). The Directive therefore uses its scope of application to move away from the re-
strictions imposed by the traditional types of contract and, furthermore, takes into ac-
count the importance of data in the digital economy.173 Accordingly, the Directive covers
the millions of contracts concluded for applications on computers or smartphones, for
the streaming of films, music, etc.
63 The central elements of the Digital Content Directive concern the trader’s perfor-
mance obligations, the remedies for the consumer and the modification of the digital
content or digital service. The main performance obligation is referred to simply as the
‘supply of the digital content or digital service’ (Art. 5 DCD). In contrast to the Con-
sumer Sales Directive and to the new Sale of Goods Directive, Art. 5 DCD states the
obligation for the trader to perform (by supplying the digital content or digital service).
Art. 11 DCD regulates the consequences of a failure to supply; Art. 12(1) and Art. 13
DCD concern the burden of proof and the applicable remedies for the consumer, respec-
tively.
64 Art. 6–10 DCD regulate the conformity of the digital content or digital service. Art. 7
DCD concerns the subjective requirements for conformity with Art. 8 DCD stipulating
the objective requirements (which apply in addition to the subjective requirements).
Art. 9 DCD includes the incorrect integration of the digital content or digital service as a
specific aspect of non-conformity. Art. 10 DCD determines the rights for the consumer
in the event of restrictions resulting from the violation of third-party rights. These pro-
visions are to some extent based on the proposed CESL but further develop the notion of
conformity with regard to the demands surrounding the supply of digital content and
digital services.174 The provisions are especially innovative as they incorporate ‘updates’
and distinguish between single supply (or a series) and continuous supply over a period
of time. These new concepts are expressed in more detail in the Directive.175
65 The consequences of non-conforming performance (‘lack of conformity’) follow the
structure of the Directive and are regulated after the consequences of non-perfor-
mance:176 liability in Art. 11(2) and (3) DCD, burden of proof in Art. 12(2)–(5) DCD
and the remedies for the consumer in Art. 14 DCD. Unlike the Consumer Sales Direc-
tive, the reversal of the burden of proof in the event of a lack of conformity is extended
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
to one year (Art. 12(2) DCD). The structure of the remedies (including prioritizing rec-
tification of the non-conformity) corresponds with the approach set by the Consumer
Sales Directive, though with differences that take into account the particular characteris-
tics of digital content and digital services. For example, Art. 14(1) and (2) DCD favour
172 See, for example, Schulze, ‘Die Digitale-Inhalte-Richtlinie – Innovation und Kontinuität im europäi-
schen Vertragsrecht’ (2019) ZEuP 695; Sein/Spindler, ‘The new Directive on Contracts for the Supply of
Digital Content and Digital Services – Part 1’ (2019) ERCL 257, Part 2 (2019) ERCL 365; Staudenmayer,
‘Die Richtlinie zu den digitalen Verträgen’ (2019) ZEuP 663; Staudenmayer, ‘The Directives on Digital
Contracts – First steps towards the Private Law of the Digital Economy’ (2020) ERPL 219.
173 See Lohsse/Schulze/Staudenmayer (eds), Trading Data in the Digital Economy (Nomos 2017). See
also De Franceschi, La circolazione dei dati personali tra privacy e contratto (Edizioni Scientifiche Italiane
2017).
174 See EU Digital Law/Schulze/Staudenmayer, Introduction mn. 6 and the comments by Staudenmayer
132 et seq.; Schulze, ‘Die Digitale-Inhalte-Richtlinie – Innovation und Kontinuität im europäischen Ver-
tragsrecht’ (2019) ZEuP 695, 713 et seq.
176 See mn. 63.
32
V. Focus on the Digital Single Market
the broader expression ‘brought into conformity’ over the distinction between ‘repair’
and ‘replacement’.
Art. 15–18 DCD concern the exercise and obligations related to a termination of the 66
contract for the failure to supply or for the failure to supply in conformity with the con-
tract. Art. 15 DCD states that the consumer exercises the right to terminate via a corre-
sponding statement to the trader. Art. 16–18 DCD set out the obligations for the trader
and consumer in the event of termination. Here the nature of digital content and digital
services has also resulted in innovative approaches vis-à-vis restitution, e.g. the right to
prevent any further use of the digital content or digital service (Art. 16(5) DCD) and the
obligation to refrain from using the digital content or digital service (Art. 17(1) DCD).
Art. 19 DCD is certainly a new feature of the legal landscape. According to this provi- 67
sion ,the trader may, under particular circumstances, modify the digital content or digi-
tal service. Although this provision is closely linked to the trader’s obligation to ‘update’
the digital content or digital service (Art. 7 and 8 DCD), it allows the trader to modify
the content or service beyond what is necessary to maintain conformity, e.g. to supply a
new version.177
b) Sale of goods
The Sale of Goods Directive not only represents a shift from minimum harmoniza- 68
tion of consumer guarantees under the Consumer Sales Directive to their full harmo-
nization but also includes changes to consumer protection in light of digitalization. In
stark deviation from the Commission’s original proposal in 2015, the Sale of Goods Di-
rective does not apply only in instances of ‘online sales’, but its scope covers the ‘online’
and ‘offline’ sale of goods.178 In contrast to the Digital Content Directive the scope of the
Sale of Goods Directive rests on the classification of the contract as a sales contract (in-
cluding contracts for the supply of goods to be manufactured or produced).179 The Sale
of Goods Directive also applies to digital content or digital services where two require-
ments are satisfied: the digital content or digital service is incorporated in or inter-con-
nected with goods in such a way that the goods would not be able to perform their func-
tions without such content or service and the content or service is provided with the
goods under the sales contract.180 If these requirements are not fulfilled, the Digital Con-
tent Directive will apply.181 The Sale of Goods Directive thus applies to the sale of a
smartphone including the pre-installed applications according to the sales contract (e.g.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
the operating system), but the Digital Content Directive will apply to any applications
subsequently downloaded and installed on the smartphone.182 In contrast, the Digital
Content Directive – not the Sale of Goods Directive – applies where the tangible medi-
um which serves exclusively as a carrier for digital content, e.g. the sale of a DVD.183
177 For detail see EU Digital Law/Wendland, Art. 19 DCD; Staudenmayer, ‘Auf dem Weg zum digitalen
the European Parliament and of the Council on certain aspects concerning contracts for the supply of dig-
ital content’ (COM(2015) 634 final – 2015/0287 (COD)) and the ‘Proposal for a directive of the European
Parliament and of the Council on certain aspects concerning contracts for the online and other distance
sales of goods’ (COM(2015) 635 final — 2015/0288 (COD)) [2016] OJ C264/57.
179 Art. 3(1) and (2) SGD.
180 In case of doubt, this is to be presumed according to and Art. 3(4) DCD and Art. 3(3) SGD. On the
33
Chapter 1 Foundations
69 The provisions on conformity and the consumer’s remedies mainly follow the ap-
proach under the Consumer Sales Directive. However, there are distinctions,184 such as
the new notion of ‘durability’185 as an objective requirement for conformity, the one year
period for the reversal of the burden of proof,186 and the details concerning the condi-
tions for termination.187 The Sale of Goods Directive extends beyond the Consumer
Sales Directive by aligning with the Digital Content Directive in taking account of new
developments in contract practice brought about by digitalization, for instance the up-
date obligation in Art. 7(3) DCD188 but also the extension in Art. 8 DCD of the rule on
incorrect installation to cover the installation instructions provided by the supplier of
the digital content or digital service.189 The correlation between the rules of the Sale of
Goods Directive and those of the Digital Content Directive therefore illustrates how the
Sale of Goods Directive also contributes to creating a consumer contract law for the dig-
ital era.
c) Modernization Directive
70 The 2019 Modernization Directive is a further step by the European legislator to-
wards meeting the demands of modern contracting. The Directive modifies and adds to
a number of existing directives in order to improve enforcement and to modernize EU
consumer protection rules.190 For enforcement, the Directive further defines and ex-
pands the sanctions for infringing the implementation requirements under several direc-
tives, including the Unfair Terms Directive191 and the Unfair Commercial Practices Di-
rective.192 Where modernization is concerned, the Directive adapts the terminology and
content of earlier directives to the changes brought by digitalization and adopted in later
legislation. Examples include the extension of ‘product’ to include digital content and
digital services,193 consideration of the role of online intermediaries or ‘online market-
places’ and ranking in modern commercial practice,194 aligning the definitions of goods,
digital content, compatibility, functionality and interoperability under the Consumer
Rights Directive in order to be consistent with the respective definitions under the Digi-
tal Content Directive (and Sale of Goods Directive, where applicable),195 changing the
provisions on the scope and the obligations of the trader,196 and extending the applica-
tion of pre-contractual information obligations to online marketplaces.197
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184 For
more detail see Chapters 5, 6 and 7.
185 Art. 7(1)(d)
in conjunction with Art. 2 No. 13 SGD.
186 Art. 11(1) SGD.
187 Art. 13(4) SGD.
188 See Art. 8(2) DCD.
189 See Art. 9 DCD.
190 On the proposal, see Twigg-Flesner, ‘Bad Hand? The “New Deal” for EU Consumers’ (2018)
GPR 166.
191 Art. 1 Modernization Directive.
192 Art. 3 Modernization Directive, including damages and other remedies for consumers in relation to
unfair practices.
193 Amending Art. 2(1)(c) UCPD.
194 Inter alia, the introduction of Art. 2(1)(m) and (n), and Art. 7(4)(f) and (4a) UCPD and Art. 2(1)
34
V. Focus on the Digital Single Market
d) Online intermediaries
The further development of European contract law as a result of digitalization is not 71
limited to consumer law. Commercial contracts (i.e. B–B contracts) have also been sub-
ject to the developments, more specifically through the Platform Regulation. This Regu-
lation concerns, for instance, online intermediation services, online search engines as
well as online software application services and online social media services. The Regu-
lation aims foremost to increase the transparency of contract terms and business models
in the use of such of such online intermediaries by businesses. For instance, Art. 3 Plat-
form Regulation provides that terms and conditions should not only be drafted in plain
and intelligible language and be easily accessible but they should also contain specific
information. Whereas the scope of the Unfair Terms Directive covers only the control of
terms in consumer contracts, the Platform Regulation now ventures into the control of
contract terms in the commercial context. Two aspects of the transparency requirement
are particularly innovative: the obligation to give reasons if the provision of the online
intermediation service is restricted, suspended or terminated (Art. 4 Platform Regu-
lation) and the obligation to set out and give reasons for the main parameters determin-
ing ranking of search engine results (Art. 5 Platform Regulation). A similar obligation
also exists for any differentiated treatment given by the online intermediary service or
online search engine in relation to goods or services (Art. 7 Platform Regulation). Fur-
thermore, intermediary services (with some exceptions) are obliged to provide for an in-
ternal system for handling the complaints of business users (Art. 11 Platform Regu-
lation) and to identify mediators (Art. 12 Platform Regulation). Moreover, particular or-
ganizations or associations, and public bodies have the right to take action before the
competent courts for breaches of the Regulation (Art. 14 Platform Regulation). How-
ever, despite these new additions to the acquis, the Platform Regulation does not include
provisions concerning the liability of the online intermediary as the (often dominating)
third party in the contractual relationship and at the conclusion of contract between the
commercial users and their customers.198 Nonetheless, the European Commission has
recently published a proposal for a Regulation on contestable and fair markets in the
digital sector (Digital Markets Act).199
When viewing the EU legislation passed since the 2015 Digital Single Market Strate- 72
gy, one can see how contract law has been reshaped. Such change also includes the con-
siderable development of instruments and methods but also of the subject matter of con-
tracts. This section gives a broad outline with further detail given later in the book.
The increasing importance of the internet and of e-commerce in the 20th century 73
brought about changes in the instruments and methods of contracting. This concerns
the means of communication in preparing, concluding and performing not only individ-
ually-negotiated contracts but also for mass contracts. Aligning European contract law
with this change is mostly directed at utilising the potential of the new means of com-
munication to strengthen the internal market and to promote cross-border trade whilst
at the same time continuing to protect consumers and SMEs. Early important measures
include the Distance Selling Directive (later repealed by the Consumer Rights Directive),
198 More extensive, ELI, ‘Model Rules on Online Platforms’ (2019). See also Schulte-Nölke, ‘Plattform-
35
Chapter 1 Foundations
the Electronic Signatures Directive (repealed by the eIDAS Regulation) and the E-Com-
merce Directive (to be amended by a ‘Digital Services Act’200).
74 Since the transition to the 21st century, digitalization has made considerable inroads
in effecting changes in contract practice and impacted on the development of European
contract law at legislative, judicial and scholarly level. Methods and instruments of con-
tracting are now affected by the technological advancements in the field of artificial in-
telligence and its use in contracting.201 In concluding contracts ‘machine-to-machine’,
artificial intelligence determines not only the conclusion of contracts with particular
partners but can also adapt the content to the market. Artificial intelligence can choose
the content of the contract without the need for human intervention and even when the
decision was not even initially foreseeable for the operator (‘black box effect’202). How-
ever, the use of artificial intelligence in contract performance and in response to breach-
es has also resulted in fundamental changes. This is especially noticeable in so-called
‘self-executing contracts’, for instance credit or insurance contracts which can prevent
the use of the object purchased using credit or subject to an insurance policy (e.g. pre-
venting the use of a car if insurance premiums have not been paid). The same also ap-
plies to ‘autonomous’ services such as the payment of compensation for delayed or can-
celled flights. However, these new developments appear to rather be expressed in the
cautionary approaches adopted in legal practice and associated case law rather than in
EU legislative measures.
75 Digitalization has effected changes in contract practice, yet it is the changes in the
subject-matter of contracts which have received the most attention in European legisla-
tion. This can be clearly seen in the focus on data as counter-performance – an issue that
is also characteristic of the Digital Content Directive and key to determining the scope
of its application. Art. 2 No. 1 DCD defines digital content as data produced or supplied
in digital form, whereby Art. 2 No. 2 DCD uses the notion of data to define digital ser-
vices. As the subject-matter of contracts data also plays a central role in the Sale of
Goods Directive, the Modernization Directive and in other legal instruments.203 Fur-
thermore, the Digital Content Directive clearly expresses that data is not just important
for performance obligations in modern contracts but is also a core part of the obligation
to provide counter-performance for the digital content or digital service supplied.204
Contract law thus reflects the economic importance of data and its role in the ‘digital
economy’ and thereby poses questions of the protection of rights to data, ensuring access
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
200 See Proposal for a Regulation of the European Parliament and of the Council on a Single Market for
Digital Services (Digital Services Act) and amending Directive 2000/31/EC, COM(2020) 825 final.
201 On the following see Lohsse/Schulze/Staudenmayer, ‘Data as Counter-Performance – Contract Law
context of the relationship between consumer law and data protection law, see Helberger/Zuiderveen Bor-
gesius/Reyna, ‘The perfect match? A closer look at the relationship between EU consumer law and data
protection law’ (2017) CMLR 1427.
36
V. Focus on the Digital Single Market
digital content or digital service and links it in the same context to the notion of confor-
mity. The Digital Content Directive also adopts the same approach to the rules on non-
performance and non-conforming performance.206 Furthermore, the Directive transfers
concepts such as conformity and principles such as the hierarchy of remedies from the
field of consumer sales law to a more general level that, in principle, includes a broader
spectrum of contract types. Other concepts that were applying for specific contract types
(in particular to consumer sales under the Consumer Sales Directive) therefore lose
their exclusivity and becoming more general in application, such as the reversal of the
burden of proof and the trader’s right of redress. The law surrounding guarantees in
sales has therefore given rise to the development of a general law on contractual perfor-
mance which applies directly to all types of contract, including digital content and digi-
tal services, and whose principles may also become of further relevance in the future.
The new shape of European contract law also features several innovations in response 77
to the technological advancements through digitalization and the changes in contract
practice. The central role played by online intermediation services for the ‘digital single
market’ is reflected in the development of the principle of transparency, the new rules on
ranking and the adoption of the control of contract terms in the B–B field.207 The Digital
Content Directive has contributed greatly to reshaping contract law.208 This applies to
fundamental concepts such as ‘digital content’, ‘digital services’ and the ‘supply’ (the pen-
dant to ‘delivery’ in sales law) as well as innovative approaches such as the requirements
for supply209, the specific exclusions and the right to retrieve non-personal data210, and
the consumer’s obligation to refrain from using the digital content (or service) or mak-
ing it available to third parties.211
The new contract law also features various structural aspects, such as the provisions 78
on the interdependence between the digital content or digital service and its digital envi-
ronment, the ‘update’ obligation and the distinction between single performance and
performance over a period of time. The interdependence between different digital con-
tent and digital services, as a characteristic of digitalization, is expressed in the Digital
Content Directive (and in part in the Sale of Goods Directive) in the performance crite-
ria functionality, interoperability and compatibility212 as well as in the provision on the
integration of digital content and digital services into the digital environment.213 The
‘update’ obligation may be viewed as a response to the rapid technological developments
and thus as a significant part of the development of contract law in the digital age.214 It
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extends the requirements for conformity215 and is linked to the distinction between sin-
gle performance and performance over a period of time, a further structural feature that
also impacts on liability, burden of proof, and restitution.216
Although one can identify several new features of European contract law in the digi- 79
tal age, the innovative approaches in recent legislation are merely the first steps in defin-
37
Chapter 1 Foundations
ing the new legal landscape. They will not only need further consideration as to their
form but will also require additions through further legislation. One open question con-
cerns, for example, whether commercial contracts for digital content are equally worthy
of protection as consumer contracts.217 It appears questionable that the harmonization
of remedies has continued to exclude damages, although its form in national law repre-
sents a heavy burden for the trader as well as an effective instrument for the con-
sumer.218 The desired increase on cross-border transactions may well be burdened by
the lack of EU rules on force majeure, impossibility, etc.219 – whereas harmonization is
full for some areas of contract law, it is certainly far from complete. A further point to
consider, and a final example, is whether the often dominant influence of online inter-
mediaries on the conclusion and content of contracts also requires a corresponding de-
velopment of the contractual or pre-contractual liability for online intermediaries.220
80 European contract law is once again proving to be a ‘law in a changing society’. At the
same time it makes clear that it is necessary to rethink the relationship between this con-
tract law and other areas of European private law. In relation to the transfer and use of
data, as well as the right of disposal, the contract law perspective will also have to focus
above all on intellectual property law221 and privacy rights, but also on data protection
law. Where the system of European contract law is concerned, the new phase in its de-
velopment under the heading of the digital revolution and with the objective of unleash-
ing the internal market’s full potential thus presents legal science with a double chal-
lenge: to facilitate the coherency of European contract law through principles and the
creation of a system without a codification and, most likely, with increasing use of piece-
meal legislation; and to coordinate the principles and structures of this contract law with
the new concepts in other fields of law which arise in order to respond to the challenges
of the digital revolution at European level.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
217 Beale, ‘The future of European contract law in the light of the European Commission’s proposals for
Directives on digital content and online sales’ (2016) Revista de Internet, Derecho y Politica 3; Schulze,
‘Die Digitale-Inhalte-Richtlinie – Innovation und Kontinuität im europäischen Vertragsrecht’ (2019) ZE-
uP 695, 702.
218 Schulze, ‘Die Digitale-Inhalte-Richtlinie – Innovation und Kontinuität im europäischen Ver-
nung, Haftung und Eigentum an Daten’ (2016) ZEuP 358; Spindler, ‘Contract Law and Copyright – Regu-
latory Challenges and Gaps’ in Schulze/Staudenmayer/Lohsse (eds), Contracts for the Supply of Digital
Content: Regulatory Challenges and Gaps (Nomos 2017) 211 et seq.; see also the contributions to Lohsse/
Schulze/Staudenmayer (eds), Trading Data in the Digital Economy: Legal Concepts and Tools (Nomos
2017).
38
CHAPTER 2
CORE ELEMENTS
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sion Draft of a Directive on Online Intermediary Platforms. Commentary (Jagiellonian University Press
2019); Busch/Schulte-Nölke/Wiewiórowska-Domagalska/Zoll, ‘The Rise of the Platform Economy: A New
Challange for EU Consumer Law?’ (2016) 1 EuCML 3; Cabrillac, Droit européen comparé des contrats (2nd
edn, LGDJ 2016); Dannemann/Vogenauer (eds), The Common European Sales Law in Context (OUP
2013); Heiderhoff, Europäisches Privatrecht (5th edn, C.F. Müller 2020); Howells/Wilhelmsson/Twigg-
Flesner, Rethinking EU Consumer Law (Routledge 2017); Jansen/Zimmermann, ‘Restating the Acquis
Communautaire? A Critical Examination of the “Principles of the Existing EC Contract Law”’ (2008) MLR
505; Jansen/Zimmermann (eds), Commentaries on European Contract Laws (OUP 2018); Research Group
on the Existing EC Private Law (Acquis Group), Contract II – General Provisions, Delivery of Goods, Pack-
age Travel and Payment Service (Contract II) (Sellier 2009); Riesenhuber, System und Prinzipien des Euro-
päischen Vertragsrechts (de Gruyter 2003); Riesenhuber, EU-Vertragsrecht (Mohr Siebeck 2013); Schulze
(ed), Common European Sales Law (CESL) – Commentary (Nomos 2012); Schulze/Staudenmayer/Lohsse
(eds), Contracts for the Supply of Digital Content: Regulatory Challenges and Gaps (Nomos 2017); Schulze/
Staudenmayer (eds), EU Digital Law – Commentary (Nomos 2020); Zoll, Rękojmia: odpowiedzialność
sprzedawcy (C.H. Beck 2018).
I. Concept of contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Contract and juridical act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Contract as consensus ad idem? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3. Contract and notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
II. Types of contract in the acquis communautaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
1. Specific circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2. Increase in contract types in the acquis communautaire . . . . . . . . . . . . . . . . . . 82
III. Mixed contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
IV. Freedom of contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
2. Default and mandatory law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
3. Limitations on contract drafting by controlling contract terms . . . . . . . . . . . 127
4. Good faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
5. Non-discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
6. Party status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
V. Consumers and other protected parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
2. Notion of the consumer in the acquis communautaire . . . . . . . . . . . . . . . . . . . . 161
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I. Concept of contract
1 Graziadei, ‘Variations on the Concept of Contract in a European Perspective: Some Unresolved Issues’
in Schulze (ed), New Features in Contract Law (Sellier 2007) 311; Paricio, ‘Der Vertrag – Eine Begriffsbil-
dung’ in Andrés Santos/Baldus/Dedek (eds), Vertragstypen in Europa: Historische Entwicklung und euro-
päische Perspektiven (Sellier 2011) 11; Schulze/Wilhelmsson, ‘From the Draft Common Frame of Refer-
ence towards European Contract Law Rules’ (2008) ERCL 154.
39
Chapter 2 Core Elements
tract as a particular case thereof or principally regulating the contract and possibly al-
lowing for contractual rules to be applicable to other juridical acts.3
2 The European legislator has adopted the second approach: the contract forms the
core of those directives and regulations regulating the European law of obligations.4 This
has practical reasons as the concept of a juridical act is a theoretical approach that is not
used in many legal systems;5 whereas the notion of a contract is widely understood (and
is the most frequent form of a juridical act) thereby allowing for European rules to be
attached simply and clearly to this notion. Where European private law is concerned,
one has to bear in mind that it does not represent the creation of a comprehensive sys-
tem;6 the various European directives do not form a complete European system but
merely supplement the contract law of the Member States.7 By comparison, the German
legal system – influenced by pandectism8 – adopts the model of a juridical act (‘Rechts-
geschäft’) due to its main role in creating a comprehensive legal system.9
3 The DCFR has, however, now attempted to use the notion of a juridical act for Euro-
pean contract law10 with the result that Art. II.–1:101 DCFR defines both ‘contract’ and
‘juridical act’:
4 The definition, however, shows the DCFR’s uncertainty regarding the position of the
juridical act within its system.11 The DCFR first defines ‘contract’ and not ‘juridical act’
2 For a comparison of the German and English concepts see Whittaker/Riesenhuber, ‘Conceptions of
Contract’ in Dannemann/Vogenauer (eds), The Common European Sales Law in Context (OUP 2013) 120–
126. See also Schmidt, ‘Der „juridical act“ im DCFR: Ein nützlicher Grundbegriff des europäischen Privat-
rechts?’ (2010) ZEuP 304, 305–320; Zoll, ‘Der Entwurf für einen Gemeinsamen Referenzrahmen im
Prozess der europäischen Rechtsvereinheitlichung’ in Gebauer/Teichmann (eds), Enzyklopädie Euro-
parecht, Band 6, Europäisches Privat- und Unternehmensrecht (Nomos 2016) § 9 mn. 56–65.
3 On the relationship between juridical act and contract see Grundmann, ‘The Architecture of Euro-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
pean Codes and Contract Law – A Survey of Structures and Contents’ in Grundmann/Schauer (eds), The
Architecture of European Codes and Contract Law (Kluwer 2006) 7 et seq.
4 A list of European legislation focusing on contracts can be found in Riesenhuber, EU-Vertragsrecht
rechts?’ (2010) ZEuP 304, 305, 307, who refers to the variation in the spread of this concept across the
different European legal systems.
6 Riesenhuber, EU-Vertragsrecht (Mohr Siebeck 2013) § 1 mn. 26.
7 Contract II/Schulte-Nölke/Zoll Introductory Part xxiii, xxv; Riesenhuber, System und Prinzipien des
Europäischen Vertragsrechts (de Gruyter 2003) 55–58; Zoll, ‘A Need for a New Structure for European Pri-
vate Law’ in Brownsword et al. (eds), The Foundations of European Private Law (Hart 2011) 556.
8 See Cabrillac, Droit européen comparé des contrats (2nd edn, LDGJ 2016) 21–21; Hattenhauer, Einseiti-
ge private Rechtsgestaltung: Geschichte und Dogmatik (Mohr Siebeck 2011) 78, 85–86; Ranieri, Europäisches
Obligationenrecht (3rd edn, Springer 2009) 128–150, especially 135.
9 Markesinsis/Unberath/Johnston, The German Law of Contract (2nd edn, Hart 2006) 25–27; Staudinger
40
I. Concept of contract
even though the reverse would have been more appropriate as the latter is more ab-
stract.12 Nevertheless, the order of the two concepts is justified as ‘juridical act’ in the
DCFR is seldom used independently as the central role is instead played by the notion of
‘contract’.13 ‘Juridical act’ is indeed used in the different situations in which contract-
based rules are applicable to other juridical acts (e.g. in Art. II.–4:301 DCFR)14 though
this merely represents an extension of contract-based rules so that ‘contract’ forms the
central point of reference for almost all relevant rules relating to the contract. Conse-
quently, the use of ‘juridical act’ is rather unnecessary for the DCFR’s regulatory tech-
nique as, in principle, the less abstract concept of contract performs this function.15
Despite the considerable influence of the DCFR, the proposed CESL did not adopt 5
the notion of a juridical act.16 The DCFR has rather been ‘recontractualized’ by the pro-
posal for a Common European Sales Law.17 The unilateral statements or conduct re-
ferred to in Art. 12 CESL are rather just considered an extension of the rules for the con-
tract.
Whereas the DCFR and the proposed CESL adopt a traditional concept of contract,18 6
the European directives do not adhere to a specific concept but instead attempt to adapt
the provisions to the different national notions of contract.19 The European legislator
does not seek to impose a concept of contract on the Member States – the aim is to en-
sure that the protection foreseen in the relevant directive is applied irrespective of how a
national legal system regulates a legal relationship arising between the parties. The Euro-
pean system of contract law therefore cannot be compared with the system at national
level. The proposed Common European Sales Law is also to be viewed as an attempt to
make qualitative changes to European contract law through the development of a gen-
uine (although optional) contract law instead of a system serving to supplement national
law.20 The rejection of this approach by several Member States has, however, prevented
its fruition.21 It thus remains to be seen whether the withdrawal of the proposal for the
Common European Sales Law will have a long-term effect on the process of creating an
independent European contract law.22
It would create the wrong impression if one were to deny that European law has had 7
considerable influence on the notion of contract in the Member States.23 Such influence
11 Zoll, ibid.
12 DCFR Full Edition 125; Staudinger BGB/Schiemann (Sellier-de Gruyter 2018) C. Das Rechtsgeschäft
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
mn. 2.
13 Schmidt, ‘Der „juridical act“ im DCFR: Ein nützlicher Grundbegriff des europäischen Privatrechts?’
concerning ‘contractual situations’and § 4 mn. 59, in which the CESL is referred to as an ‘optional second
system of contract law’.
17 Schulze, ‘Europäisches Vertragsrecht – die Zeit ist reif für die Gesetzgebung’ (2011) EuZW 569, 570;
Schulze/Wilhelmsson, ‘From the Draft Common Frame of Reference towards European Contract Law
Rules’ (2008) ERCL 154, 165.
18 DCFR Full Edition 170; Schmidt-Kessel CESL/Gebauer Art. 30 CESL-Reg mn. 1, 6.
19 Contract II/Schulte-Nölke/Zoll Introductory Part xxv.
20 For national views of the proposed CESL see the contributions in De Cristofaro/De Franceschi (eds),
Consumer Sales in Europe (Intersentia 2016). See also Tamm/Tonner, ‘Vom Scheitern des Gemeinsamen
Europäischen Kaufrechts im Rahmen des digitalen Binnenmarktes’ (2015) EWS 241, 243–244.
21 See § 1 mn. 60; COM (2014) 910 final, Annex 2, No. 60.
22 Tamm/Tonner, ‘Vom Scheitern des Gemeinsamen Europäischen Kaufrechts im Rahmen des digitalen
41
Chapter 2 Core Elements
concerns not only the clear impact of European provisions on individual aspects of na-
tional laws but also extends to the redesign of the notion of contract. In this respect, one
has to bear in mind the basis the EU adopts for contract law: the primary function of EU
law rests in the removal of obstacles to the internal market.24 Accordingly, the perspec-
tives on the role of a contract differ between the European and national legislators. In
principle, the European legislator does not determine the rules on contracts in order to
allow the individual to exercise free choice; it rather seeks to assimilate national laws in
order to ensure that the internal market functions smoothly. It is therefore concerned
with guiding the behaviour of market actors. However, this approach affects not only
market procedures but also the legal form of the individual contractual relationships.25
Even though the European legislator does not intend to fundamentally redesign contract
law in Europe, EU law nevertheless has significant influence on the core elements there-
of. The boundaries between the different phases of a legally-relevant relationship are less
distinct in European contract law – the pre-contractual phase (e.g. giving pre-contractu-
al information), the determination of the content of the contract, and the conclusion of
the contract are increasingly merging into one process.26 Furthermore, the European
legislator proceeds from the concept of the creditor’s reasonable expectations.27 This
concept not only plays a decisive role when determining the content of a contract but
also, in principle, alters the perception of the cornerstones of a contract. For instance, the
reasonable expectations replace the function of the declaration of intent: the content of
the party’s declaration is not decisive for forming the legal relationship but rather the as-
sessment of what can be reasonably expected from the customer in relation to her decla-
ration.28 The content is seldom determined just by the intention expressed by the parties.
Yet, the role of the intention is reduced even further when using the concept of reason-
able expectations. The intention will be decisive because it, under other circumstances
surrounding the contract, forms the requirement of the ‘reasonable expectation’ and not
because it is the intention of the parties. The European legislative thus invokes a factor
that is tailored to the demands of the mass market.29
8 The concept of reasonable expectations can be identified in a number of sources of
European contract law.
The information referred to in paragraph 1 shall form an integral part of the distance or off-premises
contract and shall not be altered unless the contracting parties expressly agree otherwise.
24 See, for example, Grundmann, ‘The Structure of European Contract Law (2001) ERPL 505; in rela-
tion to the legislative competence under Art. 114 TFEU Rutgers, European Competence and a European
Civil Code, a Common Frame of Reference or an Optional Instrument' in Towards a European Civil Code
(4th edn, Wolters Kluwer 2011) 320.
25 Busch, Informationspflichten im Wettbewerbs- und Vertragsrecht (Mohr Siebeck 2008) 173.
26 See Chapter 3 mn. 1 et seq.; Köndgen, Selbstbindung ohne Vertrag (Mohr Siebeck 1981) 434 et seq.
27 See, for example, Howells/Wilhelmsson, EC Consumer Law (Ashgate 1997) 320–323; Pfeiffer/Zoll,
Wady oświadczenia woli w umowach zawieranych na internetowym rynku konsumenckim (C.H. Beck 2020)
Chapter 1. § 3.V.2.
29 Busch, Informationspflichten im Wettbewerbs- und Vertragsrecht (Mohr Siebeck 2008) 57–58.
42
I. Concept of contract
Art. 6(5) CRD determines that the information shall form an integral part of the con-
tract. Technically, the communication of information is not a declaration of intent but
merely a declaration of knowledge. 30 The distinction between these two types of declara-
tion is increasingly fading.31 The communicated information forms the basis of an ex-
pectation regarding the content of the contract and the performance. The provision does
not refer to reasonable expectations as a standard, yet it is the concept of reasonable ex-
pectations that provides the reason for the information becoming part of the legal rela-
tionship between the parties.
The concept of reasonable expectations was already especially apparent in the Con- 9
sumer Sales Directive (emphasis added).
30 See Schwenzer/Hachem/Kee, Global Sales and Contract Law (OUP 2014) mn. 10.51.
31 Busch, Informationspflichten im Wettbewerbs- und Vertragsrecht (Mohr Siebeck 2008) 58.
32 See Recital 8 CSD, Recitals 26 and 29, Art. 6 and 7 SGD.
33 Zoll, Rękojmia: odpowiedzialność sprzedawcy (C.H. Beck 2018) Chapter II § 1.II; Południak-Gierz,
Wady oświadczenia woli w umowach zawieranych na internetowym rynku konsumenckim (C.H. Beck 2020)
Chapter 1. § 3.V.2.
34 Zoll, ibid.; Zoll, ‘Problem negatywnego uzgodnienia cech rzeczy sprzedanej — w oczekiwaniu na
43
Chapter 2 Core Elements
11 This approach should indeed provide a solution for the problem of so-called ‘negative
quality agreements’: the quality of the good falls below the standard that is usually ex-
pected of goods of a similar type. In principle, the parties are free to determine the quali-
ty of the good; however, the reasonable expectation of a lower-quality good is always to
be examined in consideration all relevant factors. In those cases in which the agreement
of lower quality does not accord with the circumstances (e.g. because the good appears
to be complete), the content of the contract is to be adjudged from the perspective of the
consumer’s reasonable expectations.
12 Reasonable expectations in the Digital Content Directive and Sale of Goods Directive
still serve as a basis for the contract law contained therein, but the implementation of
this concept has changed, as can be seen in Recital 20 DCD.
Here it is clear that the European legislator has used the concept of reasonable expec-
tations as a means to solve the problem of distinguishing between the Digital Content
Directive and the Sale of Goods Directive. The legislator has used the consumer’s expec-
44
I. Concept of contract
tations and the trader’s need for certainty in order to justify the application of the Digital
Content Directive (not the Sale of Goods Directive) to digital content supplied on a tan-
gible medium.
Recital 45 DCD outlines the standards for determining conformity: 14
These recitals express a central function of ‘reasonable expectations’. In this case, rea- 15
sonable expectations serve to determine the conformity of what was acquired under the
contract (goods, digital content or digital services). The recitals list various factors to be
taken into consideration. Recital 45 refers to the expectations regarding the (quality and
performance) characteristics of the digital content or digital service which are normal
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
for digital content or digital services of the same type and as such are to be expected by
the consumer for the acquired content or service. This recital also emphasizes the influ-
ence of public statements made by the trader or by others in earlier parts of the transac-
tion chain. The approach is already familiar to the acquis communautaire through the
Consumer Sales Directive and shows the extent to which EU law influences the concept
of conclusion of contract.35 Statements made by third parties can therefore determine
the content of the contract. In this respect, the corresponding declarations by the parties
do not by themselves determine the content of the contract, but rather various different
aspects which collectively (together with the declarations of intention) reveal the nature
of reasonable expectations.
16
Article 8(1)(b) Digital Content Directive
Objective requirements for conformity
In addition to complying with any subjective requirement for conformity, the digital content or digi-
tal service shall: be of the quantity and possess the qualities and performance features, including in
45
Chapter 2 Core Elements
relation to functionality, compatibility, accessibility, continuity and security, normal for digital con-
tent or digital services of the same type and which the consumer may reasonably expect, given the
nature of the digital content or digital service and taking into account any public statement made by
or on behalf of the trader, or other persons in previous links of the chain of transactions, particularly
in advertising or on labelling unless the trader shows that:
(i) the trader was not, and could not reasonably have been, aware of the public statement in
question;
(ii) by the time of conclusion of the contract, the public statement had been corrected in the
same way as, or in a way comparable to how, it had been made; or
(iii) the decision to acquire the digital content or digital service could not have been influenced by
the public statement;
46
I. Concept of contract
47
Chapter 2 Core Elements
48
I. Concept of contract
(b)
the failure of the consumer to install or the incorrect installation by the consumer of the
update was not due to shortcomings in the installation instructions provided to the con-
sumer.
(5) There shall be no lack of conformity within the meaning of paragraph 1 or 3 if, at the time of
the conclusion of the sales contract, the consumer was specifically informed that a particular
characteristic of the goods was deviating from the objective requirements for conformity laid
down in paragraph 1 or 3 and the consumer expressly and separately accepted that deviation
when concluding the sales contract.
The division between the requirements for conformity is not particularly fortunate. 19
The classifications as ‘subjective’ and ‘objective’ already appear misleading as the classifi-
cation does not concern the type of agreement between the parties, but rather the extent
to which the individual circumstances are to be considered. In actual fact there is no
qualitative difference between the ‘subjective’ and ‘objective’ requirements. Both in-
stances concern the circumstances which underpin the consumer’s reasonable expecta-
tions. The distinction serves to solve the problem of agreements for products of substan-
dard quality, as seen in Art. 7(5) SGD and Art. 8(5) DCD. The problem concerns agree-
ments between parties for products (be these goods, digital content, etc.) whose quality
falls below the objective requirements. Whereas such agreements are an expression of
contractual freedom, i.e. the freedom to purchase substandard products, they also do not
reflect typical market behaviour. Consequently, there is a high risk that one uses such an
agreement to circumvent the mandatory rules in consumer law. It is for this reason that
the EU legislator included the requirement of qualified consent in both Directives: the
consumer must be informed where the quality deviates from the objective standard and
must expressly and separately accept the deviation. The European legislator has quite
rightly acknowledged this problem, but not given an adequate solution. The standard of
reasonable expectations is influenced by various factors. The requirements referred to in
the Directives as ‘subjective’ concern, for example, the agreed description, quality, quan-
tity, functionality, compatibility and interoperability,36 supplemented by the wording ‘as
required by the sales contract’. The addition is meaningless as all content concerns the
content of the contract itself. However, this arises not just from what is expressed in the
contract itself but also from all circumstances which shape the content of the contract.
The distinction between the subjective and objective requirements may not be confused
with the distinction in German law between the ‘agreed’ and ‘usual’ quality, whereby the
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
‘agreement’ in § 434(1) BGB refers to the manner in which an aspect becomes part of the
contract.37 The ‘objective’ and ‘subjective’ requirements under the Directives do not refer
to the nature of the agreement but rather to the extent to which the requirements are
specified. It is therefore a somewhat imprecise structural criterion which only serves to
simplify the legislative technique by clarifying that the agreement between the parties
should not result in exclusions from the objective standard (i.e. the generally expected
quality). The only means to deviate from this standard is through qualified consent.
49
Chapter 2 Core Elements
21 Art. 8(5) DCD and Art. 7(5) SGD contain a similar concept in relation to the afore-
mentioned discussion of agreements on substandard quality.38 According to these provi-
sions, such an agreement will be effective where the consumer has given qualified con-
sent. Both Directives require the consumer to have been specifically informed of the de-
viation from the objective requirements and for the consumer to have expressly and sep-
arately accepted such deviation when concluding the contract.
22 The use of qualified consent as a condition for the effectiveness of particularly detri-
mental contract terms is rooted in early law on unfair contract terms, such as in Italian
law which required the customer’s separate, signed consent to detrimental contract
terms. The aforementioned provisions of the Digital Content Directive and the Sale of
Goods Directive do not contain any formal requirements. Although not directly re-
quired by EU law, it is often the trader who will have to prove that the requirements for
qualified consent have been fulfilled.
23 In light of the rules concerning qualified consent one can question whether European
contract law features a uniform concept of contract. Whereas reasonable expectations
contribute to determining the content of the contract, there are also requirements for
qualified consent. However, these two approaches are not contradictory. The modern
contract à la européen is concluded as a result of the interaction between various factors,
several of which are set in legislation (such as qualified consent) which expresses what
the counterparty may expect from the contract.
24 Qualified consent may depend on whether the contract has actually been concluded:
to pay, the trader shall make the consumer aware in a clear and prominent manner, and directly be-
fore the consumer places his order, of the information provided for in points (a), (e), (o) and (p) of
Article 6(1).
The trader shall ensure that the consumer, when placing his order, explicitly acknowledges that the
order implies an obligation to pay. If placing an order entails activating a button or a similar function,
the button or similar function shall be labelled in an easily legible manner only with the words ‘order
with obligation to pay’ or a corresponding unambiguous formulation indicating that placing the or-
der entails an obligation to pay the trader. If the trader has not complied with this subparagraph, the
consumer shall not be bound by the contract or order.
25 Art. 8(2) CRD requires the trader to not only ensure that the consumer explicitly ac-
knowledges the obligation to pay but to also label the corresponding function which,
when activated by the consumer, gives rise to the payment obligation. Non-compliance
by the trader will mean that the consumer is not bound the contract. This is a specific
sanction whereby the contract will nonetheless be concluded but the consumer is not
50
I. Concept of contract
bound by it and the trader cannot argue that the contract with the consumer does not
exist.39
b) Transparency
Several EU directives require contract terms and pre-contractual information to be 26
drafted in a ‘clear and comprehensible manner’ or in ‘plain and intelligible language’. The
principle of transparency therefore serves to ensure that a legally-relevant text has the
necessary clarity. Its application for pre-contractual information40 and contract terms
has allowed it to become an important instrument of consumer protection.
51
Chapter 2 Core Elements
gal consequences for the contract. Furthermore, these sanctions fall within a blindspot
between national and European law. Nonetheless, it is to be assumed that the informa-
tion obligation is not performed when the information does not satisfy the given re-
quirements and as such the prescribed sanctions will apply. Contract terms which do not
satisfy the requirements will be subject to review and may be considered unfair due to
the lack of transparency. EU contract law therefore has the particular feature that the
question of transparency does not determine whether a contract has been concluded but
is one of the factors in ascertaining the unfair nature of contract terms.
30 It is to be noted that the notion of transparency is constantly changing. The afore-
mentioned examples show that transparency was initially understood as a requirement
for legally-relevant texts to be clear and comprehensible. ECJ case law has, however, ex-
tended the meaning of transparency from this purely textual level as well as the clarity of
the legal consequences resulting from the contract term.
31 The decision in Van Hove expresses two elements of transparency: that the term is
grammatically intelligible to the consumer and that the consumer is in a position to
evaluate the economic consequences42 derived from the contract term. The second as-
pect actually concerns a problem in continental-European law surrounding defects of
consent. One can therefore see the extent to which European contract law impacts on
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33 This definition of contract44 may find support in the numerous directives forming
part of the acquis communautaire45. Admittedly, however, none these directives contains
a definition of contract comparable with the definition in Art. 2(a) CESL-Reg.46 This un-
An explanation of the concept of contract from the perspective of different legal systems and different
43
stages in legal history is given in Paricio, ‘Der Vertrag – Eine Begriffsbildung’ in Andrés Santos/Baldus/
Dedek (eds), Vertragstypen in Europa: Historische Entwicklung und europäische Perspektiven (Sellier 2011).
52
I. Concept of contract
Art. 27 CRD refers to the Unfair Commercial Practices Directive in which the prac- 36
tice of delivering unsolicited goods or services with the aim of concluding a contract
with a consumer is categorized as an unfair commercial practice.50 This cross-reference
is highly characteristic of the new development in contract law – the link between con-
tract law and competition law.51 This can also be seen in Art. 27 CRD as the provision is
less concerned with the presentation of the European legislator’s conviction surrounding
certain, fixed elements of the contract than avoiding a practice which burdens con-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
44 For more detail on the concept of contract in the CESL see Schmidt-Kessel CESL/Schmidt-Kessel,
market’ COM (2011) 636 final, 10; Schmidt-Kessel CESL/Schmidt-Kessel, Einleitung CESL-Reg mn. 37.
46 Schmidt-Kessel CESL/Schmidt-Kessel, Art. 2 CESL-Reg mn. 10; Schulze CESL/Wendehorst, Art. 2
CESL-Reg mn. 4.
47 Mn. 2 et seq.
48 Jansen/Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the “Princi-
marketing material an invoice or similar document seeking payment which gives the consumer the im-
pression that he has already ordered the marketed product when he has not’.
51 See Durovic, European Law on Unfair Commercial Practices and Contract Law (Bloomsbury 2016).
53
Chapter 2 Core Elements
37 The principle of protecting the consumer by protecting her capacity to make a free
decision is especially clear in rules on inertia selling. An express rule on this sales
method was first provided by Art. 9 Distance Selling Directive. This Directive has since
been repealed by the Consumer Rights Directive which has, moreover, further de-
veloped the original European rule by explicitly including the consequences for breach.
Art. 27 CRD provides that in the event of inertia selling the consumer will be exempted
from the obligation to provide any counter-performance.52 As noted by Hall/Howells/
Watson, the provision is ‘out of place’ in the structure of the Consumer Rights Direc-
tive.53 In this respect, it reflects the legislator’s intention to dissuade a business from
adopting such a consumer-unfriendly practice rather than to take a decision on the in-
terpretation of contracts.
38 Art. 27 CRD was at issue in EVN Bulgaria Toplofikatsia:
39 The decision shows the relationship between consumer protection, multi-party rela-
tionships and particular types of services. In the particular case the court held that the
common good and the supply of distance-heating take precedence over the individual
interests of the consumer.
40 The Distance Marketing of Financial Services Directive contains a similar provision:
Unsolicited services
Without prejudice to Member States provisions on the tacit renewal of distance contracts, when such
rules permit tacit renewal, Member States shall take the necessary measures to:
– prohibit the supply of financial services to a consumer without a prior request on his part, when
this supply includes a request for immediate or deferred payment,
– exempt the consumer from any obligation in the event of unsolicited supplies, the absence of a
reply not constituting consent.
This provision has the task of protecting the consumer’s freedom surrounding her de-
cision to enter into a contract – the business may not use performance as a means to
force the consumer to submit to a payment obligation. The intention is also to avoid si-
lence as a means to communicate consent. The provision does not, however, prohibit na-
tional laws that allow or provide for the tacit renewal of such distance contracts for fi-
nancial services. This provision therefore concerns a rule that focuses primarily on the
52 See Chapter 3 mn. 92 et seq. For further problems see De Cristofaro, ‘Italy’ in De Cristofaro/De
54
I. Concept of contract
initiation of contracts. It serves to clarify that the consumer’s silence does not constitute
a declaration of contractual intent. In this respect, its aim is not to outline the require-
ments for the conclusion of contract but rather solely to give the minimum requirements
for the validity of the consumer’s declaration of intent.
The Acquis Principles summarize the rules on inertia selling in the Distance Selling 41
Directive and in the Distance Marketing of Financial Services Directive as:54
Whereas the ACQP state in general that no obligation arises for the consumer in the 42
event of a failure to respond, the DCFR is even clearer in expressing that no contract
arises and no ‘non-contractual’ obligation arises for the consumer:
The text adopted by the DCFR is based on the acquis communautaire as well as on 43
corresponding rules in national laws55 and thus allows for greater precision to be given
to the scope of protection for the consumer. Irrespective of the stipulation that no con-
tract will arise, and accordingly no contractual obligations for the consumer, the rule
clarifies that the consumer can dispose of the delivered good without liability arising vis-
à-vis the business.56
In contrast, the Consumer Rights Directive appears to limit this privilege to the ex- 44
emption to tender counter-performance, therefore it remains unclear whether the busi-
ness can enforce any other rights.57 The differences regarding the rights the business
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
may have in this situation were clearer in the earlier stages of the legislative process,
though it is apparent that the European legislator did not want to go so far as to regulate
all the details in order to afford the national legislator more regulatory options for the
consequences of inertia selling.58
A common problem in contract law concerns travel on public transport without hav- 45
ing purchased a ticket (‘fare dodging’) and without the intention of concluding a con-
tract, however the ECJ has responded to this problem in Kanyeba:
55
Chapter 2 Core Elements
tion in which a passenger boards a freely accessible train for the purposes of travel without acquiring
a ticket comes within the concept of a ‘transport contract’ for the purposes of that provision.
The provision refers to the agreement between the parties.60 However, it is doubtful
whether it contains a sufficient basis for the suggestion that this represents the concept
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
of contract supported by the European legislator. Here, the European legislator does not
attempt to use the wording of the provision to indicate particular features of the contract
but rather aims at easing the mandatory provisions concerning prescription (in relation
to second-hand goods). In this instance the Directive should not be interpreted in a
manner suggesting that the ‘agreement’ is a particular form by which a contract is con-
cluded. Furthermore, the provision does not determine the requirements for the conclu-
sion and effectiveness of the contract.
48 Art. 21 SGD and Art. 22 DCD correspond to Art. 7 CSD. These provisions also do not
indicate the European legislator’s particular approach. The Commission did however at-
tempt to tackle the problem from a different angle in its proposals for the Online Sales
Directive and Digital Content Directive.
56
I. Concept of contract
The Unfair Terms Directive is not to be considered as a sufficient basis for a particu- 49
lar concept of contract.
These Recitals lack sufficient reference to the existence of a particular European un-
derstanding of contract. Recital 12 UTD clarifies that the consumer must be protected
from non-negotiated contract terms. Nevertheless, these recitals do show – albeit indi-
rectly – a notion of contract, or to be more precise a concept of party autonomy. The
Recitals proceed from the basis of a distinction between negotiated and non-negotiated
content of the contract. The fact that the content of the contract has not been individual-
ly negotiated justifies the legislative intervention – the lack of negotiations weakens the
willingness to be bound by the contract as the control of terms greatly unfair to the con-
sumer cannot be avoided with the arguments of freedom of contract and party autono-
my. However, this is not sufficient in order to assert that the European legislator could
have a complete concept of the requirements for the conclusion of a contract.
The requirement of consensus as the foundation for a contract is more prevalent in 50
the proposal for a Common European Sales Law.61 Art. 30 CESL62 emphasizes, as the
57
Chapter 2 Core Elements
Acquis Principles, the necessity to reach an agreement (Art. 30(1)(a) CESL). However,
this provision also stipulates the requirements of such an agreement, namely the inten-
tion that the agreement shall have legal effect (Art. 30(1)(b) CESL) and sufficient con-
tent (Art. 30(1)(c) CESL).63 In this context, the qualitative changes to European contract
law through an instrument such as the CESL are apparent. Adopting the CESL as an op-
tional instrument would have resulted in a fundamental change in the nature of Euro-
pean contract law. The acceptance of the optional contract law would have meant that
complete and independent principles would shape the autonomous European contract
law. Such an optional instrument would possibly also exercise extensive influence on the
EU contract law founded by directives.64 This was perhaps one of the reasons why the
European Commission withdrew its proposal for a CESL – it may have opened the door
for the extensive development of European contract law that several Member States
wanted to keep closed.
51 In some instances the acquis communautaire uses the complexities underlying the
conclusion of contract in order to protect consumers. Art. 8 CRD is an optional provi-
sion which contains a specific process for concluding contracts via telephone.
cases where the recipient of the service places his order through technological means, the following
principles apply:
(…)
– the order and the acknowledgement of receipt are deemed to be received when the parties to
whom they are addressed are able to access them.
This provision is, however, only concerned with the question of the requirements un-
der which two types of statements (order and acknowledgement of receipt) are effective
in order for the obligation to arise for the service provider to acknowledge the receipt of
the order. The rule therefore only covers one aspect of a statement and is thus hardly a
suitable foundation for more extensive generalizations.65 Consequently, the Acquis Prin-
ciples have avoided using this provision to develop a general rule on notice; the princi-
ples are therefore limited to the following situation:
63 Schmidt-Kessel CESL/Gebauer, Art. 30 CESL mn. 8, 13; von Bar/Zimmermann, Grundregeln des Euro-
päischen Vertragsrechts, Teil I und II (Sellier 2002) Comment B. on Art. 2:102 PECL, 152.
64 Stürner, Vollharmonisierung im Europäischen Verbraucherrecht (Sellier 2010) 20 et seq.
65 Contract II/Leible/Pisuliński/Zoll, Art. 1:303 mn. 2.
58
I. Concept of contract
The Acquis Principles contain two further rules on notice which apply to all state- 53
ments:
These rules are indicated as ‘grey rules’ in order to clarify that the Acquis Group did 54
not considered the single source in the E-Commerce Directive as offering a sufficient
basis for a general rule.66 The Acquis Group was thus of the opinion that the decision
concerning the parties’ respective interests – as determined in the E-Commerce Direc-
tive – is not indicative of the European legislator’s general interest in extending the con-
cept of notice beyond the Directive’s narrow scope of application.67 However, Art. 10
CESL has taken this rule from Art. 11(1) E-Commerce Directive as a model for a general
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
rule on the requirements for effectiveness of notice.68 The approach is based on the ‘re-
ceipt theory’, which features in many national legal systems.69
The concept of notice is accompanied by a revolutionary change as the use of the 55
term ‘notice’ (as opposed to ‘statement of intent’) expresses legally relevant statements
extending beyond indications of contractual intent. The term ‘notice’ not only includes
statements of knowledge but also particularly includes information given by one party to
the other.70 However, one has to bear in mind that such information is relevant for deter-
mining the content of the legal relationship between the parties. The transition from
‘statement of intent’ to ‘notice’ is thus characteristic for the shift in focus in modern con-
CESL mn. 2.
69 See Brinkmann, Der Zugang von Willenserklärungen (Duncker & Humblot 1984) with further refer-
ences; Perales Viscasillas, ‘Contract Conclusion under CISG’ (1997) Journal of Law and Commerce 315,
319; Schwenzer/Hachem/Kee, Global Sales and Contract Law (OUP 2014) mn. 34.57.
70 Schmidt-Kessel CESL/Müller-Graff, Art. 10 CESL mn. 1; Schulze CESL/Schulte-Nölke, Art. 10 CESL
mn. 3.
59
Chapter 2 Core Elements
57 Although the aforementioned provision adopts the approach under the dispatch the-
ory it only focuses on one aspect thereof, namely remaining within time limitations. The
mere dispatch of notice of withdrawal within the withdrawal period will suffice in order
for the withdrawal to be effective. However, the provision is restricted to this one issue
and does not stipulate either the time at which the notice takes effect or the party who
shall bear the risk should the notice of withdrawal not reach the addressee. As the Con-
sumer Rights Directive does not provide and answer to these questions, it is therefore for
the national legislator to provide a solution.73
58 The developments in communication technology give rise to an increasing amount of
questions of this kind and it is above all in the modern digital world in which there is a
clear need for uniform answers. Where electronic communications are concerned, one
has to further clarify how the traditional requirements can be satisfied by modern tech-
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59 The decision focused on the important question whether the formal requirements
concerning the information on the right of withdrawal are fulfilled by merely sending a
On these concepts see Schwenzer/Hachem/Kee, Global Sales and Contract Law (OUP 2014)
72
60
I. Concept of contract
occupied by the communication and the minimum size of the typeface which is appropriate for the
average consumer targeted by that communication, all the information set out in Article 6(1) of that
directive may objectively be displayed within that communication.
Article 6(1)(h) and Article 8(4) of Directive 2011/83 must be interpreted to the effect that, in a situa-
tion where the contract is concluded through a means of distance communication which allows limi-
ted space or time to display the information, and where a right of withdrawal exists, the trader is re-
quired to provide the consumer, on the means of communication in question and before the conclu-
sion of the contract, with information regarding the conditions, time limit and procedures for exer-
cising that right. In such a situation, that trader must provide the consumer with the model with-
drawal form, as provided for in Annex I(B) to that directive, by another source in plain and intelligi-
ble language.
In Romano, the ECJ was asked whether under the Distance Marketing of Financial 61
Services Directive the standard of the average, reasonably well-informed and reasonably
observant and circumspect consumer, and the requirement of clear and comprehensible
information are to be interpreted in accordance with EU law or national law. Due to the
61
Chapter 2 Core Elements
full harmonization effect of the Directive, Member States should interpret the models in
a common manner,76 and thus national standards on the communication of statements
of intent or information do not apply.
An online marketplace means ‘a service using software, including a website, part of a website or an
77
application, operated by or on behalf of a trader which allows consumers to conclude distance contracts
with other traders or consumers’ (see Art. 2(1) No. 17 CRD following the amendments by Art. 4(1)(e)
Modernization Directive. Recital 11 Regulation 2019/1150 states ‘Examples of online intermediation ser-
vices covered by this Regulation should consequently include online e-commerce market places, including
collaborative ones on which business users are active, online software applications services, such as appli-
cation stores, and online social media services, irrespective of the technology used to provide such ser-
vices.’
78 On the various roles that a platform could play as a party to the contract see Busch et al., ‘The Rise of
the Platform Economy: A New Challenge for EU Consumer Law?’ (2016) EuCML 3, 7–8.
79 Recital 11 Regulation (EU) 2019/1150 (Art. 3(1)(b), (4)(a)(ii), Art. 4(1)(e), (5) Modernization Direc-
tive.
62
II. Types of contract in the acquis communautaire
1. Specific circumstances
European contract law continues to refrain from stipulating contract types. As the di- 63
rectives generally only have a supplementary effect they do not need to contain provi-
sions on the types of contract and, in particular, rules on the main obligations character-
istic of a particular type of contract.80 The European legislator’s restraint is primarily
based on the link in European contract law to specific circumstances in which the weak-
er party (in many cases the consumer) is to be protected. Nonetheless, the various types
of contracts covered in the acquis communautaire is increasing and covers an extensive
range. In this respect one can also observe two different approaches by the European
legislator. For example, whereas Art. 2 No. 1 SGD and Art. 2 No. 5 CRD define a ‘sales
contract’, the Digital Content Directive refrains from such specific definitions and in-
stead uses general wording to cover a range of contract types and to leave the national
legislator to determine how to implement the Directive in national law. It remains to be
seen whether this method is adopted for future directives or whether it is a specific reac-
tion to the diversity of contracts for the supply of digital content or digital services.
a) Commercial agency
64
Article 1(2) Commercial Agents Directive
For the purposes of this Directive, ‘commercial agent’ shall mean a self-employed intermediary who
has continuing authority to negotiate the sale or the purchase of goods on behalf of another person,
hereinafter called the ‘principal’, or to negotiate and conclude such transactions on behalf of and in
the name of that principal.
(1) In performing has activities a commercial agent must look after his principal’s interests and act
dutifully and in good faith.
(2) In particular, a commercial agent must:
(a) make proper efforts to negotiate and, where appropriate, conclude the transactions he is
instructed to take care of;
(b) communicate to his principal all the necessary information available to him;
(c) comply with reasonable instructions given by his principal.
80 Contract II/Schulte-Nölke/Zoll, Introductory Part xxiii, xxv; Riesenhuber, System und Prinzipien des
Europäischen Vertragsrechts (de Gruyter 2003) 55–58; Zoll, ‘A Need for a New Structure for European Pri-
vate Law’ in Brownsword et al. (eds), The Foundations of European Private Law (Hart 2011) 556.
63
Chapter 2 Core Elements
ries on his activities. If there is no such customary practice a commercial agent shall be entitled to
reasonable remuneration taking into account all the aspects of the transaction.
The Commercial Agents Directive is an example of one of the rare instances in which
a directive outlines an entire type of contract for the Member States. This Directive sets
out the duties and rights under the defined type of contract and requires the national
legislator to give legislative protection to a commercial agent in certain circumstances,
but it also provides virtually complete regulation of the commercial agency contract.
However, one has to bear in mind that the European legislator is ultimately pursuing a
different objective to the national legislator when the latter outlines the rules for a par-
ticular type of contract in its national legislation. The national legislator is often acting
with the main intention to provide the parties with a model to serve as a guideline for
their agreement.81 In so doing there should be a reduction in the transaction costs that
arise in preparing the contract. By comparison, the Commercial Agents Directive strives
to go further by creating a frame of reference for an instrument protecting the commer-
cial agent in order to combat the possible disadvantages that arise through improper be-
haviour by the principal. However, as the Directive outlines the rights and duties for
both parties one can, with certain reservations, speak of a genuine type of contract as a
product of European law.82
b) Timeshare
65 At first glance it may appear that other directives outline sets of rules for particular
types of contracts, however a closer look at such directives results in the contrary ap-
proach, as demonstrated by the Timeshare Directive:
This definition of a timeshare contract does not serve to typify a particular contract.
A ‘timeshare contract’ can cover many different types of contract that fulfil the require-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
ments outlined in the Timeshare Directive. In this respect it is irrelevant whether the
contract is to be classified purely as falling under the law of obligations or whether the
parties are making use of proprietary rights (e.g. usufruct83). The European legislator
therefore did not intend for the Directive to provide the parties with a complete model
that would ease the conclusion of timeshare contracts, but rather that the particular
legally-relevant situation should induce specific protective measures.84
66 The same function is also performed by the other definitions of contract types con-
tained in the Directive’s list of definitions: ‘long-term holiday product contract’ (Art. 2
No. 1(b)), ‘resale contract’ (Art. 2 No. 1 (c)) and ‘exchange contract’ (Art. 2 No. 1(d)). It
81 See also Müller-Graff, ‘Ein fakultatives Kaufrecht als Instrument der Marktordnung?’ in Schulte-
Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier 2012) 38.
82 Flohr/Pohl in Martinek/Semler (eds), Handbuch des Vertriebsrechts (3rd edn, C.H. Beck 2010) Chap-
64
II. Types of contract in the acquis communautaire
may appear that the terms for these contracts correspond to a traditional manner of le-
gislative typification of contracts, though this is misleading. Naming particular elements
of these contracts merely serves to provide points of reference to activate the protection
under the Directive and is independent of the dogmatic structure the national legislator
has chosen to cover these types of contract.85
The European legislator has therefore decided to extend the scope of sales liability to 68
contracts in which the performance of production-related obligations have been agreed,
though the technical aspects of the implementation into national law remain with the
national legislator. Irrespective of the variations in implementation at national level, one
can nonetheless observe that the European legislator has opted to take a type of contract
that may (in the broad sense) be categorized as a services contract and recategorize it as
a type of sales contract. The Consumer Sales Directive has, however, refrained from out-
lining the details of a sales contract as the European legislator presumes that this context
will be understood uniformly across Europe.87 It expects that the limitation to the type
of goods88 defined in the Directive will eliminate the greatest differences between the
various systems of sales contracts. These differences can be found above all in the di-
verging answers to the question of what, alongside tangible goods, can be the object of
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
the sales contract. One can therefore at least presume that the Consumer Sales Directive
is based on a common European notion of sales contract that has been derived from the
comparative research undertaken when drafting the Consumer Sales Directive.
The ECJ expressed the limits of the sales contract in its decision in Schottelius: 69
ZW 485, 486.
65
Chapter 2 Core Elements
the installation of the goods is the principal subject of that contract for work and that the sale of
the goods is merely ancillary by comparison with that provision of services.
The decision in Schottelius is also important because the ECJ determines the scope of
EU law where national law implements a directive beyond its intended scope of applica-
tion (‘gold-plating’). It is clear that although the Consumer Sales Directive was used as a
model for the German law on contracts to produce a work (‘Werkvertrag’: §§ 631
BGB89), the ECJ does not have jurisdiction.
70 The Sale of Goods Directive provides a detailed definition of a sales contract.
71 Art. 2 No. 1 SGD contains a comprehensive definition of a ‘sales contract’ and with
aspects ranging from the obligations to the effects falling under the definition. The legis-
lator has attempted to take into consideration the various different national rules on a
sales contract. For this reason, the definition also covers a contract with an intrinsic pro-
prietary effect in order to include those legal systems in which the sales contract alone
has proprietary effect without the need for an additional act to this effect, as for example
under French law. The definition also covers the instances in which an obligation to
transfer property arises with payment of the price. Furthermore, a duty to pay the price
must also arise for the buyer/consumer. The definition of sales contract under the Sale of
Goods Directive cannot be equated with the classification of contract types in civil
codes.90 The Directive rather attempts to cover the different national approaches to
defining a sales contract in order to ensure that the Directive has a relatively broad scope
of application. Its aim is therefore not to create a European concept but rather to re-
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spond to range of definitions of sales contract across the Member States. At the same
time one may also observe a gradual shift in the current practice: a term for a type of
contract is used instead of defining a situation in which the provisions are to apply.
72 The DCFR has utilized the results of comparative research in order to synthesize the
concept of a sales contract:91
66
II. Types of contract in the acquis communautaire
bb) The definition of ‘price’ plays a decisive role in the definition of a sales contract. 73
The Sale of Goods Directive does not define ‘price’, though in principle it is understood
as ‘money’. The Digital Content Directive, however, contains a definition of ‘price’ that
extends beyond the traditional understanding as ‘money’.
(…)
This Directive shall also apply where the trader supplies or undertakes to supply digital content or a
digital service to the consumer, and the consumer provides or undertakes to provide personal data to
the trader, except where the personal data provided by the consumer are exclusively processed by the
trader for the purpose of supplying the digital content or digital service in accordance with this Di-
rective or for allowing the trader to comply with legal requirements to which the trader is subject,
and the trader does not process those data for any other purpose.
The European legislator intentionally refrained from framing the obligation to pro- 76
vide personal data as a payment obligation, though seeks to achieve similar effects.95
92 Or ‘virtual currencies’, to use the terminology favoured by the Digital Content Directive, see Recital
23 DCD. The recent proposal for a Regulation on Markets in Crypto-assets uses the term ‘crypto-asset’,
which it defines as a digital representation of value or rights which may be transferred and stored electron-
ically, using distributed ledger technology or similar technology (Art. 3(1) No. 2 COM(2020) 593 final).
93 Zoll, ‘Die Schuld in einer Kryptowährung als Geldschuld aus der Perspektive des polnischen Privat-
rechts’ in Welser (ed), Buchgeld und Bargeld. Rechtliche Unterschiede, Vorteile und Risiken nach den Rechts-
ordnungen der CEE-Staaten (Manz 2020) 127–128.
94 Recital 23 DCD.
67
Chapter 2 Core Elements
77 It was clear from the first proposals for the Digital Content Directive that the provi-
sion of data was viewed as counter-performance other than money. However, the Euro-
pean legislator distanced itself from this expression because of the relationship between
personal data and fundamental rights.
the classification of such contracts in which the business transfers ownership of goods
against the provision of personal data still remains a question. Admittedly, this is by far
less common than for the supply of digital content or digital services, yet it may still oc-
cur. The issue remains open under the Sale of Goods Directive because it does not define
‘price’ and ultimately it will be a matter for the ECJ. It is notable that the new definition
of ‘sales contract’ under the Consumer Rights Directive (following the Modernization
Directive) does not refer to ‘price’. Such omission is intentional. The amended version of
the Consumer Rights Directive covers contracts for the supply of digital content or digi-
tal services when the consumer provides or agrees to provide his personal data.
95 Zoll, ‘Die Schuld in einer Kryptowährung als Geldschuld aus der Perspektive des polnischen Privat-
rechts’ in Welser (ed), Buchgeld und Bargeld. Rechtliche Unterschiede, Vorteile und Risiken nach den Rechts-
ordnungen der CEE-Staaten (Manz 2020) 127–128.
96 At mn. 14 therein; available under https://edps.europa.eu/sites/edp/files/publication/17-03-14_opini
68
II. Types of contract in the acquis communautaire
However, this does not explain why ‘price’ was not included as part of the definition 79
of ‘sales contract’. The Directive’s scope of application varies. The notion of ‘sales con-
tract’ does not determine the scope of the Directive in general, but rather is necessary to
determine the application of individual provisions. It is therefore to be asked whether
the notion of ‘sales contract’ under the Consumer Rights Directive is to be understood
differently than beforehand. In particular, the question is posed whether the Directive’s
specific rules for sales contracts also apply to contracts in which a consumer purchases a
good using virtual currencies or against the provision of his personal data.
d) Consumer credit
Similarly, a definition only relevant to the scope of application of a specific directive 80
also features in the Consumer Credit Directive.
In using such a definition, the European legislator attempts to cover all instances in 81
which it considers that consumers ought to be protected. The definition is broad as it
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covers various different types of contracts – the decisive element here is whether a de-
ferred payment or other financial accommodation is provided; therefore even sales con-
tracts with deferred payment can fulfil the requirements of this definition.
69
Chapter 2 Core Elements
Chapter 3 of the Payment Services Directive contains extensive rules for framework
contracts. However, the provisions for these contracts do not just contain the founda-
tions for customer protection but also include important points concerning the legal re-
lationship vis-à-vis each of the parties (e.g. termination, Art. 45). The regulation of the
framework contract has thus allowed for a near-complete system to emerge even though
the development of this system can be traced back to purposes aimed at providing pro-
tection.
b) Advisory services
83 The increase in European norms regulating specific types of contracts is also shown
by the Mortgage Credit Directive, which provides rules on contracts for advisory ser-
vices.
tract shall be concluded. The concern for the European legislator is to ensure that cus-
tomers are given clear information about the role the business has in providing its ser-
vices and which duties can arise when a corresponding contract is concluded (e.g. when
the business just provides advice).97
c) Service contracts
84 The European legislator uses the notion of services in a number of further direc-
tives.98 From an economic perspective, services play a role of increasing importance.99
For example Art. 4(1) Services Directive; Art. 2(a) E-Commerce Directive; Art. 1(2) Directive
98
98/48/EC of the European Parliament and of the Council of 20 July 1998 amending Directive 98/34/EC
laying down a procedure for the provision of information in the field of technical standards and regula-
tions [1998] OJ L217/18; Art. 4 and Annex UTD; Art. 2 PTD; Art. 3(c) CRD; Art. 1(2)(c) Directive
2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation
[2002] OJ L09/03.
99 On the importance of services law in the EU see Streinz, ‘Rezension zu Calliess/Korte, Dienstleis-
tungsrecht in der EU’ (2013) NVwZ 346; Hatzopoulos, Regulating Services in the European Union (OUP
2012) vii-viii; Zoll, ‘Krόtki esej o zmierzchu umowy sprzedaży i przyszłości umów o świadczenie usług, a
70
II. Types of contract in the acquis communautaire
This is also reflected at legislative level not only by the shift in focus towards service con-
tracts but also by the view that such contracts present the most important tasks for a
modern legal system.100 The term ‘service’ is therefore to be found in numerous other
aspects of EU law, though its very heterogeneous use means that it covers (and can en-
compass) many different types of legal relationships. Consequently, the reference by the
European legislator to a ‘service’ or ‘service contract’ does not allow one to presume that
there is a solid framework for a ‘European’ service contract. One can therefore even
doubt whether in this respect it is possible to speak of a contract type.101
EU primary law contains a definition of ‘services’: 85
Article 57 TFEU
Services shall be considered to be ‘services’ within the meaning of the Treaties where they are nor-
mally provided for remuneration, in so far as they are not governed by the provisions relating to free-
dom of movement for goods, capital and persons.
‘Services’ shall in particular include:
(a) activities of an industrial character;
(b) activities of a commercial character;
(c) activities of craftsmen;
(d) activities of the professions.
Without prejudice to the provisions of the Chapter relating to the right of establishment, the person
providing a service may, in order to do so, temporarily pursue his activity in the Member State where
the service is provided, under the same conditions as are imposed by that State on its own nationals.
The main purpose of this provision does not lie in the regulation of issues of private 86
law but rather serves to structure the freedom to provide services in the EU.102 Nonethe-
less, the significance of this provision extends beyond the boundaries of public law: the
definition provides the basis for the further development of European services law in its
entirety. The Services Directive provides an illustration of this feature with its express
reference to the definition of service given in Art. 50 EC Treaty, which has since been
replaced by Art. 57 TFEU without any change in content:
Although the Services Directive mostly includes provisions of a public law nature,103 87
it does contain rules that are of importance for contract law, for example the content of
the pre-contractual information to be given by the service provider (Art. 22(1)) and how
it is to be provided (Art. 22(2)), as well as prohibiting discrimination (Art. 20). However,
these articles do not represent the sole extent to which the Services Directive is relevant
to contract law as specific rules can also be seen in the other provisions on the quality of
services (Chapter V). The reference to the definition given in primary law is of addi-
tional importance for contract law as such a definition expresses that the term ‘service’
71
Chapter 2 Core Elements
does not extend to contracts whose objects are goods or capital. This negative definition
means that all contracts are to be considered as service contracts unless they are con-
cerned with the movement of goods or capital. However, it is the European Commis-
sion’s view that online sales contracts are to be considered as retailing services in order
for the Services Directive to apply (e.g. the rules concerning non-discrimination),
though the attempts to further extend the definition may go too far in this instance.
Such attempts are nevertheless characteristic of the general problem surrounding the
definition of a service and show the inherent difficulties. It may appear to be a category
for which an autonomous definition is necessary, but one has to remember that this cat-
egory is developing into an endless general term that covers nearly all contracts other
than sales contracts.
88 This problem becomes clear when interpreting ‘contracts under which a trader sup-
plies goods or services to a consumer’ – an expression used in many directives.104 The
question in this respect is whether this wording functions as a limitation or as a syn-
onym for ‘all contracts’; this was the subject of the decision in Dietzinger.105 In this case
the ECJ was to decide whether a guarantee contract concluded by a private individual (as
guarantor) does not fall under the (then applicable) Doorstep Selling Directive since the
Directive applied only to contracts for the supply of goods.
tomer may have been unable to see all the implications of his act. Consequently, a contract ben-
efiting a third party cannot be excluded from the scope of the directive on the sole ground that
the goods or services purchased were intended for the use of the third party standing outside
the contractual relationship in question.
20. In view of the close link between a credit agreement and a guarantee securing its performance
and the fact that the person guaranteeing repayment of a debt may either assume joint and sev-
eral liability for payment of the debt or be the guarantor of its repayment, it cannot be excluded
that the furnishing of a guarantee falls within the scope of the directive.
89 The ECJ’s decision expresses that ‘goods and services’ does not serve as a limitation. It
does not refer to types or groups of contracts; the Court rather considers that the Euro-
pean legislator intended to set as wide a scope of application as possible so that not only
sales contracts are covered.106
104 As
in Art. 1(1) Doorstep Selling Directive.
105 See
Kümmerle, ‘„Güter und Dienstleistungen“ – Vertragstypenbildung durch den EuGH’ Andrés
Santos/Baldus/Dedek (eds), Vertragstypen in Europa: Historische Entwicklung und europäische Perspektiven
(Sellier 2011) 305–307.
72
II. Types of contract in the acquis communautaire
However, this does not mean that the European legislator only uses this general defi- 90
nition of service. Several directives contain a more precise definition of services in order
to give a more definable category of contracts, for example the Consumer Rights Direc-
tive:
Following the Modernization Directive, the definition now includes digital services
and clarifies that these fall under the notion of service (this is not an obvious conse-
quence and requires further discussion).
This particular definition reflects all of the problems concerning the definition of a 91
service contract. A notable characteristic is its inclusion of the negative element, namely
a contract that is not considered a sales contract. It is clear to the legislator that this neg-
ative definition is insufficient and therefore there is the – quite unsuccessful – attempt to
incorporate a positive aspect by referring to the supply of the service; though this high-
lights the vicious circle afflicting the definition – idem per idem.107 In fact the attempt
lacks criteria that could have provided a clearer definition. Similarly, academic sets of
rules such as the DCFR have also been unsuccessful in proposing a better and fuller
definition of a service contract.108
supply a service to the other party, the client, in exchange for a price; and
The DCFR does in fact contain a complex regulation of service contracts and related 92
contracts (e.g. distributorship contracts in Art. IV.E.–5:101 et seq. DCFR) though this
system does not represent current European law. Great difficulty also arises in attribut-
ing the system to the results of comparisons from the Member States – a basis can only
be seen in the new Dutch Civil Code.109 In this respect, the DCFR therefore only
presents an attractive model for the future.
Recent EU directives define ‘digital services’. 93
106 Ibid. 305–307; Zoll, ‘Consumer Notion: Suretyship’ in Terryn/Straetmans/Colaert (eds), Landmark
Contracts (Mohr Siebeck 2010) 115, 135; Loos, ‘Service contracts’ in Hartkamp (ed), Towards a European
Civil Code (4th edn, Kluwer 2011) 757, 764.
108 See Unberath, ‘Der Dienstleistungsvertrag im Entwurf des Gemeinsamen Referenzrahmens’ (2008)
ZEuP 745.
109 De overeenkomst van opdracht in Art. 7:400 BW.
73
Chapter 2 Core Elements
94 As a result of changes via the Modernization Directive, the definition of digital ser-
vices under the Digital Content Directive has been added – via cross-referencing – to the
Consumer Rights Directive in a new Art. 2 No. 16 CRD. The concept of digital services
is, however, not clear as it is difficult to draw a distinction between digital content and
digital services. The European legislator attempts to explain the concept in the Digital
Content Directive:
95 It can be seen from Recital 19 DCD that the definition of digital services centres
around programmes that allow the creation, processing and storage of data in digital
form, including software-as-a-service. This includes, for example, video and audio shar-
ing and other forms of file hosting, word processing or games offered in the cloud com-
puting environment or via social media. However, a problem arises when one considers
that modern programmes feature different functions and also require a continuous con-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
nection with the supplier. In using the term ‘digital service’ (which was not used in the
initial proposal) the European legislator seeks to ensure that the Directive’s scope of ap-
plication is not too narrow. Taking sales law as the basis for the Digital Content Directive
(the remedies and description of conformity correspond to the Sale of Goods Directive)
could have excluded cloud computing from its scope. The distinction between digital
content and digital services is of little relevance for the application of the Directive. Both
terms offer appear together so that it is not always necessary to decide whether the sub-
ject matter is digital content or a digital service. However, this approach does highlight
the considerable difficulty in giving an abstract definition of a service.
96 The ever-growing number of rules in European contract law causes the aforemen-
tioned types of contracts (even with their specific functions) to become more
widespread,110 thereby giving rise to the problem of how to treat mixed contracts in the
74
III. Mixed contracts
acquis communautaire. Art. 2 No. 5 CRD therefore contains the first EU rule concerning
this problem.
Art. 2(5) CRD regulates how a contract is to be treated when it contains both sale and 97
service elements. At first glance it would appear that this article adopts the absorption
theory as a mixed contract is to be treated as a sales contract (irrespective of the recipro-
cal relationship of both types of performance). There are however two reasons which
cast doubt on whether such an interpretation is actually intended: the first arises from
the entirely pragmatic observation that the general application of sales law would lead to
unreasonable results in contracts in which the service element plays the dominant role
and the transfer of ownership is merely secondary (e.g. restricted to documentation).
The second concerns the function of Art. 2(5) CRD – the provision should not be
viewed as a complete regulation of mixed contracts but rather merely as a norm outlin-
ing the scope of application of those provisions of the Directive which indirectly refer to
the sales contract. It primarily concerns the rules in Chapter IV of the Directive which
are specific to sales, but also other individual provisions elsewhere in the Directive e.g.
Art. 9(2)(b) which determines the start of the withdrawal period. The final version of the
Directive does not aim at comprehensive regulation of a sales contract which also con-
tains features to be performed under other contract types; instead it attempts to use
these simple means to determine the scope of application of the Directive’s provisions. In
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other words, the Directive does not contain a general rule for mixed contracts but only
stipulates the application of individual rules.
The Sale of Goods Directive strives to find a solution to the problem of ‘goods with 98
digital elements’.111 Such type of goods pose the question whether the Sale of Goods Di-
rective or the Digital Content Directive applies.
110 Alpa, ‘Towards a European Contract Law’ in Schulze/Stuyck (eds), Towards an European Contract
Law (Sellier 2011) 23, 23–33; Howells/Schulze (eds), Modernising and Harmonising Consumer Contract
Law (Sellier 2009); Müller-Graff, ‘Der Introitus des optionalen Europäischen Kaufrechts: Das erste Kapitel
im Kontext von Kodifikationskonzept und Primärrecht’ in Schmidt-Kessel (ed), Ein einheitliches europäi-
sches Kaufrecht? (Sellier 2012) 51, 54 and n 13 on the numerous projects contributing to harmonization of
European private law; Reding, ‘The Next Step Towards a European Contract Law for Businesses and Con-
sumers’ in Schulze/Stuyck ibid. 9, 9–20; Riesenhuber, EU-Vertragsrecht (Mohr Siebeck 2013) mn. 24–43,
Introduction, 3, 3–4; Schulze/Stuyck, ‘An Introduction’ in Schulze/Stuyck ibid. 3, 3–8.
111 See De Francheschi, La vendita di beni con elementi digitali (Edizioni Scientifiche Italiane 2019).
75
Chapter 2 Core Elements
99 According to Art. 3(3) SGD, a contract will fall within the definition of a sales con-
tract if it the digital content or digital services are incorporated or interconnected with
goods and are provided with the goods under the sales contract. Art. 3(3) SGD also con-
tains the presumption whereby in cases of doubt the contract will be considered a sales
contract. The provision is problematic in several respects. Firstly, the requirement that
the delivery obligation arises from the sales contract is circular because the question is
whether a sales contract has been concluded. Furthermore, the concept of ‘goods with
digital elements’ is unclear. This concept is based on the fact that it is often not possible
to determine which of the good’s functions, which cannot be performed without digital
content, should be excluded. For example, a device such as a smartphone112 has vast
number of potential functions which depend on different applications – making a tele-
phone call does not represent a necessary function. The provisions are especially trou-
blesome because they are not just concerned with the distinction between contract types
and the corresponding application of one of two directives. Moreover, the provisions are
needed in order to determine the parties within the legal relationship – is the seller liable
for non-conformity of the digital content, or the supplier of the digital content? It may be
assumed that this provision will cause considerable problems in the future.
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100
Recital 16 Sale of Goods Directive
In contrast, if the absence of the incorporated or inter-connected digital content or digital service
does not prevent the goods from performing their functions, or if the consumer concludes a contract
for the supply of digital content or a digital service which does not form part of the contract concern-
ing the sale of goods with digital elements, that contract should be considered to be separate from the
contract for the sale of the goods, even if the seller acts as an intermediary of that second contract
with the third-party supplier, and could fall within the scope of Directive (EU) 2019/770 if the condi-
tions of that Directive are met. For instance, if the consumer downloads a game application from an
app store onto a smart phone, the contract for the supply of the game application is separate from the
contract for the sale of the smart phone itself. This Directive should therefore only apply to the sales
contract concerning the smart phone, while the supply of the game application should fall under Di-
rective (EU) 2019/770, if the conditions of that Directive are met. Another example would be where it
is expressly agreed that the consumer buys a smart phone without a specific operating system and the
consumer subsequently concludes a contract for the supply of an operating system from a third party.
In such a case, the supply of the separately bought operating system would not form part of the sales
76
III. Mixed contracts
contract and therefore would not fall within the scope of this Directive but could fall within the scope
of Directive (EU) 2019/770, if the conditions of that Directive are met.
The DCFR offers a near complete regulation of the contractual relationships. In this 102
case a rule pertaining to mixed contracts therefore has the task of determining the law
applicable to the contract. Art. II.–1:107 DCFR expresses a typical approach (at least in
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the Germanic legal family) of supplementing the combination theory113 with the absorp-
tion theory. However, one must bear in mind that a typification of contracts is not the
approach favoured by the DCFR. This is illustrated especially in Book IV DCFR (specif-
ic contracts), which takes on the characteristic role of regulating service contracts, and
for which the authors of the DCFR have selected the method of grouping contracts.114
Book IV contains three chapters which concern service contracts: Part C focuses on ser-
vices (in the narrow sense), Part D on mandate and Part E on commercial agency, fran-
chise and distributorship. Each of these groups covers further types of contracts, such as
construction, processing, storage, etc. However, each part contains general rules and
Part C serves as a type of ‘general part’ for the other parts (Art. IV. C.–1:103 DCFR); the
provisions on mandate are in principle applicable subsidiarily to commercial agency,
franchise and distribution contracts (Art. IV. E.–1:201 DCFR). The scope of application
113 Gawlik, ‘Umowy mieszane. Konstrukcja i ocena prawna’ in Pojęcie umowy nienazwanej, studia cy-
77
Chapter 2 Core Elements
103 One can observe under this provision that the relevant contracts are arranged into
three circles. The narrowest circle (for which the provisions of Book IV DCFR were
mainly drafted) covers the contracts listed in Art. IV. C.–1:101(2) DCFR and for which
the proposed rules are directly applicable. The further circles cover other service con-
tracts in which remuneration is to be provided (Art. IV. C.–101(1)(a) DCFR) and, like-
wise, no restrictions apply for the application of the provisions in Book IV. The method
signals that the rules for these contracts are indeed to be applied, but one has to consider
that the content of the rules for the contracts is more greatly distanced from the con-
tracts that the authors of the DCFR had in mind when drafting the rules. Although the
wording of this provision does not stipulate an adjustment to the contract, it concerns
the guarantee of greater flexibility that considers the deviations from the basic model.
Finally, the third circle covers the service contracts for which a service is provided other
than in exchange for a price (Art. IV. C.–1:101(1)(b) DCFR). It is expressly stipulated
that the rules of Book IV can be applied but with ‘appropriate adaptations’.115
104 The three circles are not exhaustive in relation to the groups of rules that shall be ap-
plied to service contracts. The method adopted by the DCFR may also allow for the
identification of further ‘concentric circles’ as is clearly illustrated by the definition of the
individual contracts (contract groups):
(1) This Chapter applies to contracts under which one party, the constructor, undertakes to con-
struct a building or other immovable structure, or to materially alter an existing building or oth-
er immovable structure, following a design provided by the client.
(2) It applies with appropriate adaptations to contracts under which the constructor undertakes:
(a) to construct a movable or incorporeal thing, following a design provided by the client; or
(b) to construct a building or other immovable structure, to materially alter an existing build-
ing or other immovable structure, or to construct a movable or incorporeal thing, follow-
ing a design provided by the constructor.
105 This provision is built on the same principle. The centre circle encompasses the con-
tracts listed in Art. IV. C.–3:101(1), whereas the contracts listed in Art. IV. C.–3:101(2)
fall within the outer circle. Similarly, further ‘service contracts’ are outlined. This
method changes the concept of a mixed contract. The service contracts, which form a
very broad and heterogeneous category, cover very different types of contractual perfor-
115 Zoll, ‘Der Entwurf für einen Gemeinsamen Referenzrahmen im Prozess der europäischen
78
III. Mixed contracts
mance. Such a very open concept of a service contract means that the boundaries for
this type of contract are very vague. However, this aspect results in a flexible concept
that leaves relatively little room for unnamed and mixed contracts as many different
contracts for various types of performance – and of varying intensity – will indeed fall
under the broad definition of a service contract. Art. IV. C.–1:101 DCFR is not directly
applicable to mixed contracts within the group and, moreover, within all three ‘service’
groups. The internal structure of the rule on services is rather to be observed and the
general rule on mixed contracts is only applicable when no solution can be found within
this structure. Despite the conceptual similarity, the method adopted by the DCFR for
mixed contracts differs from the approach influenced by Germanic-continental Euro-
pean legal systems (combination and absorption theory) as it refrains from a clear differ-
entiation between the contracts. The problem of mixed contracts also features greatly in
the CESL. Its rule on mixed contracts fulfils many functions, for instance the traditional
function of determining the scope of application of those provisions aimed at a particu-
lar type of contract, as well as contracts beyond this type. This function forms the basis
of Art. 9 CESL.
Article 9 CESL
Mixed-purpose contracts
(1) Where a contract provides both for the sale of goods or the supply of digital content and for the
provision of a related service, the rules of Part IV apply to the obligations and remedies of the
parties as seller and buyer of goods or digital content and the rules of Part V apply to the obliga-
tions and remedies of the parties as service provider and customer.
(2) Where, in a contract falling under paragraph 1, the obligations of the seller and the service
provider under the contract are to be performed in separate parts or are otherwise divisible,
then if there is a ground for termination for non-performance of a part to which a part of the
price can be apportioned, the buyer and customer may terminate only in relation to that part.
(3) Paragraph 2 does not apply where the buyer and customer cannot be expected to accept perfor-
mance of the other parts or the non-performance is such as to justify termination of the con-
tract as a whole.
(4) Where the obligations of the seller and the service provider under the contract are not divisible
or a part of the price cannot be apportioned, the buyer and the customer may terminate only if
the non-performance is such as to justify termination of the contract as a whole.
In comparison to Art. II.–1:107 DCFR, Art. 9 CESL contains a rule exclusively follow- 106
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ing the combination theory. However, the heart of the statement lies in the effect of ter-
minating the contract. In terms of structure this approach is surprising because such a
rule would rather be expected under those provisions concerning the termination of the
contract. The problems presented here are due to the unclear relationship between the
sales contract (and the contract for the supply of digital content) and the ‘related’ service
contract within the structure of the proposal. The provision attempts to align the rela-
tionship between the contracts, though in so doing the drafters are faced with two com-
peting ideas underlying these types of contract. From a purely technical perspective the
CESL lists three separate types of contract: sales contract, contract for the supply of digi-
tal content, and the ‘related service’ contract. The CESL regulates the content of a con-
tract for a ‘related service’ almost entirely through the provisions on the consequences of
non-performance (Part V). According to the structure of the CESL, the agreement of a
sales contract and of a related service contract are to be viewed not as one contract but
rather as two different contracts, although the CESL is not consistent in this concept.
The aforementioned Art. 2(m) CESL-Reg requires the related service contract to be con-
cluded at the same time, with the same object and between the same parties as for the
sales contract or contract for the supply of digital content. It is frequently a mixed con-
79
Chapter 2 Core Elements
tract that is to be subjected to the combination theory. The drafters of the CESL have
recognized the problem of the unclear relationship between the sales contract (or con-
tract for supply of digital content) and the related service contract and have consequent-
ly included a separate rule for the termination of the contract:
107 The title of this provision is somewhat misleading as it does not concern the applica-
tion of specific rules for sales contracts but rather the application of provisions that are
mainly devised for sales contracts, though also for service contracts. Art. 147(2) CESL
plays a particular role in relation to the aforementioned problem of mixed contracts. It
contains a hidden exception to Art. 9(2) CESL which, for unknown reasons, was not in-
cluded in Art. 9 CESL. This exception sets out that, in contrast to Art. 9(2) CESL, the
termination of the contract leads to the termination of the related service contract. How-
ever, one can presume that Art. 9 CESL would regulate all the various combinations be-
tween the ‘main contract’ and the related service contract.
1. Overview
108 The principle of freedom of contract appears to also be self-evident in the European
context.116 It is emphasized in, for example, the DCFR:117
juridical acts, or the rights and obligations arising from them, or derogate from or vary their
effects, except as otherwise provided.
(3) A provision to the effect that parties may not exclude the application of a rule or derogate from
or vary its effects does not prevent a party from waiving a right which has already arisen and of
which that party is aware.
116 See T–24/90 Automec ECLI:EU:T:1992:97 para. 51; Wagner, ‘Zwingendes Vertragsrecht’ in Eiden-
80
IV. Freedom of contract
The CESL very clearly states the principle of freedom of contract:118 109
Article 1 CESL
Freedom of contract
(1) Parties are free to conclude a contract and to determine its contents, subject to any applicable
mandatory rules.
(2) Parties may exclude the application of any of the provisions of the Common European Sales
Law, or derogate from or vary their effects, unless otherwise stated in those provisions.
The withdrawal of the proposed Common European Sales Law is of considerable sig- 110
nificance for the notion of freedom of contract at European level. Freedom of contract in
the CESL system was designed as a principle for the parties who chosen this instrument
to regulate their contract.119 It was thus foreseen as a genuine principle of European con-
tract law.120 However, as the proposal has been withdrawn and therefore has not become
binding law, the principle of freedom of contract in a European context is not to be gen-
eralized in light of the role it was to play in the Common European Sales Law. European
law rather acknowledges freedom of contract as a dominant principle of contract law in
the Member States and modifies this principle with its own rules.121
It cannot be denied that European law imposes mandatory rules on the Member 111
States and thus often limits contractual freedom.122 This is understandable when one
takes into account the removal obstacles to trade in the internal market as an objective of
European law. Consequently, many directives will contain mandatory rules that are to
remain mandatory when transposed into national law. However, the European legislator
has attempted to shape the national legal systems in a manner that strengthens the free-
dom of the weaker market actor (consumer, investors, distributors, groups susceptible to
discrimination) in order to strengthen the internal market. One seeks to prevent busi-
nesses from using the freedom of contract to gain a greater advantage over those busi-
nesses that have to trade in accordance with laws serving to protect the weaker party.123
The extensive effect of European law on the national legal systems does however 112
change the concept of freedom of contract. The primary focus of EU law lies in market
regulation, not the will of the individual. The European legislator especially seeks to en-
sure that the customer receives that which he can reasonably expect to receive. It is
therefore a market perspective whereby the standardization of contracts and products
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leaves little room for individual freedom to draft the contract as desired. Furthermore,
EU law serves to guarantee fair conditions and fair competition.124 For example, as a
118 On freedom of contract in the CESL see Claeys, ‘CESL Tools: Issues Settled, Matters Addressed,
Rules, Principles, Objectives and All its Provisions’ in Claeys/Feltkamp (eds), The Draft Common Euro-
pean Sales Law: Towards an Alternative Sales Law? (Intersentia 2013) 34; Schmidt-Kessel, ‘Der Vorschlag
der Kommission für ein Optionales Instrument – Einleitung’ in Schmidt-Kessel (ed), Ein einheitliches
europäisches Kaufrecht? (Sellier 2012) 1; Schulze CESL/Schulte-Nölke, Art. 1 CESL-Reg mn. 1.
119 See Schmidt-Kessel, ibid. 2.
120 Ibid.; Herresthal, ‘Zur Dogmatik und Methodik des Gemeinsamen Europäischen Kaufrechts nach
dem Vorschlag der Kaufrechts-Verordnung’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales
europäisches Kaufrecht (Sellier 2012) 111. In this vein also Claeys, ‘CESL Tools: Issues Settled, Matters Ad-
dressed, Rules, Principles, Objectives and All its Provisions’ in Claeys/Feltkamp (eds), The Draft Common
European Sales Law: Towards an Alternative Sales Law? (Intersentia 2013) 34.
121 Herresthal, ibid. 111.
122 Schmidt-Kessel, ‘Der Vorschlag der Kommission für ein Optionales Instrument – Einleitung’ in
Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 1, 3; Faust, Der Vorschlag für
ein Gemeinsames Europäisches Kaufrecht (2012) Bonner Rechtsjournal 123, 128.
123 Riesenhuber, Europäisches Vertragsrecht (2nd edn, de Gruyter 2006) § 7 mn. 943.
124 Schmidt-Kessel, ‘Der Vorschlag der Kommission für ein Optionales Instrument – Einleitung’ in
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Chapter 2 Core Elements
specific instrument of consumer protection, the right of withdrawal simply allows the
consumer to change its decision and to withdraw from the contract.125 Although it is not
suitable (at least not directly) as a means to exercise influence over the content of the
contract, it does promote one aspect of the freedom of contract: the freedom to conclude
the contract. Relaxing the principle of pacta sunt servanda also serves competition (as
the consumer can still seek better offers even after the contract has been concluded).126
At the same time a right of withdrawal can serve as an incentive for businesses to refrain
from imposing unacceptable terms – the consumer may exercise the right after discover-
ing such terms during the ‘cooling-off ’ period. Ultimately, it is an instrument to guide
market behaviour.127
113 Examples of EU legislation which restrict freedom of contract in order to guarantee
EU fundamental rights include the Portability Regulation and the Geo-blocking Regu-
lation.
online and offline. Although such different treatment might, in some cases, be objectively justified, in
other cases, some traders' practices deny or limit access to goods or services by customers wishing to
engage in cross-border transactions, or some traders apply in this regard different general conditions
of access, which are not objectively justified.
125 See Chapter 3 mn. 118 et seq.; Watson, ‘Withdrawal rights’ in Twigg-Flesner (ed), Research Hand-
2011) 2, 4.
82
IV. Freedom of contract
The above rule not only reflects the current acquis communautaire but also attempts 115
to indirectly determine the boundaries of contractual freedom. One can see that not all
of the Acquis Principles are mandatory (or cannot be modified to the consumer’s disad-
vantage) even though their effect is to protect the consumer in a particular situation.130
According to these rules, only those provisions directly addressed to the consumer can
be prejudicial, i.e. the notion of the consumer is assumed by the norm. One can there-
fore conclude that the authors of the Acquis Principles generally intended the Principles
to be default rules.
Many sources131 of European private law contain similar provisions stipulating the 116
mandatory effect of certain aspects of consumer protection, for example:
This provision only ascertains that all of the rules arising from the Consumer Rights 117
Directive cannot be changed to the consumer’s disadvantage. It is, however, not possible
to ascertain from this provision whether the European legislator has taken the principle
of freedom of contract as its foundation, though the drafters of the Directive have cer-
tainly acted on the basis that the contract law of the Member States has been built with
this principle as the cornerstone. Nevertheless, it cannot be stated just in this context
that the principle of freedom of contract is a tenet of European law. Ascertaining the role
played by freedom of contract in the EU rather requires further sources, in particular the
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Art. 352 TFEU should have been the legal basis see Schmidt Kessel CESL/Schmidt-Kessel, Einleitung
CESL-Reg mn. 23–36.
135 Grigoleit, ‘Der Entwurf für ein Gemeinsames Europäisches Kaufrecht; Funktionsbedingungen, EU-
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Chapter 2 Core Elements
monization of default law to be of no actual significance for the creation of the internal
market. Default law is to be seen as the guiding model for the legislator’s notion of jus-
tice and considered as giving direction to the control of contract terms.136 The harmo-
nization of such law therefore plays an indispensable role in the harmonization of con-
tract law and thus ultimately in creating the internal market.
119 Several directives contain default provisions. The Consumer Sales Directive is a no-
table example:
120 The Sale of Goods Directive clearly expresses that, unless stated otherwise (e.g.
Art. 10(6)), its provisions are mandatory but deviations are possible when to the benefit
of the consumer.
(2) This Directive shall not prevent the seller from offering to the consumer contractual arrange-
ments that go beyond the protection provided for in this Directive.
huber, Europäisches Vertragsrecht (2nd edn, de Gruyter 2006) § 31 mn. 910 et seq.
84
IV. Freedom of contract
122
Article 4 Consumer Sales Directive
Right of redress
Where the final seller is liable to the consumer because of a lack of conformity resulting from an act
or omission by the producer, a previous seller in the same chain of contracts or any other intermedi-
ary, the final seller shall be entitled to pursue remedies against the person or persons liable in the
contractual chain. the person or persons liable against whom the final seller may pursue remedies,
together with the relevant actions and conditions of exercise, shall be determined by national law.
Art. 4 CSD concerns the legal relationships between businesses and protects the final
seller from the risk of bearing the costs of consumer protection. However, Art. 4 CSD is
not covered by Art. 7 CSD. A literal interpretation of the Consumer Sales Directive al-
lows the argument that the Member States are free to use mandatory or default provi-
sions to implement the claims to redress. If this is true, one can pose the question
whether the national legislator is free to designate the implemented norm as fully or par-
tially mandatory. Minimum harmonization applies to this Directive:
Minimum harmonization allows the Member States to exceed the level of protection 123
afforded by the Directive. However, according to Art. 8 CSD this only concerns the level
of consumer protection. As Art. 4 CSD is not concerned with consumer protection one
could consider that, in this instance, the national legislator’s freedom surrounding im-
plementation arises from the provision itself. The consequence may therefore be that the
Directive even mandates the dispositive nature of the rule and the national legislator
would have no room to restrict the freedom to draft the contract as desired. If such an
interpretation were to apply then one would presume that, for example, the German
transposition in § 478 BGB (which only affords the parties a very limited possibility to
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
deviate from this rule) would be in breach of the Directive.137 This conclusion would,
however, go too far. The teleological interpretation of Art. 4 CSD would allow for the
conclusion that the purpose of protecting the (often weaker) final seller from bearing all
liability could hardly be achieved if there were no limitations on excluding the applica-
tion of this rule. For this reason one can rather presume that the provision allows, at
least implicitly, the national legislator to place restrictions on the dispositive nature of
this rule.138 However, it may even be possible that an implementation allowing absolute
exclusion of this rule would not violate the Directive.
The corresponding provision in the Sale of Goods Directive and the Digital Content 124
Directive is more conclusive:
85
Chapter 2 Core Elements
125 Both provisions provide that the national legislator may only determine the condi-
tions for pursuing the right of redress; the Consumer Sales Directive was more open in
this respect. The new provisions therefore contain a strong basis for the argument that
the national legislator may not implement these as default rules. The parties may still be
able agree upon equivalent solutions in their contract.139
126 The dispositive nature of these provisions is primarily expressed in relation to com-
mercial contracts, e.g. Art. 30(1) Payment Services Directive:
Art. 30 Payment Services Directive clearly expresses that, with the exception of con-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
sumer protection, all provisions covered by this article are not mandatory. However, this
Directive represents an exception in European contract law because it does not simply
supplement particular aspects of national law but rather represents a complete set of
rules for this area. The rules are ‘self-supporting’, i.e. they have to be implemented into
national law as a whole. It therefore does not just require mandatory rules but also a sys-
tem of default rules to define and shape the area of law. The European legislator has,
however, allowed the Member States to waive the dispositive nature of these rules and to
assimilate them with the consumer protection standards, even outside of consumer law.
86
IV. Freedom of contract
This provision plays a specific role in European legislation because it expresses the 128
substantive requirement for the limitations of party autonomy. The European legislator
presumes that this control is necessary if the terms of the contract are given to the con-
sumer either as part of pre-formulated standard terms or with the intention of single
use. Protection for the consumer is difficult to justify when she can influence the content
of the term.141
It can be considered a paradox that the European legislator appears to be less active 129
with regard to B–B contracts. The Late Payment Directive is an example of such activity,
albeit in a relatively narrow field of law.
140 Collins, ‘The Directive on Unfair Contract Terms: Implementation, Effectiveness and Harmoniza-
tion’ in Collins (ed), Standard Contract Terms in Europe (Wolters Kluwer 2008) 2; Jansen, ‘Klauselkon-
trolle’ in Eidenmüller et al, Revision des Verbraucher-acquis (Mohr 2011) 53–107.
141 Zoll, ‘Unfair Terms in the Acquis Principles and Draft Common Frame of Reference: A Study of the
Differences between the Two Closest Members of One Family’ (2008) XIV Juridica International 69, 75.
87
Chapter 2 Core Elements
The Late Payment Directive only applies to B–B contracts. Art. 7 Late Payment Direc-
tive creates a basis for the control of contract terms that determines the period for pay-
ment, however this control can even be carried out when the parties have negotiated the
term. This does not mean that the negotiation of the term is not relevant for the control
of its content. Art. 7 Late Payment Directive outlines a number of criteria to be consid-
ered when examining the (un)fairness of a term; the negotiation does not form an ex-
plicit part of this list. In this instance the European legislator has attempted to use a
‘flexible system’142 to set the boundaries of party autonomy. This system is tailored to the
requirements of the individual case rather than the mass-contracting characteristic of
consumer transactions. The Late Payment Directive refrains from clearly stipulating that
the negotiation and real possibility of negotiation should exclude examination of the
content of the terms. This solution appears to be better suited to the future as it is very
difficult to ascertain in practice whether a process of negotiation actually took place or
whether a party actually had the possibility to influence how the contract was drafted. It
is not simply possible to give a ‘yes or no’ answer as negotiations themselves as well as
the influence of one party can vary in intensity. Consequently, the relationship between
negotiations and the boundaries of contractual freedom is much more complicated. Put
simply, the greater the drafting scope available to the parties the greater their realistic
influence on the contract. However, here one has to assess the influence under consider-
ation of the factors listed in Art. 7 Late Payment Directive.
4. Good faith
130 The concept of good faith is not self-evident in EU law.143 National legal systems ac-
knowledge good faith in its function as a rectification in a legal relationship and as a lim-
itation on the exercise of subjective rights, though to varying extents (for instance com-
mon law legal systems are, at the least, sceptical of the concept144).145 The European law
on this matter has therefore been very restrained146 thus only few directives expressly in-
clude the concept of good faith in their provisions. The Unfair Terms Directive147 de-
scribes good faith as:
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
142 The term was coined by the Austrian scholar Walter Wilburg in Elemente des Schadenrechts (Elwert
1941); see, in English, Wilburg, The Development of a Flexible System in the Area of Private Law (Manz
2000).
143 Zoll, ‘Die Grundregeln der Acquis Gruppe im Spannungsverhältnis zwischen acquis commun und
Modernising and Harmonising Consumer Contract Law (Sellier 2009) 88; Howells/Wilhelmsson/Twigg-
Flesner, Rethinking EU Consumer Law (Routledge 2017) 145 with further references; Ranieri, Europäisches
Obligationenrecht (3rd edn, Springer 2009) 1873 n 114, 1873–1875; Stuyck, ‘Unfair Terms’ in Howells/
Schulze, ibid. 142–147; Teubner, ‘Legal irritants: Good faith in British law or how unifying law ends up in
new divergences’ (1998) MLR 11; Zimmermann/Whittaker, Good faith in European Contract Law (CUP
2000) 39.
145 Patti, ‘Interpretation of the General Clauses “Public Policy” and “Good Morals” in European Con-
tract Law’ (2014) ERPL 611; Riesenhuber, System und Prinzipien des europäischen Vertragsrechts (de
Gruyter 2003) 570; Smits, Contract Law, A Comparative Introduction (Edward Elgar 2014) 136–137, 139;
Zimmermann/Whittaker, ibid. 16–39.
146 Jansen/Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the “Prin-
ciples of the Existing EC Contract Law”’ (2008) MLR 505, 524; Riesenhuber, ibid. 412–510.
147 Riesenhuber, ibid. 402–403, 570.
88
IV. Freedom of contract
The Unfair Terms Directive plays a central role in spreading the concept of good 131
faith.148 The required implementation into national law has therefore resulted in ‘good
faith’ finding its way into the common law;149 though of course the concept of ‘good
faith’ under the Directive is restricted in scope as it concerns terms that have not been
individually negotiated. The Late Payment Directive uses, however, the wording good
faith and fair dealing, though here the functions are similar and the content is compara-
ble:
However, the inclusion of good faith in Unfair Terms Directive does not represent the 132
European legislator’s first use of the concept: good faith is also explicitly included in the
Commercial Agents Directive.
The use of good faith in this context was less of a revolution for the common law legal
tradition – its use concerns a long-term obligation that is characterized by the parties’
particular duties of loyalty,150 a contract of the uberrima fidei.151 The parties to such con-
tracts are obliged to act to achieve a common goal. This requires co-operation to an ex-
tent which cannot be precisely defined but which must be substantiated by a flexible
term such as good faith.
The inclusion of good faith has over time become more commonplace in European 133
law, for instance in the Unfair Commercial Practices Directive:
148 Ibid. 410; Rott, ‘Unfair Contract Terms’ in Twigg-Flesner (ed), EU Consumer and Contract Law (Ed-
Litigation’ in Andenas and Fairgrieve (eds), Courts and Comparative Law (OUP 2015) 628–631.
150 Riesenhuber, System und Prinzipien des europäischen Vertragsrechts (de Gruyter 2003) 403–404.
151 See Burrows (ed), Principles of the English Law of Obligations (OUP 2015) mn. 1.193; Zimmermann/
89
Chapter 2 Core Elements
134 The notion of good faith here is accompanied by the further category of ‘honest mar-
ket practice’; the notions can be used as an alternative to each another.152 In this respect
one must remember that the Directive is addressed to the Member States (Art. 288
TFEU). Consequently, the alternative is also addressed to the Member States who may
choose to use the milder term ‘honest market practice’ rather than ‘good faith’. These two
terms are not synonymous: the concept of good faith shrouds an ideal of reciprocal rela-
tionships – a form of wishful thinking which sets a standard for people to achieve in
their actions.153 ‘Honest market practices’ represents a different notion as it does not re-
fer to an idealized situation but rather to actual practices and usages that only have to be
qualified as ‘honest’. This of course requires evidence of their actual use in practice. The
concept of good faith extends further as it also encompasses the ‘honest market
practices’, though actually behaving in such a manner is not required. Consequently, it
makes little sense for the national legislator to give no thought and simply implement
into national law the phrase covering both concepts. There is rather a choice whereby
the inclusion of ‘honest market practices’ would mean reluctance to implement the
broader notion of good faith.
135 The ECJ has also referred to the concept of good faith, in particular in its decision in
Messner:154
for the use of the goods in the case where he has made use of those goods in a manner incompatible
with the principles of civil law, such as those of good faith or unjust enrichment, on condition that
the purpose of that directive and, in particular, the efficiency and effectiveness of the right of with-
drawal are not adversely affected, this being a matter for the national court to determine.
This decision is particularly noteworthy as the Court uses the notion of good faith
without an explicit basis in the Distance Selling Directive, i.e. the legislation at the basis
of the dispute. However, good faith was not referred to as an independent part of the
acquis communautaire but the Court merely made reference to the use of the principle in
modifying the European rule on restitution following withdrawal.
136 The authors of the Acquis Principles have considered that these few traces of claims
to good faith provide a sufficient basis for general rules.155 However, it is to be noted that
152 For more detail see Durovic, European Law on Unfair Commercial Practices and Contract Law
90
IV. Freedom of contract
the Acquis Principles do not contain a general provision expressing the general applica-
tion of the principle of good faith.156 Aside from the control of contract terms (Art. 6:301
ACQP), the principle of good faith is also relevant for pre-contractual obligations, deter-
mining the content of obligations, and the rules on performance:157
The decision to have separate rules on good faith arises from a reluctance to give this 137
concept an overly prominent standing within the system adopted by the Acquis Princi-
ples. The effect of good faith ought therefore to be selective.158 The question may be
asked whether, at the time of drafting, sufficient sources were available in order to de-
clare the application of good faith in EU law in the form of a restatement. The European
Commission took, at least at that time, an alternative view by explicitly stating in a
Green Paper159 that European law does not contain a general principle of good faith.
Annex I 4.3. Green Paper on the Review of the Consumer Acquis COM (2006) 744 final
The concepts of good faith and fair dealing in the Consumer Acquis
The consumer acquis on contract law does not include a general duty to deal fairly or to act in good
faith. A general clause referring to the concept of (un-)fairness exists in Article 5 of Directive on Un-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
fair Commercial Practices, which concerns marketing practices, but which does not apply to con-
tracts. Article 3 (1) of Directive 93/13/EEC on Unfair Terms in Consumer Contracts constitutes a
general clause referring to ‘(un-) fairness’ and contains a definition of that term for the purposes of
the Directive.
The main advantage of an overarching general clause for consumer contracts in the horizontal instru-
ment would be the creation of a tool which would provide guidance for the interpretation of more
specific provisions and would allow the courts to fill gaps in the legislation by developing comple-
mentary rights and obligations. It could therefore provide a safety net for consumers and create cer-
tainty for producers by filling gaps in legislation. In addition, a general provision may also be a useful
tool when interpreting clauses contained in offers or contracts and it may as well respond to the criti-
cism that certain directives or provisions are not time-proof. A general provision could be built
155 Contract II/Pfeiffer/Ebers, Art. 2:101 mn. 10; Zoll, ‘Die Grundregeln der Acquis Gruppe im Span-
nungsverhältnis zwischen acquis commun und acquis communautaire’ (2008) GPR 106, 113–115.
156 Jansen/Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the “Prin-
ciples of the Existing EC Contract Law”’ (2008) MLR 505, 524; Ranieri, Europäisches Obligationenrecht
(3rd edn, Springer 2009) 1896–1897.
157 Jansen/Zimmermann, ibid. 510.
158 Ranieri, Europäisches Obligationenrecht (3rd edn, Springer 2009) 1896–1897.
159 COM(2006) 744 final,17.
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Chapter 2 Core Elements
round the phrase ‘good faith and fair dealing’. This includes the idea that they show due regard to the
interests of the other party, considering the specific situation of certain consumers.
The disadvantage of such a general clause is that it does not encompass precisely the rights and obli-
gations imposed on each party. Its interpretation may vary from Member State to Member State.
If included, such a general principle should apply from the negotiation phase to the execution of the
contract, including remedies. It would also prevent the emergence of the kind of problems encoun-
tered with the current consumer protection directives, due to legislation being overtaken by techno-
logical and market developments.
Question C: Should a horizontal instrument include an overarching duty for professionals to act
in accordance with the principles of good faith and fair dealing?
Option 1: The horizontal instrument would provide that under EU consumer contract law profes-
sionals are expected to act in good faith.
Option 2: The status quo would be maintained: There would be no general clause.
Option 3: A general clause would be added which would apply both to professionals and consumers.
138 The Consumer Rights Directive – which may be considered a consequence of this
Green Paper – did not adopt the principle of good faith. It thus appears that Option 2
was followed.
139 The DCFR makes express reference to the principle of good faith:
140 It can be seen from the wording that the DCFR has attempted to find a balance be-
tween the various traditions in the legal systems of the Member States. Phrasing a gener-
al principle of good faith accords with the approach in continental legal systems, though
the use of good faith as a ‘shield’ rather than a ‘sword’ follows from the English doctrine
of estoppel. The wording means that no direct claims can be derived from the principle
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92
IV. Freedom of contract
The CESL uses the principle of good faith as a general rule which applies across its 142
entire system:
Article 2 CESL
Good faith and fair dealing
(1) Each party has a duty to act in accordance with good faith and fair dealing.
(2) Breach of this duty may preclude the party in breach from exercising or relying on a right, reme-
dy or defence which that party would otherwise have, or may make the party liable for any loss
thereby caused to the other party.
(3) The parties may not exclude the application of this Article or derogate from or vary its effects.
Moreover, the CESL-Reg contains a definition of ‘good faith and fair dealing’: 143
It is clear from this provision that the concept of ‘fair dealing’ (which replaces the no-
tion of ‘honest market practices’ used in the Unfair Commercial Practices Directive) has
been merged with ‘good faith’ without actually extending or changing the content of the
latter principle. Its use rather aims at bringing familiarity to the reader from a common
law jurisdiction.161 Although the definition under Art. 2(b) CESL-Reg also uses various
undefined terms that also require substantiation, it does show the direction taken by
contract law under the CESL. The CESL requires the parties to consider the interests of
the other party and to co-operate with each other for this purpose (see also Art. 3 CESL
on the obligation to co-operate162).163 In other words, contract law under the CESL is
focused on party co-operation rather than the parties each acting in its own interest. In
general, the wording of Art. 2(b) CESL-Reg repeats the concept adopted in the DCFR164
though it includes the possibility for the injured party to claim damages. The injured
party is therefore afforded not only a ‘shield’ but also a ‘sword’ in the form of damages;
this approach stems from the French legal system. The inclusion of a general principle of
good faith in the CESL highlights a development that was anticipated by the Acquis
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Principles. In this sense, had the CESL been adopted, its principle of good faith could, in
spite of its optional nature, have possibly influenced the entire acquis communautaire.
However, in this respect there has been no change to European private law due to the
withdrawal of the CESL.
5. Non-discrimination
a) Foundation
European contract law is heavily influenced by the development of non-discrimina- 144
tion legislation.165 Moreover, it is an important example for the horizontal effect of fun-
Schulze (eds), EU-Grundrechte und Privatrecht (Nomos 2016); Schulze (ed), Non-discrimination in Euro-
pean Private Law (Mohr Siebeck 2011); Zoll, ‘Non-Discrimination and European Private Law’ in Twigg-
Flesner (ed), The Cambridge Companion to European Private Law (CUP 2011) 298.
93
Chapter 2 Core Elements
damental rights on private law. The protection against discrimination impacts consider-
ably on the principle of freedom of contract166 – the freedom to decide on the partner to
the contract. It also affects the content of the contract because non-discrimination provi-
sions may set limitations. A controversial issue is whether the prohibition of discrimina-
tion is compatible with the traditional notion of contract law. Storme even notes a ‘right
to discriminate’ as a fundamental principle of private law.167 In contrast, Lehmann pre-
sumes that the principle of non-discrimination is a fundamental principle in civil law
codifications.168 This is particularly noticeable in the French Civil Code with origins in
liberté, égalité, fraternité. However, both authors are correct as they consider different as-
pects in the structure of private law. It cannot be denied that the codifications have their
origins in liberal traditions with an image of an equal society, yet at the same time the
principle of free will also played a decisive role. From this perspective, declarations of
intent do not require justification, such as why it was not made towards a particular per-
son. Freedom of contract did not prevent a contract from being discriminatory in situa-
tions of equal bargaining power.
145 Non-discrimination plays a particular role in EU law:169 the European legislator at-
tempts to sanction such behaviour by a party to the contract. Such actions are not only
inconsistent with a multi-cultural European society but prejudice and stereotypes can
also deny particular groups access to the market, or even render it impossible. The Euro-
pean system of non-discrimination comprises various elements that make a number of
distinctions under the common feature of ensuring market access to as many groups as
possible. In part, the basis for equal treatment is derived from fundamental rights.170
This concerns cases of discrimination on the grounds of personal characteristics such as
gender, ethnic origin or race. However, there are prohibitions that are justifiable from an
internal market perspective – non-discrimination in access to services (and soon the ac-
cess to online services) due to habitual residence in a different Member State.
law, which is not covered here). 171 These two Directives have a similar structure: they list
the factors for prohibited unequal treatment, define direct and indirect discrimination,
give instances in which unequal treatment is justified, provide a framework for propor-
tionate and deterring sanctions, and include a presumption of discrimination when
plausible facts are established.
147 These Directives are anchored in EU primary law: Art. 18 TFEU prohibits discrimi-
nation on the basis of EU citizenship whereas Art. 19 TFEU provides the legislative com-
in: Schulze (ed), New Features in Contract Law (Sellier 2009) 67–69.
169 See Schulze (ed), Non-discrimination in European Private Law (Mohr Siebeck 2011); Zoll, ‘Remedies
for Discrimination: a Comparison of the Draft Common Frame of Reference and the Acquis Principles’
(2008) ERA Forum Special 87–88.
170 Art. 21 CFR.
171 On non-discrimination legislation in the acquis communautaire see Zoll, ‘Remedies for Discrimina-
tion: a Comparison of the Draft Common Frame of Reference and the Acquis Principles’ (2008) ERA Fo-
rum Special 87.
94
IV. Freedom of contract
petence for the EU to prohibit discrimination based on gender, racial or ethnic origin,
religion or belief, disability, age or sexual orientation. In addition, Art. 21 CFR prohibits
discrimination on further grounds such as political opinion, genetic features, etc.
Article 18 TFEU
Within the scope of application of the Treaties, and without prejudice to any special provisions con-
tained therein, any discrimination on grounds of nationality shall be prohibited.
The European Parliament and the Council, acting in accordance with the ordinary legislative proce-
dure, may adopt rules designed to prohibit such discrimination.
Article 19 TFEU
(1) Without prejudice to the other provisions of the Treaties and within the limits of the powers
conferred by them upon the Union, the Council, acting unanimously in accordance with a spe-
cial legislative procedure and after obtaining the consent of the European Parliament, may take
appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or
belief, disability, age or sexual orientation.
(2) By way of derogation from paragraph 1, the European Parliament and the Council, acting in
accordance with the ordinary legislative procedure, may adopt the basic principles of Union in-
centive measures, excluding any harmonisation of the laws and regulations of the Member
States, to support action taken by the Member States in order to contribute to the achievement
of the objectives referred to in paragraph 1.
A particular question arises in relation to the extent to which non-discrimination ap- 148
plies in contract law if it is not expressed in a directive. One can see that, where em-
ployment law is concerned, the ECJ decision in Mangold has gone so far as to assume
general application of non-discrimination.
the transposition of a directive intended to lay down a general framework for combating dis-
crimination on the grounds of age, in particular so far as the organisation of appropriate legal
remedies, the burden of proof, protection against victimisation, social dialogue, affirmative ac-
tion and other specific measures to implement such a directive are concerned.
Art. 3:101 ACQP prohibits discrimination in contract law on the grounds of sex, 149
racial or ethnic origin; Art. II.–2:101 DCFR contains a similar provision.172 Both of these
sets of rules extend the scope of non-discrimination to contract law, which is otherwise
reluctant to do so as it considerably limits the freedom of contract, particularly the free-
dom to choose the counterparty. The horizontal application of provisions prohibiting
discrimination in contract law just on the basis of open-phrased fundamental rights in-
fringes on the status of contract law as an independent and autonomous area of law.
However, present legislation generally allows one to presume that discrimination on the
grounds of sex, racial or ethnic origin is prohibited.
172 See also Zoll, ‘Remedies for Discrimination: a Comparison of the Draft Common Frame of Refer-
ence and the Acquis Principles’ (2008) ERA Forum Special 87.
95
Chapter 2 Core Elements
150 The Racial Equality Directive maintains that its use of ‘racial origin’ does not mean
the acceptance of ‘theories attempting to determine the existence of separate human
races’ (Recital 6). However, ‘racial origin’ is one of the requirements for unequal treat-
ment. One can therefore presume that the focus is particularly on the racist motives of
the discriminating party who insinuates that its counterparty is of a particular racial or
ethnic origin.173 It cannot be denied that this requirement is lacking the necessary preci-
sion. Particular objective elements are necessary in order to provide a basis for probable
racist motivations underlying the unequal treatment.174
151
C–668/15 Jyske Finans ECLI:EU:C:2017:278
Article 2(2)(a) and (b) of Council Directive 2000/43/EC of 29 June 2000 implementing the principle
of equal treatment between persons irrespective of racial or ethnic origin is to be interpreted as not
precluding the practice of a credit institution which requires a customer whose driving licence indi-
cates a country of birth other than a Member State of the European Union or of the European Free
Trade Association to produce additional identification in the form of a copy of the customer’s pass-
port or residence permit.
In Jyske Finans, the ECJ found no indirect discrimination as the aforementioned re-
quirement applied without distinction to all persons born outside the territory of a
Member State of the European Union or the EFTA.175
152 The ECJ outlined in a previous decision the requirements for a discrimination on the
basis of ethnic origin:
rective 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between per-
sons irrespective of racial or ethnic origin and, in particular, of Articles 1 and 2(1) thereof, must
be interpreted as being intended to apply in circumstances such as those at issue before the re-
ferring court — in which, in an urban district mainly lived in by inhabitants of Roma origin, all
the electricity meters are placed on pylons forming part of the overhead electricity supply net-
work at a height of between six and seven metres, whereas such meters are placed at a height of
less than two metres in the other districts — irrespective of whether that collective measure af-
fects persons who have a certain ethnic origin or those who, without possessing that origin, suf-
fer, together with the former, the less favourable treatment or particular disadvantage resulting
from that measure.
2. Directive 2000/43, in particular Article 2(1) and (2)(a) and (b) thereof, must be interpreted as
precluding a national provision which lays down that, in order to be able to conclude that there
is direct or indirect discrimination on the grounds of racial or ethnic origin in the areas covered
173 Riesenhuber, ‘Das Verbot der Diskriminierung aufgrund der Rasse oder der ethnischen Herkunft
sowie aufgrund des Geschlechts beim Zugang zu und der Versorgung mit Gütern und Dienstleistungen’ in
Leible/Schlachter (eds), Diskriminierungsschutz durch Privatrecht (Sellier 2009) 123, 130.
174 See generally Schiek/Waddington/Bell (eds), Cases, Materials and Text on National, Supranational
96
IV. Freedom of contract
by Article 3(1) of the directive, the less favourable treatment or the particular disadvantage to
which Article 2(2)(a) and (b) respectively refer must consist in prejudice to rights or legitimate
interests.
3. Article 2(2)(a) of Directive 2000/43 must be interpreted as meaning that a measure such as that
described in paragraph 1 of this operative part constitutes direct discrimination within the
meaning of that provision if that measure proves to have been introduced and/or maintained for
reasons relating to the ethnic origin common to most of the inhabitants of the district con-
cerned, a matter which is for the referring court to determine by taking account of all the rele-
vant circumstances of the case and of the rules relating to the reversal of the burden of proof that
are envisaged in Article 8(1) of the directive.
4. Article 2(2)(b) of Directive 2000/43 must be interpreted as meaning that:
– that provision precludes a national provision according to which, in order for there to be
indirect discrimination on the grounds of racial or ethnic origin, the particular disadvan-
tage must have been brought about for reasons of racial or ethnic origin;
– the concept of an ‘apparently neutral’ provision, criterion or practice as referred to in that
provision means a provision, criterion or practice which is worded or applied, ostensibly,
in a neutral manner, that is to say, having regard to factors different from and not equiva-
lent to the protected characteristic;
– the concept of ‘particular disadvantage’ within the meaning of that provision does not refer
to serious, obvious or particularly significant cases of inequality, but denotes that it is par-
ticularly persons of a given racial or ethnic origin who are at a disadvantage because of the
provision, criterion or practice at issue;
– assuming that a measure, such as that described in paragraph 1 of this operative part, does
not amount to direct discrimination within the meaning of Article 2(2)(a) of the directive,
such a measure is then, in principle, liable to constitute an apparently neutral practice
putting persons of a given ethnic origin at a particular disadvantage compared with other
persons, within the meaning of Article 2(2)(b);
– such a measure would be capable of being objectively justified by the intention to ensure
the security of the electricity transmission network and the due recording of electricity
consumption only if that measure did not go beyond what is appropriate and necessary to
achieve those legitimate aims and the disadvantages caused were not disproportionate to
the objectives thereby pursued. That is not so if it is found, a matter which is for the refer-
ring court to determine, either that other appropriate and less restrictive means enabling
those aims to be achieved exist or, in the absence of such other means, that that measure
prejudices excessively the legitimate interest of the final consumers of electricity inhabiting
the district concerned, mainly lived in by inhabitants of Roma origin, in having access to
the supply of electricity in conditions which are not of an offensive or stigmatising nature
and which enable them to monitor their electricity consumption regularly.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
The Commission is presently working on a proposal for a directive which, following 153
the model in employment law, will extend the scope of non-discrimination in relation to
access to goods and services made available to the public by including the other factors
listed in Art. 19 TFEU.176
97
Chapter 2 Core Elements
155 The provision prohibits unequal treatment on the grounds of nationality or place of
residence.177 Unequal treatment may however be justified by objective criteria – for in-
stance cases in which access to services is denied due to distance, type of service, etc. or
the service can only be offered in a particular place or would require unreasonable ef-
fort. The prohibition does however raise significant doubts. Commercial freedom allows
a business to determine its field of operations and does not require, for example a work-
man, to offer his services in the whole of the EU. The notion underlying the provision is
understandable as access to different services, especially those offered online, is not the
same in all EU Member States. However, the wording of Art. 20 Services Directive is
hardly compatible with the principles of commercial freedom.178 Nationality as a criteri-
on for discrimination under Art. 20 Services Directive is redundant as this principle is
anchored in Art. 19 TFEU.
156 Furthermore, the EU restricts the practice of ‘geo-blocking’, which can result in dis-
crimination in the access to goods and services. This term describes the practice in
which access to digital content is made impossible or more difficult due to the cus-
tomer’s geographical location. The recent Geo-blocking Regulation prohibits discrimi-
nation in the following fields:
(2) A trader shall not, for reasons related to a customer’s nationality, place of residence or place of
establishment, redirect that customer to a version of the trader’s online interface that is different
from the online interface to which the customer initially sought access, by virtue of its layout,
use of language or other characteristics that make it specific to customers with a particular na-
tionality, place of residence or place of establishment, unless the customer has explicitly con-
sented to such redirection.
In the event of redirection with the customer’s explicit consent, the version of the trader’s online
interface to which the customer initially sought access shall remain easily accessible to that cus-
tomer.
(3) The prohibitions set out in paragraphs 1 and 2 shall not apply where the blocking or limitation
of access, or the redirection is necessary in order to ensure compliance with a legal requirement
laid down in Union law, or in the laws of a Member State in accordance with Union law, to
which the trader’s activities are subject.
In such instances, the trader shall provide a clear and specific explanation to customers regard-
ing the reasons why the blocking or limitation of access, or the redirection is necessary in order
177 See Schulte-Nölke et al. (eds), Discrimination of Consumers in the Digital Single Market, Study re-
quested by the European Parliament’s Committee on Internal Market and Consumer Protection (2013) 45
available online under https://www.europarl.europa.eu/thinktank/de/document.html?reference=IPOL-I
MCO_ET%282013%29507456 (accessed 11 December 2020).
178 Ibid. 50.
98
IV. Freedom of contract
to ensure such compliance. That explanation shall be given in the language of the online inter-
face that the customer initially sought to access.
99
Chapter 2 Core Elements
2015/2366, has been introduced in the law of the Member State to which the trader’s operation
is subject. Those charges shall not exceed the direct costs borne by the trader for the use of the
payment instrument.
157 The Regulation serves to prevent the access to the internal market by reason of an
unfair distinction between customers on the basis of their nationality, place of residence
and place of establishment. There are many reasons for why suppliers often attempt to
subject their performance to different conditions depending on the Member State, for
instance to take advantage of regional differences including the level of competition at
local market level.179
6. Party status
158 Party status (business or consumer) is of key importance for European contract law.
However, before shifting the focus to the consumer, it is important to note that the origi-
nal notion of the consumer is well rooted in the commercial realities of the 1970s and
1980s. Social changes and the technological revolution now question the present justifi-
cation for the notion of the consumer.180 The social roles of market actors are now less
clearly defined; there is an increasing number of persons who do not have an easily
identifiable role,181 or whose behaviour gives rise to new categories such as ‘pro-
sumers’182. In addition to the different risks brought by the technological revolution,
such concepts also have an immense impact on the asymmetry in access to information,
an important justification for the development of the notion of a ‘consumer’. In the mod-
ern era, anyone equipped with a smartphone can easily access the information on goods,
comparable offers or customer reviews. However, this change is hardly considered in
current EU law, yet there are indications for a change in direction. For instance, the
Package Travel Directive describes the parties as follows:
half, for purposes relating to his trade, business, craft or profession in relation to contracts cov-
ered by this Directive, whether acting in the capacity of organiser, retailer, trader facilitating a
linked travel arrangement or as a travel service provider;
The Package Travel Directive (1990) contained a very broad notion of ‘consumer’,
which corresponds to the term ‘traveller’ used in the new Package Travel Directive. Nev-
ertheless, in this case the change in terminology is symptomatic. It emphasizes that the
179 See, for example, European Parliament, Briefing Paper on Geo-blocking and discrimination among
out Law?’ (2015) EuCML 135, 138. See also Reich et al., European Consumer Law (2nd edn, Intersentia
2014) 52–60.
182 The term is used to describe consumers who are actively involved in, for example, production, see
Toffler, Future Shock (1971). See also for the term produsage Bruns, ‘Towards Produsage: Futures for User-
Led Content Production’ in Sudweeks/Hrachovec/Ess (eds), Proceedings: Cultural Attitudes towards Com-
munication and Technology (Murdoch University 2006) 275–284.
100
V. Consumers and other protected parties
protection covers all customers, not just the consumer. This development from con-
sumer to customer protection may possibly appear in other areas of EU law.
1. Overview
European private law has undergone a development that differs from the develop- 159
ment of the traditional private laws of the individual Member States. The extensive codi-
fications of the 19th century reflect the liberal tendencies of the time and set out rights
that should serve to remove the formal differences between individuals. However, the re-
alization of the principle of formal equality led these private laws to contain merely
‘Tropfen sozialen Öls’ (literally, ‘drops of social oil’183). Over the course of the 20th centu-
ry the many experiences from the development of a market economy under the welfare
state gave rise to the tendency to protect the weaker party. Such a tendency was particu-
larly prevalent in employment law, which ultimately resulted in this area of law becom-
ing a separate legal discipline in many European legal systems.184 The protection of the
weaker party first arose in some legal systems by affording protection to tenants and
thereafter to consumers;185 many national legal systems also attempted to protect other
‘non-professionals’ as well as SMEs. The development was however quite uncoordinated
amongst the individual countries and has since become an obstacle to the creation of a
smoothly functioning internal market.186 The necessity of increased protection for par-
ticular market participants does however raise costs187 and leads to unequal opportuni-
ties for businesses as some may, in comparison to others, have to consider less rigorous
rules, which can ultimately lead to social dumping. This variation in protection across
the Member States was also a decisive factor in a consumer’s decision not to purchase
cross-border.188 As such it is hardly surprising that the development of European private
law has focused on the removal of such differences in national laws.189 Nonetheless, the
removal of these differences ought not result in a reduction of the level of protection but
instead create high common standards of protection. The protection in contract law has
particularly developed on the basis of the concept of the consumer, a notion that is also
of central importance in the development of European contract law. The concept of the
consumer serves to ‘generalize’ characteristics that have to be displayed in order for pro-
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tection to be granted.190 In particular instances the consumer may be the superior party
(e.g. in terms of knowledge about the good or service) and not actually deserve the pro-
tection that it will nevertheless be afforded. One can therefore see that an intrinsic and
183 v. Gierke, Die soziale Aufgabe des Privatrechts (Springer 1889) 10; Markesinsis/Unberath/Johnston,
European Contract Law’ COM (2001) 398 final and has been a recurring theme in later communications,
in particular in the ‘Green Paper on the Review of the Consumer Acquis’ COM (2006) 744 final, 6. See
also Riesenhuber/Takayama, ‘Rechtsangleichung: Grundlagen, Methoden und Inhalte’ in Riesenhuber/
Takayama (eds), Rechtsangleichung: Grundlagen, Methoden und Inhalte (de Gruyter 2006) 1, 2.
187 See Adams, Ökonomische Theorie des Rechts: Konzepte und Anwendungen (2nd edn, Lang 2004)
115–118; Luth/Cseres, ‘The DCFR and Consumer Protection: An Economic Analysis’ in Chirico/
Larouche (eds) Economic Analysis of the DCFR (Sellier 2010) 243 et seq.
188 e.g. COM(2006) 744 final, 7 with references to further studies; COM(2010) 348 final, 5.
189 As is made clear in, for example, COM(2002) 208 final; COM (2003) 68 final; COM (2004) 651 final.
190 See Riesenhuber, System und Prinzipien des europäischen Vertragsrechts (de Gruyter 2003) 206.
101
Chapter 2 Core Elements
potential injustice is linked to the concept of the consumer. Such injustice may also be
seen whereby inferiority is more significant than in the case of a consumer (e.g. small
businesses) yet no protection is afforded, whereas others will be protected even though it
may not be necessary under the circumstances. Ultimately, the classification as a con-
sumer is a phenomenon corresponding to the demands of mass contracts.191 However,
this results in problems in relation to ‘dual use’,192 i.e. acting for a purpose that is a com-
bination of commercial and private motivations.
160 The protection of parties under a contract of course depends on the nature of the
contract to be concluded. Accordingly, the parties’ contractual role and, in some circum-
stances, their personal characteristics will be of considerable relevance for the applica-
tion of protective measures; though in certain cases it will rather be the nature of the
legal relationship, not party status, which will be relevant in, for instance, package holi-
days. The role of a party in a contract can be particularly seen in the notion of the con-
sumer, a term that is defined in the numerous consumer law directives193 but, as stated
above, is nevertheless problematic due to particular issues such as ‘dual use’. A further
example can also be seen in certain B–B contracts, such as investment contracts.194
be negligible in the overall context of the supply, the fact that the private element is predominant
being irrelevant in that respect;
– it is for the court seised to decide whether the contract at issue was concluded in order to satisfy,
to a non-negligible extent, needs of the business of the person concerned or whether, on the con-
trary, the trade or professional purpose was negligible;
– to that end, that court must take account of all the relevant factual evidence objectively con-
tained in the file. On the other hand, it must not take account of facts or circumstances of which
the other party to the contract may have been aware when the contract was concluded, unless
191 See v. Hippel, Verbraucherschutz (3rd edn, Mohr Siebeck 1981) 3–4.
192 See Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 52–54; Riesenhuber, Europäi-
sches Vertragsrecht (2nd edn, de Gruyter 2006) 91.
193 A useful overview of the notion of the consumer in earlier EU directives is given in Riesenhuber,
System und Prinzipien des europäischen Vertragsrechts (de Gruyter 2003) 251–253. See also Howells/
Wilhelmsson/Twigg-Flesner, Rethinking EU Consumer Law (Routledge 2017) 25 et seq.
194 Recital 1 MiFID.
195 Jansen/Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the “Prin-
102
V. Consumers and other protected parties
the person who claims the capacity of consumer behaved in such a way as to give the other party
to the contract the legitimate impression that he was acting for the purposes of his business.
The recitals198 to the Consumer Rights Directive do however contain a more differen-
tiated definition of the consumer. This model of a narrow definition in the legislation199
itself and a broader paraphrasing in the recitals200 has also been adopted in the Mortgage
Credit Directive and Consumer ODR Regulation.
197 More specifically, the application of Art. 13–15 Convention of 27 September 1968 on Jurisdiction
and the Enforcement of Judgments in Civil and Commercial Matters (Brussels Convention) [1978] OJ
L304/36.
198 Recital 17 CRD.
199 See the definition of the ‘consumer’ in Art. 4(a) Consumer ODR Regulation and Art. 4(1) Mortgage
Credit Directive.
200 Recital 10 Consumer ODR Regulation and Recital 12 Mortgage Credit Directive.
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Chapter 2 Core Elements
According to these Recitals, the consumer concept encompasses dual use contracts as
long as the private element is predominant; therefore more extensive than in Gruber.
The problem arises in relation to the role of the recitals as they could indeed complete
and extend the definition given in the main text of the directive. Moreover, one cannot
ignore the recitals when interpreting a directive.201 One can thus pose the question of
why their content was not directly included in the main text; the reason may perhaps lie
in simply trying to reach a consensus during the legislative process. It is however clear
from these Directives and the Consumer ODR Regulation that the dual purpose of the
contract does not prevent the classification of a party as a consumer as long as the pri-
vate purpose is predominant. There is however another possible reason for approaching
the issue of dual-use contracts just in the recitals: the European legislator may possibly
have sought a generalization also with regard to the definition of the consumer in other
directives. One could argue that the clarification that the traditionally ‘narrow’ defini-
tion of the consumer also covers ‘dual use’, thereby older definitions of the consumers
(e.g. in the Unfair Terms Directive or Consumer Sales Directive) are also to be interpret-
ed in the same manner as the notion of the consumer under the Consumer Rights Di-
rective.
162 A tendency to broaden the scope of the consumer definition (but also the definition
of trader) is clear from recent ECJ case-law, for example in the 2015 decision in Šiba:
The ECJ clearly expresses that a contract between a lawyer and natural person, who is
not acting for professional purposes, is a consumer contract. The lawyer is indeed a
member of the legal profession, but this does not change his status as a ‘seller or supplier’
for the purposes of the Unfair Terms Directive. His client can therefore act as a con-
sumer when the criteria are fulfilled.
163 The ECJ held in Costea that:
201 A recital in the premable may cast light on the interpreation of a rule but cannot in itself constitute
such a rule, C–215/88 Casa Fleischhandel ECLI:EU:C:1989:331 para. 31; furthermore the ‘purpose of the
recitals is to set out concise reasons for the chief provisions of the enacting terms, without reproducing or
paraphrasing them. They shall not contain normative provisions or political exhortations’, Interinstitution-
al Agreement of 22 December 1998 on common guidelines for the quality of drafting of Community legis-
lation [1999] OJ C73/1 mn. 10.
104
V. Consumers and other protected parties
profession. The fact that the debt arising out of the same contract is secured by a mortgage taken out
by that person in his capacity as representative of his law firm and involving goods intended for the
exercise of that person’s profession, such as a building belonging to that firm, is not relevant in that
regard.
This case clarifies that a close connection between the contract and the natural per-
son’s professional activity does not exclude the classification as a consumer when the
purpose of the contract (e.g. credit) is not linked to the natural person’s profession. The
cases highlight the aforementioned development towards a general customer protec-
tion.202 However, the case does raise doubts whether the ECJ touches too greatly on na-
tional law as the Court’s decision concerns the decision-making process and, above all,
the principle of free evaluation of evidence. The conclusions the court is to draw from
the fact that the credit is secured against commercial premises does not concern the no-
tion of the consumer, but rather the conclusions that the national court is to draw from
the evidence. This latter question does not fall within the ECJ’s competence.
A tendency to favour the classification as a consumer is also apparent in the context 164
of procedural law, as is shown in Faber:
According to this decision, the court is required to determine of its own motion
whether a party qualifies as a consumer.203 The decision in Faber does not make a sub-
stantive change to the definition of the consumer, yet will result in the more frequent
categorization of a party as a consumer during the litigation process. Consequently, this
will extend the scope of parties that benefit from the qualification as a consumer.
The qualification as a consumer also requires, in principle, the other party to be a 165
trader. Contracts between two parties, neither of whom are acting for purposes related
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
to their business, craft, trade or profession, are not consumer contracts. However, such
circumstances are open to abuse, especially a professional intermediary commissions the
contract. In general, an intermediary (such as a broker) will not change the parties’ legal
status, though there are cases in which acts by the intermediary exceed mere commis-
sion or, such as in the decision Whatelet, the role as an intermediary is not made appar-
ent:
105
Chapter 2 Core Elements
above interpretation does not depend on whether the intermediary is remunerated for acting as inter-
mediary.
The ECJ therefore assumes that the lack of transparency regarding the role of a trader
acting as an intermediary allows the consumer buyer to enforce its rights under the Di-
rective against the trader. However, the consequences of this decision are unclear with
respect to the legal relationships between the parties. European contract law merely re-
quires the intermediary to be liable (as the seller) for non-conformity; all other aspects
are left to the Member States.
166 A sudden change in the development of notion of the consumer can be seen in the
Digital Content Directive and the Sale of Goods Directive.
The wording in each of these Directives clearly contradicts Recital 17 CRD. Accord-
ing to these new Directives (more precisely, the recitals), the regulation of dual-purpose
contracts is left to the Member States and is not directly regulated by EU law. This ap-
proach is problematic because it is clear that the Member States may extend the scope of
protection under the Directives to other parties outside the scope of the Directives. This
could potentially have the effect that an extension of consumer protection to dual pur-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
pose contracts would also directly extend the application of genuine EU law with all of
the underlying principles, e.g. interpretation in accordance with EU law and the require-
ment to submit questions for preliminary ruling (Art. 267 TFEU). The new wording
does, however, mean that the notion of the consumer is no longer uniform in EU law:204
the Consumer Rights Directive, which also concerns aspects of sales law, will have to be
interpreted differently than the Sale of Goods and Digital Content Directives. This is not
an ideal situation.
106
V. Consumers and other protected parties
In addition, Art. 4 CSD provides a business (who was liable to the consumer) with a
right to seek redress from other businesses. In each of these examples there are no par-
ticular criteria for the business seeking protection; playing a particular role in the legal
relationship, e.g. supplier, commercial agent, or final seller, will therefore suffice.205
The Markets in Financial Instruments Directive applies a mixed system under which 168
all customers will in principle be protected, though the level of protection will vary de-
pending on whether the customer is a professional or retail client.206 A similar system
can also be seen in the E-Commerce Directive as generally all customers of a service
provider will be protected (e.g. information obligations will apply to the same extent to
all customers) though rules protecting consumers are mandatory.
(…)
The new Directives allow an extension of their scope to parties who are not traders, 169
but are active on online platforms as sellers or service providers. Furthermore, the Di-
rectives allow platform operators to always qualify as traders even though they may oth-
erwise not satisfy the requirements in the definition.
205 On the different national approaches to the regress chain see Ebers/Janssen/Meyer (eds), European
107
Chapter 2 Core Elements
should remain free to extend the application of this Directive to platform providers that do not fulfil
the requirements for being considered a trader under this Directive.
170 This possibility to extend the scope of the definition means that particular contracts
may be classified as consumer contracts even though a trader is not party to the con-
tract. As an absolute exception, one is therefore faced with a so-called consumer–con-
sumer contract, whereas normally the notion of the consumer contract always requires a
trader to be the other party.207 The Directive solves this by allowing the national legisla-
tor to create a legal fiction. However, it is problematic that the solution is contained
within the recitals. The national legislator may always extend a directive’s personal scope
of application because the parties concerned fall outside the scope of the directive and
therefore within the exclusive domain of the national legislator. Sensible interpretation
of these recitals may allow the conclusion that application of the legal fiction requires
application of EU law and thus uniform interpretation (which may involve requests for
preliminary rulings pursuant to Art. 267 TFEU).
171
Article 21(1) ELI Model Rules on Online Platforms
Exercise of Rights and Remedies Against the Platform Operator
Where Article 19 or Article 20 (1) apply, a customer who is a consumer can exercise against the plat-
form operator all the rights and remedies that would be available against the supplier if the supplier
were a business, irrespective of whether the supplier is a business.
Art. 21(1) of the ELI Model Rules on Online Platforms offers an alternative solution
to the problem. However, this only concerns the platform’s subsidiary liability that may
arise from Art. 19 and 20 of the ELI Model Rules.208
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
207 For a different solution in the context of online platforms see Rodriguez de las Heras Ballell, in
Busch et al. (eds), Discussion Draft of a Directive on Online Intermediary Platforms. Commentary (Jagiel-
lonian University Press 2019) Art. 2 mn. 43–44.
208 ELI Model Rules on Online Platforms, https://www.europeanlawinstitute.eu/fileadmin/user_upload
108
CHAPTER 3
CONCLUSION AND CONTENT OF CONTRACTS
Literature: von Bar/Clive (eds), DCFR Full Edition (Sellier 2009); Basedow/Hopt/Zimmermann (eds), The
Max Planck Encyclopedia of European Private Law (OUP 2012); Dannemann/Vogenauer (eds), The Com-
mon European Sales Law in Context (OUP 2013); van Erp, Contract als Rechtsbetrekking (Willink 1990);
Fleischer, Informationsasymmetrie im Vertragsrecht – Eine rechtsvergleichende und interdisziplinäre Ab-
handlung zu Reichweite und Grenzen vertragsschlussbezogener Aufklärungspflichten (C.H. Beck 2001);
Howells/Wilhelmsson/Twigg-Flesner, Rethinking EU Consumer Law (Routledge 2017); Kötz/Flessner,
European Contract Law (Clarendon 1997); Micklitz/Stuyck/Terryn, Cases, Materials and Text on Consumer
Law (Hart 2010); Research Group on the Existing EC Private Law (Acquis Group), Contract II – General
Provisions, Delivery of Goods, Package Travel and Payment Services (Contract II) (Sellier 2009); Schulze,
‘Die Widerrufsrechte im Gemeinsamen Europäischen Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf
für ein optionales Kaufrecht (Sellier 2012) 151; Twigg-Flesner/Schulze/Watson, ‘Protecting rational choice:
information and the right of withdrawal’ in Howells/Ramsay/Wilhelmsson (eds), Handbook of Research on
International Consumer Law (2nd edn, Edward Elgar 2018) 111–138; Watson, ‘Withdrawal Rights’ in
Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward Elgar 2016) 241–265;
Zoll, ‘Culpa in Contrahendo in European Contract law – A Useful Concept?’ in Schulze/Perales Viscasillas
(eds), The Formation of Contract (Nomos 2016) 41–58.
I. Pre-contractual duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Comparative perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3. Pre-contractual duties and good faith in the acquis communautaire . . . . 17
4. Pre-contractual duties and good faith in the CESL . . . . . . . . . . . . . . . . . . . . . . . 19
5. Pre-contractual duties and good faith in the DCFR . . . . . . . . . . . . . . . . . . . . . . 25
6. Liability under the Acquis Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7. Information duties in the acquis communautaire . . . . . . . . . . . . . . . . . . . . . . . . 32
8. Between pre-contractual information duties and fair trading . . . . . . . . . . . . 36
9. Standardized performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10. Pre-contractual information duties in the CESL . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11. Pre-contractual information duties in the Acquis Principles and DCFR 43
12. Consequences of breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
II. Conclusion of contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3. Modes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4. Pre-contractual public statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5. Unilateral promises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
6. Inertia selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
7. Defects in Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
III. Right of withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
2. Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
3. Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
4. Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
5. Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
I. Pre-contractual duties
1. Overview
The conclusion of contracts under European private law is understood as a process 1
that begins at an early stage and thus attention towards the the question whether a duty
of loyalty exists between the parties even before the contract has been concluded.
Present EU law has only focused on particular aspects of pre-contractual duties, in par-
ticular determining pre-contractual information duties.1 Nonetheless, EU law is taking
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Chapter 3 Conclusion and Content of Contracts
ever more steps, as is illustrated by the inclusion of particular duties which are subject to
the principle of good faith and honest market practices (Art. 5(2)(a), Art. 2(h) UCPD).2
2 The Acquis Principles have used the principle of good faith as a source for pre-con-
tractual duties (see Art. 2:101 ACQP).3 This rule is not merely a matter of course as the
Acquis Principles were drafted at a time when there were few bases in the acquis commu-
nautaire to underpin the assumption that EU law would adopt the general principle of
good faith. The Green Paper on the Review of the Consumer Acquis highlighted that the
acquis communautaire does not include a ‘general duty to deal fairly or act in good faith’
but indicated that a general clause would be beneficial.4 The examination of the various
national legal systems shows that the principle of good faith has not been adopted in all
systems. There is limited use of good faith in common law systems and has principally
only become part of such systems since the implementation of EU law (in particular the
Unfair Terms Directive).5
3 However, the importance of the principle of good faith has increased in recent EU
law. This is clearly demonstrated by, for example, the Unfair Commercial Practices Di-
rective; moreover, the ECJ has also referred to good faith in both public and private law
contexts preceding the Unfair Terms Directive.6 The recent Platform Regulation seeks to
ensure that contractual relations falling within its scope are conducted ‘in good faith and
based on fair dealing’ (Art. 8). The proposed CESL makes frequent references to the
principle of good faith;7 lasting changes could therefore have been made to EU law be-
yond the scope of the CESL had it not been withdrawn.8
4 One aspect of pre-contractual duties has been subject to comprehensive regulation at
European level: information duties.9 Correct information is indeed critical in the deci-
sion-making process but is also required in order to (consciously) behave in a manner
that allows for the intended legal consequences to be achieved (or that no legal conse-
quences shall arise). However, at present it is almost a permanent feature that decisions
are made without the full, necessary information. The amount of available information
is extensive, yet it is rarely possible to select the information that is necessary in the deci-
sion-making process.10 The process is made increasingly difficult by the frequent asym-
metry in information.11 Such an asymmetry formed part of the initial aspects of the no-
tion of a consumer, i.e. a person who lacks sufficient information due to the weaker con-
tractual position. However, such structural asymmetry is not limited to consumer con-
tracts as considerable information asymmetries also exist in contracts between business-
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Art. 68(1)(c), Art. 83(1), Art. 86(1)(b), Art. 170(1) CESL; see the corresponding comments in the Schmidt-
Kessel CESL and Schulze CESL commentaries.
8 See Chapter 2 mn. 142 et seq.
9 COM(2006) 744 final, 19–20.
10 See Howells, ‘The Potential and Limits of Consumer Empowerment by Information’ (2005) Journal of
2005); Vogenauer/Kerber/Weatherill (eds), Party Autonomy and the Role of Information in the Internal
Market (de Gruyter 2001).
110
I. Pre-contractual duties
es.12 Insufficient information is also not just a feature of the pre-contractual phase – in-
formation may also be necessary to ensure the performance of the contract.
Modern legal systems ought not fail to take into account the information asymme- 5
tries between the parties. Indeed, the development in many legal systems has shown an
increase in the information duties that are imposed on a party in certain contractual re-
lationships; however there are differences amongst the legal traditions in Europe. These
differences have arisen against the background of the cultural diversities that have not
only influenced the image of Europe but also, more fundamentally, influenced the ideas
whether and what duties the parties are to perform in the pre-contractual phase. Some
legal systems aim more at party co-operation – as opposed to solely considering and as-
serting one’s own interests – therefore resulting in extensive duties arising from the prin-
ciple of mutual loyalty. The duty to provide pre-contractual information therefore ex-
tends further into such ‘co-operative’ systems and is easier to justify. Other legal systems
take the opposite approach by focusing more on the individual. Accordingly, such sys-
tems proceed from the general assumption that each person is responsible for obtaining
the information it requires. These two approaches represent two ends of a spectrum
composed of various models that adopt a conciliatory position.13 The pre-contractual
information duties in these systems are often obtained from the principle of good faith
and the generalization of the different analogies from specific provisions.14
In EU law, the right to information is considered as one of the most important instru- 6
ments used to strengthen the position of the consumer.15 Catalogues of information du-
ties have therefore been included in (or attached to) numerous directives, though the in-
formation itself fulfils different functions. Some information intends to allow the con-
sumer to make the correct decision. This concerns all information that primarily con-
cerns the subject matter of the performance as well as explaining the risks that may pre-
vent the consumer from achieving the purpose of the contract.16 A further category of
information serves to identify the party to the contract.17
Other information explains the procedure that should lead to the conclusion of the 7
contract. Such information plays a prevailing role when the procedure requires particu-
lar knowledge or is technically complex (Art. 8(1) and (2) CRD).18 For example, the con-
sumer in a distance contract (and especially in e-commerce) must therefore be informed
of the technical aspects concerning the procedure for the conclusion of contract.
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12 As is apparent in several provisions of the Platform Regulation, e.g. Art. 3(1)(d), (e), Art. 8(b),
Art. 9(d).
13 On the cooperative, individualistic and altruistic systems of contract law see Brownsword, Contract
Law. Themes for the Twenty-First Century (2nd edn, OUP 2006).
14 In relation to the modernization of the 2002 reform of the German law of obligations see, Schulze,
Consumer Law (2nd edn, Intersentia 2014) 21 et seq. For criticisms of the modern EU approach see How-
ells/Wilhelmsson/Twigg-Flesner, Rethinking EU Consumer Law (Routledge 2017) 95.
16 See, for example, Art. 5(1) and Art. 6(1) Consumer Credit Directive; Recital 21 Distance Marketing of
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Chapter 3 Conclusion and Content of Contracts
8 Information duties also exist which serve to make the other party aware of the com-
mercial nature underlying the contract. In turn, other information concerns the avail-
ability of particular rights that are available to the consumer under the contract, for in-
stance a withdrawal right which is available to the consumer in specific situations (e.g. in
an off-premises or distance contract).19
9 The acquis communautaire contains very few provisions stipulating the sanctions for
breach of information duties,20 though an extension of the withdrawal period belongs to
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the typical consequences under EU contract law.21 However, this reluctance to set sanc-
tions is waning – sets of rules such as the Acquis Principles and the DCFR provide a
complete set of sanctions for the breach of information duties (Art. 2:208 ACQP;
Art. II.–3:109 DCFR). An important element of these systems is to modify the contract
in light of missing or incorrect information:
19 COM(2006) 744 final, 19–20. See also, for example, Art. 5(1)(o), Art. 10(2)(p) Consumer Credit Di-
2017) 111.
21 See, for example, Art. 14(1)(b) Consumer Credit Directive; Art. 10 CRD.
112
I. Pre-contractual duties
The European legislator is gradually beginning to refrain from primarily allowing the 10
Member States to regulate the sanctions for breach of information duties. The Consumer
Rights Directive contains detailed provisions on such sanctions.22
Furthermore, EU law contains information duties that apply outside the field of con- 11
sumer law, such as the Services Directive. The recipient of the service need not be a con-
sumer in order to benefit from the service provider’s information duty:
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Chapter 3 Conclusion and Content of Contracts
the harmonisation of the laws of the Member States relating to turnover taxes – Common
system of value added tax: uniform basis of assessment (38);
(e) in the case of the regulated professions, any professional body or similar institution with
which the provider is registered, the professional title and the Member State in which that
title has been granted;
(f) the general conditions and clauses, if any, used by the provider;
(g) the existence of contractual clauses, if any, used by the provider concerning the law appli-
cable to the contract and/or the competent courts;
(h) the existence of an after-sales guarantee, if any, not imposed by law;
(i) the price of the service, where a price is pre-determined by the provider for a given type
of service;
(j) the main features of the service, if not already apparent from the context;
(k) the insurance or guarantees referred to in Article 23(1), and in particular the contact de-
tails of the insurer or guarantor and the territorial coverage.
(2) Member States shall ensure that the information referred to in paragraph 1, according to the
provider’s preference:
(a) is supplied by the provider on his own initiative;
(b) is easily accessible to the recipient at the place where the service is provided or the con-
tract concluded;
(c) can be easily accessed by the recipient electronically by means of an address supplied by
the provider;
(d) appears in any information documents supplied to the recipient by the provider which set
out a detailed description of the service he provides.
(3) Member States shall ensure that, at the recipient’s request, providers supply the following addi-
tional information:
(a) where the price is not pre-determined by the provider for a given type of service, the price
of the service or, if an exact price cannot be given, the method for calculating the price so
that it can be checked by the recipient, or a sufficiently detailed estimate;
(b) as regards the regulated professions, a reference to the professional rules applicable in the
Member State of establishment and how to access them;
(c) information on their multidisciplinary activities and partnerships which are directly
linked to the service in question and on the measures taken to avoid conflicts of interest.
That information shall be included in any information document in which providers give
a detailed description of their services;
(d) any codes of conduct to which the provider is subject and the address at which these
codes may be consulted by electronic means, specifying the language version available;
(e) where a provider is subject to a code of conduct, or member of a trade association or pro-
fessional body which provides for recourse to a non-judicial means of dispute settlement,
information in this respect. The provider shall specify how to access detailed information
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on the characteristics of, and conditions for, the use of non-judicial means of dispute set-
tlement.
(4) Member States shall ensure that the information which a provider must supply in accordance
with this Chapter is made available or communicated in a clear and unambiguous manner, and
in good time before conclusion of the contract or, where there is no written contract, before the
service is provided.
(5) The information requirements laid down in this Chapter are in addition to requirements al-
ready provided for in Community law and do not prevent Member States from imposing addi-
tional information requirements applicable to providers established in their territory.
(6) The Commission may, in accordance with the procedure referred to in Article 40(2), specify the
content of the information provided for in paragraphs 1 and 3 of this Article according to the
specific nature of certain activities and may specify the practical means of implementing para-
graph 2 of this Article.
However, as European contract law predominantly concerns consumer law, there are
fewer instances of information duties outside of the field of consumer law.
12 The ever increasing number of information duties may indeed be positive, yet it does
have the negative effect that consumers are often overwhelmed because they are not able
to cope with volume of information.23 The performance of the information duty is
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I. Pre-contractual duties
therefore reduced to a formality that has no positive influence on improving the con-
sumer’s actual level of information. The consumer will only become an ‘informed con-
sumer’ in theory, whereas the practical reality is that it will be ‘struck down’ by the infor-
mation without being able to make actual use thereof. Information duties also entail
risks for businesses – as diligent as the business may be, it will often have no certainty as
to whether it has actually given the other party all the necessary information. The risk is
especially prevalent where the scope of the information duty is solely determined by the
principle of good faith. The European legislator has attempted to achieve greater certain-
ty by introducing specific forms that can be used as a basis for providing the informa-
tion. These forms serve a function in protecting the interests of both parties: the con-
sumer will receive standardized and manageable information and the business will have
clear boundaries for the information duty to depend on and refer to. The Consumer
Credit Directive illustrates this approach:
The European legislator has also attempted to expand the pre-contractual duties in 13
particularly risky financial transactions (e.g. investments) in order to protect the cus-
tomer from taking a considerable risk. Financial institutions are therefore subject to spe-
cific duties that, alongside giving information, also serve the creation of a client profile
that will allow the institution to determine whether the intended transaction can actually
meet the customer’s needs.24 The pre-contractual duties may therefore mean that the
business is obliged to refrain from concluding the contract unless the client is adamant
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
23 See, for example, Ben-Shahar/Schneider, More than you wanted to know – the failure of mandated dis-
closure (Princeton University Press 2014); Howells, ‘The Potential and Limits of Consumer Empowerment
by Information’ (2005) Journal of Law and Society 349; Howells/Wilhelmsson/Twigg-Flesner, Rethinking
EU Consumer Law (Routledge 2017) 330. See also: ‘Warning: Too Much Information Can Harm an Inter-
im Report by the Better Regulation Executive and National Consumer Council on Maximising the Posi-
tive Impact of Regulated Information for Consumers and Markets’ (2007) available online under http://w
ww.eurofinas.org/uploads/documents/policies/NCB-BRE-Report.pdf (last accessed 11 December 2020).
24 See Howells/Wilhelmsson/Twigg-Flesner, Rethinking EU Consumer Law (Routledge 2017) 330.
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Chapter 3 Conclusion and Content of Contracts
(2) All information, including marketing communications, addressed by the investment firm to
clients or potential clients shall be fair, clear and not misleading. Marketing communications
shall be clearly identifiable as such.
(3) Appropriate information shall be provided in a comprehensible form to clients or potential
clients about
– the investment firm and its services,
– financial instruments and proposed investment strategies; this should include appropriate
guidance on and warnings of the risks associated with investments in those instruments or
in respect of particular investment strategies,
– execution venues, and
– costs and associated charges
so that they are reasonably able to understand the nature and risks of the investment service and
of the specific type of financial instrument that is being offered and, consequently, to take in-
vestment decisions on an informed basis. This information may be provided in a standardised
format.
(4) When providing investment advice or portfolio management the investment firm shall obtain
the necessary information regarding the client’s or potential client’s knowledge and experience
in the investment field relevant to the specific type of product or service, his financial situation
and his investment objectives so as to enable the firm to recommend to the client or potential
client the investment services and financial instruments that are suitable for him.
(…)
(10) In order to ensure the necessary protection of investors and the uniform application of para-
graphs 1 to 8, the Commission shall adopt, in accordance with the procedure referred to in Ar-
ticle 64(2), implementing measures to ensure that investment firms comply with the principles
set out therein when providing investment or ancillary services to their clients. Those imple-
menting measures shall take into account:
(a) the nature of the service(s) offered or provided to the client or potential client, taking
into account the type, object, size and frequency of the transactions;
(b) the nature of the financial instruments being offered or considered;
(c) the retail or professional nature of the client or potential clients.
(…)
2. Comparative perspectives
14 In 1861, the celebrated German scholar, Rudolf von Jhering, published his article ‘Cul-
pa in contrahendo oder Schadensersatz bei nichtigen oder nicht zur Perfektion gelangten
Verträgen’25 in which he outlined his theory on the existence of loyalty duties between
the parties in a relationship that can result in the conclusion of a contract. This ‘discov-
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ery’ has since had a long-lasting effect on the concept of contract: the existence of a
legally relevant relationship prior to the conclusion of contract reduces the significance
of the contract itself. Jhering’s focus was on the question of liability for breach of pre-
contractual duties and therefore he may not have intended that the content of the con-
tract would also be determined by the pre-contractual phase. Nonetheless, Jhering as-
sumed a contractual relationship that would oblige the parties to act loyally towards one
another at the time the contract was concluded; this basis provided the source for pre-
contractual duties. The classification under contract was founded by the absence of a
sufficient non-contractual foundation for liability, which continued after the German
Civil Code entered into force in 1900. Jurisprudence and legal theory indeed renounced
the fiction of a contract on the conclusion of contract but have nonetheless remained
with the contractual approach. The liability due to culpa in contrahendo was adopted in
25 v. Jhering, ‘Culpa in contrahendo oder Schadensersatz bei nichtigen oder nicht zur Perfektion
gelangten Verträgen’ in Jahrbücher für die Dogmatik des heutigen römischen und deutschen Rechts (Jherings
Jahrbücher) vol 4 (1861) – reprint: v. Jhering, Culpa in contrahendo (Gehlen 1969) 7–91.
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I. Pre-contractual duties
the German Civil Code in the course of the modernization of the law of obligations in
2002.26
Jhering’s theory on the liability due to the breach of pre-contractual duties received 15
recognition outside of the German jurisdiction, yet the contractual (or quasi-contractu-
al) classification is considered a feature of the German approach. The theory inspired
Italian and French scholars, Gabriele Faggella and Raymond Saleiles, respectively, to seek
the source of liability in tort law à la française.27 In comparison to German law, the
French model for tort law was (and is) more generous to the injured party.
The concept of pre-contractual liability was however met with considerable scepti- 16
cism in other legal traditions, especially the common law. This is particularly apparent in
the English decision Walford v Miles:
However the concept of a duty to carry on negotiations in good faith is inherently repugnant to the
adversarial position of the parties when involved in negotiations. Each party to the negotiations is
entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations.28
It is thus undeniable that the different legal traditions in Europe have adopted various
different positions concerning the question of pre-contractual duties. Consequently, the
process of European harmonization in this area of law faces numerous difficulties.
tified by the principle of good faith. In comparison, Art. 5 CRD concerns the informa-
tion duties for other types of contracts and does not prevent other information duties
arising under national law due to application of good faith. Such duties under the Direc-
tive can therefore not be derived solely from the principle of good faith.
law’ in Schulze/Perales Viscasillas (eds), The Formation of Contract (Nomos 2016) 29–40.
27 Fagella, ‘Dei periodi precontrattuali e dell loro vera ed esatta costruzionescientifica’ in Studi Giuridici
in onore di Carlo Fadda, vol 3 (Pierro 1906) 269, 271; Saleilles, ‘De la responsabilité précontractuelle; à
propos d´une étude nouvelle sur la matière’ (1907) Revue Trimestrelle de Droit civil 697.
28 Walford v Miles [1992] 2 AC 128, 138 per Ackner LJ.
29 For comments on the application of good faith in the acquis communautaire see COM(2006) 744 fi-
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Chapter 3 Conclusion and Content of Contracts
in a clear and comprehensible manner, if that information is not already apparent from the con-
text:
(a) the main characteristics of the goods or services, to the extent appropriate to the medium
and to the goods or services;
(b) the identity of the trader, such as his trading name, the geographical address at which he
is established and his telephone number;
(c) the total price of the goods or services inclusive of taxes, or where the nature of the goods
or services is such that the price cannot reasonably be calculated in advance, the manner
in which the price is to be calculated, as well as, where applicable, all additional freight,
delivery or postal charges or, where those charges cannot reasonably be calculated in ad-
vance, the fact that such additional charges may be payable;
(d) where applicable, the arrangements for payment, delivery, performance, the time by
which the trader undertakes to deliver the goods or to perform the service, and the trad-
er’s complaint handling policy;
(e) in addition to a reminder of the existence of a legal guarantee of conformity for goods, the
existence and the conditions of after-sales services and commercial guarantees, where ap-
plicable;
(f) the duration of the contract, where applicable, or, if the contract is of indeterminate dura-
tion or is to be extended automatically, the conditions for terminating the contract;
(g) where applicable, the functionality, including applicable technical protection measures, of
digital content;
(h) where applicable, any relevant interoperability of digital content with hardware and soft-
ware that the trader is aware of or can reasonably be expected to have been aware of.
(2) Paragraph 1 shall also apply to contracts for the supply of water, gas or electricity, where they
are not put up for sale in a limited volume or set quantity, of district heating or of digital content
which is not supplied on a tangible medium.
(3) Member States shall not be required to apply paragraph 1 to contracts which involve day-to-day
transactions and which are performed immediately at the time of their conclusion.
(4) Member States may adopt or maintain additional pre-contractual information requirements for
contracts to which this Article applies.
However, the Commission failed to take account of the sources of EU law31 in which,
even for modern law, the principle of good faith unarguably applies. This still holds true
even though the Consumer Rights Directive is entirely silent on this principle.
20 The actual break in the application of good faith as a source of rights and duties for
the parties (also in the pre-contractual phase) can be observed in the frequent references
to good faith in the proposed CESL and the intended general application of this princi-
ple.32 As already indicated,33 had the proposed CESL not been withdrawn, its principle
of good faith would have had influence on the entire acquis communautaire as the prin-
ciple would have been adopted elsewhere in EU law.
30 COM(2006) 744 final, 17–18. On the application of the principle of good faith see Chapter 2 mn. 130
et seq.
31 See Whittaker/Zimmermann, ‘Good faith in European contract law: surveying the legal landscape’ in
Zimmermann/Whittaker (eds), Good faith in European Contract Law (CUP 2000) 7–62.
32 Recital 3, Art. 2(b) CESL-Reg, Art. 2, Art. 23(1), Art. 48(1)(b)(iii), Art. 49(1) and (3), Art. 59(h),
Art. 68(1)(c), Art. 83(1), Art. 86(1)(b), Art. 170(1) CESL; see the corresponding comments in the Schmidt-
Kessel CESL and Schulze CESL commentaries.
33 See mn. 3.
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I. Pre-contractual duties
The proposed CESL defines the principle of good faith. As under the Unfair Com- 21
mercial Practices Directive34 the principle has been extended to also include ‘fair deal-
ing’. Both concepts are covered under one uniform definition:
A notable feature of the CESL is the distinction between the pre-contractual informa- 23
tion duties in B–C and B–B contracts. Art. 13 CESL states information duties for B–C
contracts but does not refer to the principle of good faith.
However, Art. 23(1) CESL provides: 24
tice of the “General Clause” in English Law: General Norms and Structuring of Judicial Discretion’ in
Grundmann/Mazeaud (eds), General Clauses and Standards in European Contract Law – Comparative
Law, EC Law and Contract Law Codification (Kluwer 2006) 57, 69.
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Chapter 3 Conclusion and Content of Contracts
means to the other trader any information concerning the main characteristics of the goods, digital
content or related services to be supplied which the supplier has or can be expected to have and
which it would be contrary to good faith and fair dealing not to disclose to the other party.
The provision gives rise to the question whether a duty to give information in B–C
contracts is not derived solely from the principle of good faith. However, the reference to
good faith in B–B contracts allows greater flexibility in ascertaining the scope of the in-
formation duties. In this respect, one has to bear in mind the differences in contracting
practice for B–C and B–B contracts and therefore the variation in approach. B–C con-
tracts are primarily standardized, mass contracts in nature and therefore it is possible to
determine an exhaustive list of information duties. This approach is also in the interest
of the seller as he can be sure that he will have correctly performed its information du-
ties;37 such certainty is all the more relevant due to monitoring by consumer organiza-
tions and authorities. However, the circumstances may lead to the paradox that the in-
formation duties in a particular B–B contract may be more extensive than in a B–C con-
tract. This is somewhat theoretical as such extensive information duties are seldom likely
to arise from the principles of good faith and fair dealing, yet it does highlight the possi-
bility for further information duties in B–B contracts.38 One can therefore see that the
principle of good faith is better suited to contracts negotiated individually. In compari-
son, too much flexibility and the need to consider the individual circumstances (as result
from the principle of good faith) are not well suited to standardized, mass contracts. It is
therefore not contradictory that no additional information duty in consumer contracts
can be derived from the principle of good faith even though this principle is generally
acknowledged. The information duties listed in the CESL are therefore exhaustive.
between the two sets of rules, particularly in relation to good faith. The concept of good
faith under the DCFR is used more sparingly than in the proposed CESL.
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I. Pre-contractual duties
In contrast to the CESL, Art. III.–1:103(3) DCFR provides that the breach of the duty
of good faith and fair dealing does not give rise to remedies. However, both sets of rules
provide that the breach of good faith can preclude the party in breach from exercising or
relying on rights, remedies or defences. The provision implements the common law con-
cept of estoppel, which is similar to good faith in this respect, and is based on the as-
sumption that good faith can solely function as a ‘shield’ and not as ‘sword’. The wording
of Art. III.–1:103(1) DCFR implies that the provision only applies to a relationship be-
tween the parties that has arisen after a contract was concluded. This narrow version of
the principle of good faith, as well as the limited consequences for breach, indicate that
this principle cannot serve as a general source for pre-contractual duties.41
26
Article I.–1:103 DCFR
Good faith and fair dealing
(1) The expression ‘good faith and fair dealing’ refers to a standard of conduct characterised by
honesty, openness and consideration for the interests of the other party to the transaction or
relationship in question.
(2) It is, in particular, contrary to good faith and fair dealing for a party to act inconsistently with
that party’s prior statements or conduct when the other party has reasonably relied on them to
that other party’s detriment.
The provision contains the same definition as used in the CESL. Moreover, it can be
seen from Art. I.–103(2) DCFR that the concept of good faith can apply to the pre-con-
tractual phase, though this will only be of practical relevance once the contract has been
concluded. In this case Art. III.–1:103(1) DCFR may be applied by way of analogy. How-
ever, it would not be possible to use this as a base for damages claim; liability due to
culpa in contrahendo is also practically excluded. One may consider basing liability on
the DCFR’s general tort law provisions, though this conclusion would diminish the im-
portance of Art. III.–1:103 DCFR. The extensive liability for culpa in contrahendo under
the DCFR is excluded on the basis of two provisions: Art. II.–3:301(2) DCFR provides
liability for breach of the duty of good faith and fair dealing when conducting negotia-
tions or in breaking-off negotiations; Art. II.–3:301(4) DCFR states a particular type of
such breach, namely entering into negotiations without the intention to conclude a con-
tract.
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The second provision concerns the breach of the duty of confidentiality in relation to 27
the information given in the course of negotiations:
41 Zoll, ‘Der Entwurf für einen Gemeinsamen Referenzrahmen im Prozess der europäischen
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Chapter 3 Conclusion and Content of Contracts
28 The express regulation of these two issues in the DCFR and its the narrow under-
standing of the concept of good faith indicate that one cannot assume extensive liability
under culpa in contrahendo for the breach of duties derived from good faith. The liability
in this respect will be neither on the basis of tort nor contract and shall only arise when
it is expressly provided by a provision to that effect.
European legislator has been most active in the field of consumer law, which now con-
tains a considerable number of information duties. The right to information initially
formed one of the cornerstones of the development and justification for consumer poli-
cy.49 Indeed, one of the consumer’s key weaknesses lies in the asymmetry of information;
consequently the European legislator has attempted to combat this weakness by impos-
ing information duties on the business.50 The information duties do not just cover the
ill, EU Consumer Law and Policy (2nd edn, Elgar 2013) 5 et seq.
50 See mn. 4 et seq.
122
I. Pre-contractual duties
field of consumer law but also extend to other contractual situations. For example, the
Services Directive practically contains no limitations to particular types of recipients –
the mere fact that a services contract shall be concluded will suffice in order for the in-
formation duties to apply.51 In addition, information duties arise in e-commerce regard-
less of the status of the parties;52 the mandatory nature of the information duties in this
context does however depend on whether the customer is a consumer.53 The mandatory
nature of the information duties also depends on the status of the parties in investment
contracts.
Information duties serve different purposes including, for example, identifying the 33
party, informing of the intention to create legal relations, technical aspects of the proce-
dure for concluding the contract, the subject-matter of the contract, requirements for
performing the contract, risks, content of the contract and standard terms, as well as cer-
tain rights that are available to a party (e.g. withdrawal rights). Several directives also
provide that information is to be given on the enforcement of rights, methods of dispute
resolution as well as the applicable law.54 However, before the Services Directive and,
above all, the Consumer Rights Directive were passed, these information duties were
generally scattered across the acquis communautaire and only applied in specific situa-
tions.
The Services Directive stipulates that a service provider is obliged to provide all the 34
information listed in its Art. 21. The notion of a services contract is very broad.55 It is so
extensive that one can ultimately presume that a general information duty applies espe-
cially as this duty does not only apply to consumer contracts. A comprehensive informa-
tion duty was also introduced in the Consumer Rights Directive,56 though this Directive
distinguishes between information duties in off-premises and distance contracts, and
other types of contract. Off-premises and distance contracts are subject to full harmo-
nization57 and therefore the Member States cannot introduce any additional information
duties for these types of contracts.58 The Member States are entitled to maintain or in-
troduce further information duties for other circumstances.
The Directive does however contain an exception for contracts (not off-premises or 35
distance) involving day-to-day transactions performed immediately at the time they are
concluded: the information duties may not apply to such contracts (Art. 5(3) CRD). This
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
(p) Consumer Credit Directive; Art. 6(1)(h) CRD; Art. 17(1) CESL; further information duties under
Art. 10(2)(q), (r) and (s) Consumer Credit Directive (on the excerise of the rights under Art. 15 Consumer
Credit Directive); Art. 5(1)(f) CRD (on the termination of contracts of undetermined duration);
Art. 16(b), Art. 19(3)(e) CESL (on the conditions for terminating the contract); the procedure for early
payment Art. 10(2)(r), the procedure for termination (s); on ADR Art. 10(2)(t) Consumer Credit Direc-
tive; Art. 6(1)(t) CRD; Art. 13(1)(g) CESL; on the applicable law Art. 8(1) in conjunction with Art. 9(1)
CESL-Reg; see the corresponding comments in the Schmidt-Kessel CESL and Schulze CESL commentaries.
55 Cf the definitions in Art. 4 No. 1 Services Directive with the restrictions under the second sentence of
Contribution to the Development of European Consumer Law’ (2012) ERCL 139, 142 et seq.; Reich et al.,
European Consumer Law (2nd edn, Intersentia 2014) 401 et seq.
57 See Recital 5 CRD.
58 With respect to the fully harmonized aspects in the Consumer Rights Directive see Loos, ‘Full har-
monisation as a regulatory concept and its consequences for the national legal orders. The example of the
consumer rights directive’ (2010) Centre for the Study of European Contract Law Working Paper Series 5,
6 available online under http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1639436 (last accessed 11
December 2020).
123
Chapter 3 Conclusion and Content of Contracts
37 The Unfair Commercial Practices Directive does not aim at a regulation of individual
contractual relationships but rather seeks to structure the market according to the prin-
ciples of fair trading.59 In practice, however, the boundary between individual contract
law and fair trading is blurred.60 Art. 7 UCPD results in a general information duty in
favour of consumers. The requirement for this duty is simply that particular information
is necessary in order to allow the ‘average consumer’ to take an informed contractual de-
cision.
9. Standardized performance
38 Imposing new information duties does not always lead an improvement in level of in-
formation for the other party: as noted above, the volume of information creates diffi-
culties for this party to take on, process and sort the information it has received.61 Even
the business is faced with the challenge of determining the information that must be
provided in order to perform the information duty. New directives have therefore intro-
duced standard forms to overcome this problem, for example the Consumer Credit Di-
rective62 and the Markets in Financial Instruments Directive63. These standard forms
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should ensure that the business performs its duties. In turn, the consumer shall gain easy
access to the information and be able to more easily compare the information given by
various businesses.64
criticisms of the Member States on the standard information see Lawrynowicz, The Implementation of the
Consumer Credit Directive (Study for the European Parliament 2012) 31–32; available online under
www.europarl.europa.eu/RegData/etudes/etudes/join/2012/475083/IPOL-IMCO_ET(2012)475083_EN.p
df (accessed 11 December 2020).
124
I. Pre-contractual duties
in consumer law because the business is often subject to close monitoring by various dif-
ferent authorities. Although this question was not clarified sufficiently, it can be assumed
that the effect of the optional instrument on determining the rights and duties in the
pre-contractual phase would have solely depended on the intention to conclude the con-
tract under its regime. In this respect, one can presume the optional instrument would
have had a direct effect on the pre-contractual phase.
65 For a general overview of the pre-contractual information duties in the CESL see Delvoie/Reniers,
‘Pre-contractual Information in the Proposal for a Common European Sales Law’ in Claeys/Feltkamp
(eds), The Draft Common European Sales Law: Towards an Alternative Sales Law? (Intersentia 2013) 49 et
seq.
66 Ibid. 52, noting that good faith probably would not play an important role in this context.
67 Ibid.
125
Chapter 3 Conclusion and Content of Contracts
arise in relation to the marketing of goods and services (Art. 2:202 ACQP). The Acquis
Principles use the specifics of European directives in order to draft general principles68
and therefore they include information duties that are designed to apply regardless of
particular contractual situations. Moreover, the Acquis Principles provide specific infor-
mation duties for situations in which particular types of information are necessary. The
relationship between this general clause (Art. 2:202 ACQP) and the specific information
duties cannot be described as simply being lex specialis – lex generalis. For example,
Art. 2:E–01 ACQP on package travel contracts shows that the performance of these de-
tailed information duties leads to the presumption of compliance with the general infor-
mation duty (Art. 2:202 ACQP). This approach attempts to link the need for certainty
with flexibility.
44 The pre-contractual duties under the DCFR have generally been drafted in line with
the Acquis Principles though some distinctions can be observed. The structure of the
DCFR is more conservative and not as greatly influenced by the development of the ac-
quis communautaire; Art. II.–3:101 to 3:108 DCFR therefore only contain general infor-
mation duties. Specific information duties tailored to particular situations are, with the
exception of Art. II.–3:103 to 3:105 DCFR, therefore lacking in the general framework.
The DCFR does contain specific information duties but these are, more traditionally,
linked to the particular types of contract.
(Art. 2:208(1) ACQP). The rule served as a model for the Consumer Rights Directive (as
well as the CESL) and aims to remedy the incoherency in EU law. Two further sanctions
were not expressly provided in EU law but could nonetheless be identified therein: first-
ly, Art. 2:208(2) ACQP provides for a modification of the content to take into account
the rights and obligations that the other party could reasonably expect in light of the in-
formation that was (or was not) given. The concept therefore creates an alternative to
avoidance due to defects in consent. The mistake potentially caused by the breach of the
information duty will be resolved by adapting the content of the contract to the other
party’s legitimate (to use the terminology favoured by the Acquis Principles) expecta-
tions. Secondly, Art. 2:208(3) ACQP provides a right to damages due to breach. Further-
more, the Acquis Principles refer to the rules on damages due to non-performance. It is
therefore clear that the breach of an information duty is to be equated with the non-per-
126
II. Conclusion of contract
formance of a contractual obligation. The DCFR includes a very similar rule in its
Art. II.–3:109, which was derived from the Acquis Principles. However, in contrast to the
Acquis Principles, the DCFR contains rules on defects in consent. In this respect
Art. II.–7:201(b)(iii) DCFR contradicts the model of the self-correcting contractual con-
tent; here the conservative elements of this draft are not sufficiently in tune with a new
development.
By comparison the Consumer Rights Directive includes only few rules outlining the 47
sanctions for the breach of information duties. The European legislator has not provided
any sanctions for the breach of information duties in contracts other than off-premises
or distance contracts, therefore leaving the responsibility with the national legislator.
Nonetheless, the Consumer Rights Directive contains two specific sanctions for breach
of certain information duties in distance and off-premises contracts: the consumer will
not have to bear any additional charges or costs if she has not been informed thereof
(Art. 6(6) CRD, in a similar vein Art. 14(1), (2) and (4) CRD); the withdrawal period
will be extended if the consumer has not been provided with the information on the
right of withdrawal (Art. 10 CRD).
The proposed CESL contains more detailed rules than the Consumer Rights Direc- 48
tive: Art. 29(1) CESL provides – as the Acquis Principles – a right to damages; Art. 29(2)
CESL stipulates that consumer will not be liable to pay additional costs if the business
has breached its duty to inform thereof. Furthermore, the provisions on defects in con-
sent will also apply (Art. 29(3) CESL). Art. 42(2) CESL contains the consequences of a
failure to inform the consumer of her right of withdrawal. The proposed CESL has how-
ever not adopted the approach of adjusting the contract and therefore tensions arise be-
tween the law on defective performance and the law on defects in consent. It is regret-
table that the Commission proposed to remain with a rather conservative approach to-
wards regulating the sanctions for breach of information duties despite an initial inten-
tion to follow the Acquis Principles.72
1. Overview
a) Introduction
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The conclusion of a contract gives rise to a legal relationship with specific rights and 49
obligations between the parties. Although increasing consideration is given to the pre-
contractual relationship between the parties, the rules concerning the manner as well as
the time of conclusion of contract remain of central importance in all European legal
systems. However, examination of the various legal systems shows that there are consid-
erable differences between the individual rights, especially in civil law and common law
jurisdictions (e.g. the requirement of consideration under the common law).73 Further-
more, the European legal systems have reacted differently to the new challenges for con-
clusion of contract in national and, above all, in international trade (such as those forms
of agreement not traditionally categorized as offer and acceptance, and especially e-com-
merce, the use of artificial intelligence and in general the effects of digitalization on con-
tract practice).74 The effects of these new developments concern all European countries.
72 See the Feasibility Study published by the Expert Group on European Contract Law, available online
127
Chapter 3 Conclusion and Content of Contracts
There is therefore an increased need for a convergence of national laws or uniform rules,
especially for cross-border trade. Rules on conclusion of contract are thus of central im-
portance also for European private law.
b) Acquis communautaire
50 The acquis communautaire does not contain a comprehensive group of rules on con-
clusion of contract. Nonetheless, there are numerous provisions and court decisions con-
cerning this matter and therefore open the possibility for identification of overarching
principles. Fundamental principles can even be found within EU primary law: freedom
of conclusion and freedom of content are at the heart of the principle of freedom of con-
tract;75 the principle of non-discrimination is based on Art. 10, 18 and 19 TFEU and
Art. 21 CFR as well as the principles for the EU’s individual policy areas (for instance,
consumer protection under Art. 38 CFR, which also extends to the conclusion of con-
sumer contracts).
51 However, the law regarding conclusion of contract is of much greater significance
within secondary EU law. Many directives contain rules concerning various aspects of
conclusion of contract, for instance inertia selling,76 form requirements and electronic
confirmation,77 and withdrawal rights. In contrast to the laws of the Member States, one
can observe great inconsistencies in the regulatory density of the acquis communautaire:
the directives contain very few details on the general requirements for conclusion of
contract via offer and acceptance,78 yet several questions of conclusion via telephone or
electronic means have, in comparison, been regulated in considerable detail. According-
ly, Member States’ laws on conclusion of contract are a mixture of aspects that have been
greatly harmonized (though in part by minimum harmonization) and matters that have
not been subject to any, or very little, harmonization whatsoever (such as defects in con-
sent).
52 Despite this fragmented nature, EU law on conclusion of contract does display several
tendencies that deviate from the traditional models of conclusion of contract founded in
19th century codifications. It not only includes consideration of new media, such as the
Internet and other means of distance communication, but also data as ‘counter-perfor-
mance’.79 A particular feature of EU contract law is its expansion to take account of the
notion of ‘mass contracts’ and the associated standardization of contracts.80 In this re-
spect it is necessary to take account of the modern reality of contract practice in which
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
contracts are often (in contrast to the traditional model) not the result of individual ne-
gotiations between the parties. A party (or even each party) will often instead use his
own standard terms in the hope that these will be accepted by the other party without
the need for negotiations.
53 Furthermore, the acquis communautaire is characterized by its focus on pre-contrac-
tual behaviour and the content of the future contract. Its broad range of information du-
ties to be performed before or at the moment the contract is concluded sometimes allow
for a smooth transition between the pre-contractual phase and the conclusion of a con-
tract.81 Such a strong link to the formation of intention and the content of the contract
74 See Schulze/Staudenmayer (eds), Digital Revolution: Challenges for Contract Law in Practice (Nomos
2016).
75 For more detail see Chapter 2 mn. 108 et seq.
76 On inertia selling see Art. 27 CRD.
77 Art. 8 CRD; Art. 11(1) E-Commerce Directive.
78 Contract II/Schulze, Art. 4:102 mn. 3.
79 See mn. 74 et seq.; on the rules surrounding data as counter-performance see Chapter 5 mn. 34–35.
80 See Chapter 2 mn. 55, 159.
128
II. Conclusion of contract
thus poses key questions surrounding the relationship between these information duties
and the traditional doctrines on invalidity and avoidance of contract due to defects in
consent. In contrast to information duties, the acquis communautaire contains very few
rules belonging to the ‘traditional’ area of defects in consent, such as the consequences of
mistake, threat, and misrepresentation. It is therefore for the national legislator to coor-
dinate the extensive information duties with such types of rules. Nonetheless, the task
remains to consider both approaches in order to develop a theory of risk distribution in
the event of missing, incomplete or incorrect information during the conclusion of a
contract.82
The defects in contractual intent and the distribution of information risks require re- 54
consideration due to the acquis communautaire, though attention is also to be paid to the
starting points for determining the content of the contract and the time aspects for the
conclusion of the contract. Particular acts during the pre-contractual phase can exercise
direct and significant influence on the content of the contract and therefore on the sell-
er’s contractual duties towards the consumer, for instance advertising and other public
statements made by third parties.83 This effect is expressly acknowledged in Art. 6(1)
PTD in which pre-contractual information provided to the traveller ‘shall form an inte-
gral part of the package travel contract’. Some directives provide the consumer with a
right of withdrawal and thus modify the traditional notions underpinning the time after
agreement – such provisions cause the contract to be ‘pending effectiveness’ and grant
the weaker party the possibility to cancel the contract after the agreement has been
made.84 Consequently, consideration of each of these approaches in the acquis commu-
nautaire allows one to identify a notion of conclusion of contract with several innovative
features: formation of contract does not occur solely from the perspective of a ‘magical
moment’85 in which two corresponding statements of intention create the contract. For-
mation of contract rather requires consideration of the process from pre-contractual in-
formation, to the postponing the conclusion of the contract via ‘reflection periods’
(Art. 14(6) Mortgage Credit Directive) and to subsequent correction of the agreement
through the right of withdrawal.86
all aspects of conclusion of contract; the development of rules in areas not covered by the
acquis has therefore adopted a comparative law approach through the PECL, with fur-
ther development by the DCFR and the French Principes Directeurs.88 It is to be noted
that the PECL extend beyond those aspects traditionally regulated by the Member States
as its Principles (despite their rather concise nature89) do not categorize the conclusion
81 See mn. 1 et seq. Busseuil, ‘La Phase précontractuelle – La formation du contrat électronique’ in
Perales Viscasillas (eds), The Formation of Contract (Nomos 2016) 9–24; mn. 99 et seq.
83 See mn. 85 et seq.
84 See mn. 130.
85 Pfeiffer, ‘New Mechanisms for Concluding Contracts’ in Schulze (ed), New Features in Contract Law
Frame of Reference: Terminology, Guiding Principles, Model Rules (Sellier 2008) 421–422.
89 Art. 2:101 PECL. Art. 2:201 PECL contains a rule on offer and Art. 2:204 PECL on acceptance.
129
Chapter 3 Conclusion and Content of Contracts
of contract in offer and acceptance, and also include unilateral promises. Several of the
rules from these further sources have been used by the Acquis Principles to supplement
matters of EU law requiring completion.90 Moreover, Book II DCFR has proposed a
broad synthesis of the principles obtained by the comparative and acquis approaches in
order to provide rules for almost all key aspects of the conclusion of contract.
56 The synthesis approach adopted by the DCFR was also been followed in the Commis-
sion’s proposal for a Common European Sales Law. The CESL’s chapter on conclusion of
contract forms the heart of the main part on ‘making a binding contract’, preceded by
pre-contractual information and succeeded by the chapters on withdrawal and on de-
fects in consent, respectively. Moreover, several provisions in other parts of the CESL
concern specific aspects of the conclusion of contract.91 The CESL therefore proposes to
comprise matters based on the traditions of the Member States (e.g. the conclusion of
contract through offer and acceptance) as well as new approaches based on the acquis
communautaire (e.g. the inclusion in consumer contracts of pre-contractual statements
and a right to withdraw).92
57 The aforementioned innovative approaches in the acquis communautaire were includ-
ed in the proposed CESL (though mostly in a more general manner) and were developed
further, especially in relation to digital content. Nonetheless, the proposal did not con-
tain specific, detailed rules that took into account the particular features of digital con-
tent. The Commission’s proposal for a Digital Content Directive did however use the
CESL as a starting point in order to develop rules better suited to the needs surrounding
digital content (such as extending the notion of non-conformity93 with features specific
to digital content and taking the role of data into account in the rules on termination of
contracts94). However, as the CESL is designed as an optional instrument, not all of the
innovative suggestions from comparative law or the acquis communautaire were adopt-
ed. For example, the consequences of inertia selling95 or unilateral promises96 cannot be
regulated by a law of contract that is only applicable by means of an agreement between
the parties. Furthermore, the CESL appears in some respects to have been reluctant to
include matters of considerable practical importance, but which have received little at-
tention in the legislation and jurisprudence of the Member States and have been inade-
quately discussed in legal doctrine. It would be especially desirable if the further devel-
opment of European private law were to direct greater attention towards the many dif-
ferent forms of conclusion of contract without the traditional structure of offer and ac-
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ceptance.
90 Such as detailed requirements for an offer (Art. 4:103 ACQP) and the binding effect of unilateral
ment indicating the agreement to conclude a contract) on the agreement to use the CESL in consumer
contracts, and Art. 69 CESL on the effect of pre-contractual statements on the content of the contract.
92 Summarizing the conclusion of contract under the CESL, Conelis, ‘Unaware of any evil: breath-tak-
ing, simply breath-taking – Articles 30–39 and 48–57 of the CESL’ in Claeys/Feltkamp (eds), The Draft
Common European Sales Law: Towards an Alternative Sales Law? (Intersentia 2013) 84 et seq.; Szczerbows-
ki, ‘Formation of Contract’ in Plaza Penadés/Martínez Velencoso (eds), European Perspectives on the Com-
mon European Sales Law (Springer 2015) 37 et seq.
93 Art. 6 DCD. On the draft Digital Content Directive see Colombi Ciacchi/van Schagen, ‘Conformity
under the Draft Digital Content Directive: Regulatory Challenges and Gaps’ in Schulze/Staudenmayer/
Lohsse (eds), Contracts for the Supply of Digital Content: Regulatory Challenges and Gaps (Nomos 2017) 99.
For details on Art. 6 DCD see EU Digital Law/Staudenmayer, Art. 6 DCD.
94 Art. 13 DCD. See Schulze, ‘Supply of Digital Content: A New Challenge for European Contract Law’
in De Franceschi (ed), European Contract Law and the Digital Single Market (Intersentia 2016) 140.
95 Art. 27 CRD; previously Art. 9 Distance Selling Directive (which provided the basis for Art. 4:106
ACQP).
96 Art. 2:107 PECL; Art. 4:109 ACQP; Art. II.–1:103 DCFR.
130
II. Conclusion of contract
2. Agreement
a) Principle
The requirement in European contract law for the formation of a contract and cre- 58
ation of rights and obligations for the parties is an agreement between the parties.97 In
this respect, European contract law follows the concept whereby parties are contractual-
ly bound by reason of their agreement; this concept primarily arose through the natural
law doctrine of the 17th and 18th centuries in relation to the view that the parties’
promises form the basis of their respective obligations.98 According to this traditional
doctrine, the binding effect for both parties is based on the consensus shown in the con-
gruence in the content of their statements of contractual intention. As has been shown
by the analysis of the concept of contract in EU law99, the acquis communautaire does
not contain such an express, general stipulation; a series of different sources do however
indicate that EU law has adopted this principle of conclusion of contract100 but has used
different means to modify and develop the principle, in particular the notion of reason-
able expectations.101 The PECL, Acquis Principles and the DCFR102 assisted the CESL in
determining its three requirements for the conclusion of a contract: Conclusion of con-
tract is therefore subject to three requirements: the parties reach an agreement; they in-
tend the agreement to have legal effect (intention to be legally bound); the content and
certainty of the agreement is sufficient to give legal effect. In principle these three core
elements of conclusion of contract are firmly set by Art. 30(1) CESL. The provision’s sub-
sequent paragraphs, as well as the further articles in Chapter 3 (Art. 31–39 CESL), sub-
stantiate and supplement these three central elements of the conclusion of contract.
b) Requirements
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aa) The academic and legislative drafts for a European contract law primarily follow 59
the traditional model of conclusion via offer and acceptance.103 Offer and acceptance do
not necessarily require express statements but can be inferred from conduct (‘conclusive
behaviour’).104 Furthermore, the drafts substantiate the requirement of an agreement to
opment of the notion of promises see Hogg, Promises and Contract Law (CUP 2011).
99 For more detail see Chapter 2 mn. 1 et seq.; see also Commentaries on European Contract Laws/Chris-
Art. 30(2) and 34(1) CESL explicitly refer to the acceptance, the exclusion of such possibility for the offer
would not only contradict the values and purpose of Art. 6 and 10 CESL; for criticisms of this double ap-
proach and the wording of Art. 30(2) CESL see Schulze CESL/Terryn, Art. 30 CESL mn. 13.
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Chapter 3 Conclusion and Content of Contracts
the extent that a party can give a specific matter such significance that a contract cannot
be concluded until an agreement on that matter has been reached (see Art. 30(4) CESL).
In this context, a typical, yet non-essential, question can be regarded by a party as funda-
mental for the conclusion of the contract.105 This provision guarantees the party’s free-
dom to conclude a contract and to determine its content even with regard to unusual,
individual expectations and values.
60 bb) Furthermore, the various sets of rules for a European contract law require the
parties to intend to be legally bound by their agreement.106 Such a requirement particu-
larly allows a distinction to be drawn between a contractually-binding agreement and a
non-binding favour (gentlemenʹs agreement, acte de complaisance).107 This distinction
does however create difficulties especially for unilateral promises and can have serious
consequences (e.g. A promises to hand in B’s lottery ticket, A forgets and B seeks to
claim compensation for the lost winnings). It is not necessary for the parties to expressly
state their intention to be legally bound, nonetheless Art. 30(3) CESL states that the par-
ties’ statements and conduct are determining factors for ascertaining such an intention
in relation to their agreement.108
61 cc) The sufficiency of the content and certainty of the agreement is a further require-
ment for the conclusion of contract. This standard seeks to ensure that the parties’ re-
spective obligations can be clearly determined in order to ensure the performance of the
contract. The various sets of rules do however adopt different approaches to achieving
this aim.109 Whereas the wording of Art. 4:101 ACQP is general, Art. 30(1) CESL seeks
to achieve precision through three aspects: firstly, it stipulates that the rules of the CESL
are to be considered alongside the agreement in order to determine whether the agree-
ment is sufficient. Secondly, the agreement has to be sufficient in relation to its content
and certainty, therefore the extent of the parties’ terms (supplemented by the CESL) and
their certainty (also supplemented by the CESL, e.g. rules on interpretation) are each to
be considered. Thirdly, the standard for ‘sufficient’ content and certainty is set by ‘to be
given legal effect’. Such wording has little conclusive effect by itself and requires substan-
tiation by the aforementioned principle that the obligations of the parties have to be de-
termined to the extent that allows for the performance of the contract.110 Following the
CESL’s regulatory pattern, however, this requirement would often be satisfied by the sell-
er’s extensive pre-contractual information duties (especially in consumer contracts) un-
der Chapter 2 CESL.111
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105 Looschelders, ‘Das allgemeine Vertragsrecht im Common European Sales Law’ (2012) 212 AcP 581,
606; Schmidt, Der Vertragsschluss (Mohr Siebeck 2013) 270; Schulze CESL/Terryn Art. 30 CESL mn. 12;
DCFR Full Edition 279.
106 See Art. 2:102 PECL; Art. 4:101 ACQP; Art. II.–4:102 DCFR; Art. 30 (1)(b) CESL.
107 Harvey/Schillig, ‘Conclusion of Contract’ in Dannemann/Vogenauer (eds), The Common European
Sales Law in Context (OUP 2013) 248, 263–265; Deshayes, ‘Formation du Contrat’ in Deshayes (ed), Le
Droit Commun Européen de la Vente (Société de législation comparée 2012) 95, 112.
108 In general accordance with Art. 2:102 PECL, Art. II.–4:102 DCFR and Art. 30(3) CESL.
109 Compare Art. 2:103(1) PECL, Art. II.–4:103(1) DCFR, Art. 4:101 ACQP and Art. 30(1) CESL.
110 It is however not necessary for all obligations to have been performed. It will rather suffice when the
agreement provides criteria or mechanisms (e.g. transfer of responsibilities to a third party) by which a
party’s or both parties’ obligations can be determined; see also, for example, Huber/Mullis, The CISG (Sell-
ier 2007) 73–75.
111 Schulze CESL/Terryn, Art. 30 CESL mn. 7–8 with reference to the possibility in B–B contracts to also
132
II. Conclusion of contract
c) Additional requirements?
aa) The aforementioned sets of rules on European contract law do not contain any 62
additional requirements for the conclusion of a contract; this is expressly stated in
Art. 2:101 PECL and Art. II.–4:101 DCFR.112 The focus on an agreement without any
additional requirements underpins the Acquis Principles and current EU contract law.113
Accordingly, the effectiveness of a contract in European contract law depends neither on
consideration (such as in the common law), cause (such as in earlier French law) nor
causa (as in Spanish law).114 The requirement in European contract law of an agreement
now appears to have influenced national law, as can bee seen in the reform of the French
law of obligations and its removal of cause requirement.115
bb) The principle of freedom of form features in each of the sets of rules on European 63
contract law.116 Unless stated otherwise, contracts are therefore neither subject to specif-
ic formal requirements nor do they have to be evidenced.117
3. Modes
a) Offer and acceptance
aa) Parties will frequently reach an agreement on the contract through the acceptance 64
by one party of an offer made by the other. The underlying consensus consists of the
congruence in content of the offer and the corresponding acceptance. Offer and accep-
tance are therefore traditionally central parts of the laws of the Member States that serve
to describe the process of conclusion of contract and the elements of the agreement.118
However, EU legislation and ECJ decisions119 also consider a contract to be concluded
by means of offer and acceptance;120 Art. 4:102(1) ACQP contains a corresponding rule.
112 In comparison, the lack of additional requirements under the CESL is apparent from its background,
see Schmidt-Kessel CESL/Gebauer, Art. 30 CESL mn. 17–18; Schulze CESL/Terryn, Art. 30 CESL mn. 10.
113 Art. 4:101 ACQP; Contract II/Schulze, Art. 4:101 mn. 9. See also Chapter 2 mn. 50.
114 On both concepts Cabrillac, Droit européen comparé des contrats (2nd edn, LGDJ 2016) 39–40;
Farnsworth, ‘Comparative Contract Law’ in Reimann/Zimmermann (eds), The Oxford Handbook of Com-
parative Law (1st edn, OUP 2006) 908–910; Gordley, ‘Consideration’ in Smits (ed), Elgar Encyclopedia of
Comparative Law (2nd edn, Edward Elgar 2012) 180; Ranieri, Europäisches Obligationenrecht (3rd edn,
Springer 2009) 76–100, 1049, 1153–1179; Szczerbowski, ‘Formation of Contract’ in Plaza Penadés/
Martínez Velencoso (eds), European Perspectives on the Common European Sales Law (Springer 2015) 37,
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
n° 2016-131 du 10 février 2016 portant réforme du droit des contrats, du régime général et de la preuve
des obligations, abrufbar unter: www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT0000320049
39&categorieLien=id (accessed 11 December 2020); see also the special edition of the journal Revue des c
ontrats (April 2016) on the topic of ‘La réforme du droit des contrats: quelles innovations?’; Schulze/Wick
er/Mäsch/Mazeaud (eds), La réforme du droit des obligations en France, 5èmes Journées franco-allemandes
(Société de Législation Co 2015); Bien/Borghetti (eds), Die Reform des französischen Vertragsrechts (Mohr
Siebeck 2018).
116 Art. 2:101(2) PECL; Art. 1:304 ACQP; Art. II.–106(1) DCFR; Art. 6 CESL.
117 Limitations on the freedom of form are contained in, for example, Art. 19(4) and Art. 25(2) CESL
with respect to distance contracts concluded electronically; see mn. 74 et seq. Harmonized restrictions on
the freedom of form may also be seen in national laws, for example in distance contracts concluded via
telephone (Art. 8(6) CRD).
118 Kötz/Flessner, European Contract Law (Clarendon 1997) 16–18; Lando/Beale (eds), Principles of
European Contract Law, Parts I and II (Kluwer 1999) 161; see also Ranieri, Europäisches Obligationenrecht
(3rd edn, Springer 2009) 176–228, 290–309; Szczerbowski, ‘Formation of Contract’ in Plaza Penadés/
Martínez Velencoso (eds), European Perspectives on the Common European Sales Law (Springer 2015) 37,
39–41; DCFR Full Edition 294–295.
119 The ECJ made express reference to the conclusion of contract via acceptance of an offer, see C–96/00
133
Chapter 3 Conclusion and Content of Contracts
Nevertheless, current EU law is not a fruitful source for detailed provisions on the con-
clusion of contract via offer and acceptance. In contrast, Art. 2:201 et seq. PECL and ac-
cordingly Art. II.–4:201 et seq. DCFR have considered this matter in much more detail
(in part through reference to the CISG as well as the UNIDROIT Principles).121 Art. 31
et seq. CESL are largely based on this model in order to substantiate and supplement the
general rule on agreement via offer and acceptance. They comprise rules on the termi-
nology, revocation and rejection of an offer (Art. 31–33 CESL) as well as on the accep-
tance (Art. 34, 36–38 CESL), time of conclusion of contract (Art. 35 CESL), and conflict-
ing standard terms (Art. 39 CESL).
65 bb) The requirement of a sufficiently definite agreement means that the content of
the offer must also be sufficiently definite. Accordingly, the content must be sufficiently
clear and precise; the offer must also clearly express the offeror’s intention to be legally
bound.122 The ECJ expressed these two requirements for an offer capable of leading to
the conclusion of a contract in its decision in Ilsinger:123
66 However, the acquis communautaire does not contain clear answers to two problems
of notable practical importance: the distinction between an offer and other preparatory
statements and conduct prior to conclusion of contract,124 and the revocation of an offer
prior to acceptance. The importance of the first problem is directly linked to the role
played by the offer for the conclusion of a contract. If such a statement or conduct is an
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
offer, the other party merely has to state its acceptance in order for the contract to be
concluded and therefore to give rise to rights and obligations for each party. However, if
preparatory statements by one party do not fulfil the requirements of an offer, an affir-
mation by the other party cannot result in the conclusion of a contract. There will often
be a divergence in the parties’ interests and views in regard to whether the proposal by
one party contains an offer or is merely an invitation to the other party to make an offer
(invitatio ad offerendum). For example, if a seller distributes a catalogue it will thus often
120 This model has already been referred to by, for example, the Doorstep Selling Directive (since re-
pealed by the Consumer Rights Directive) and Art. 3(3) of the Commission Recommendation of 19 Octo-
ber 1994 relating to the legal aspects of electronic data interchange (94/820/EC) [1994] OJ L338/98.
121 Lando/Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer 1999) xxv-xxvii; Lan-
do, ‘Das neue Schuldrecht des Bürgerlichen Gesetzbuchs und die Grundregeln des europäischen Ver-
tragsrechts’ (2003) RabelsZ 235; Vogenauer in Kleinheisterkamp/Vogenauer (eds), Commentary on the
UNIDROIT Principles of International Commercial Contracts (PICC) (OUP 2009) Introduction mn. 22.
122 See mn. 60.
123 See Commentaries on European Contract Laws/Christandl, Introduction before Art 2:101 mn. 6.
124 Illmer, ‘Vertragsschluss’ in Basedow/Hopt/Zimmermann (eds), Handwörterbuch des Europäischen
134
II. Conclusion of contract
not be in its interest to make an offer to each recipient as its stock level will only suffice
for a limited number of customers. Alternatively, it may be in the interest of the recipient
to not have to first make an offer and to thus keep the conclusion of contract in suspense
until the seller responds.
International sets of rules give different answers to this conflict of interests. 67
Article 31 CESL
Offer
(1) A proposal is an offer if:
(a) it is intended to result in a contract if it is accepted; and
(b) it has sufficient content and certainty for there to be a contract.
(2) An offer may be made to one or more specific persons.
(3) A proposal made to the public is not an offer, unless the circumstances indicate otherwise.
Where the general requirements for an offer are concerned, the CISG, PECL and
DCFR indeed adopt the same approach for the central aspects of intention to be legally
bound, and sufficient certainty;125 Art. 31 CESL follows these models. However, there
are differences between the standards vis-à-vis proposals made, for example, in public
advertisements or catalogues, and directed at an undefined group. Under Art. 14(2)
CISG such a proposal is, in the absence of the contrary, to be considered merely as invi-
tatio ad offerendum. In contrast, Art. 2:201(3) PECL and Art. II.–4:201(3) DCFR have
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
not adopted this approach, which would be more favourable to the offeror (in consumer
contracts this would often be the seller). These provisions instead provide that a propos-
al to deliver goods or to provide services at stated prices are presumed to be an offer to
sell at the stated price. However, this is limited in public advertisements, catalogues, or
in a display of goods by the supplier’s capacity to supply the service or goods.
Art. 4:103(3) ACQP incorporates this rule in order to supplement existing EU law. Al-
though no clear rule on this matter can be found within the acquis communautaire, such
a supplementary rule in the Acquis Principles may serve to clarify whether (and at what
moment) a contract is concluded and thus if, under the circumstances, protective rules
in EU law can be invoked to benefit a party. The reference in the Acquis Principles to the
solution favoured by the PECL and DCFR is founded by the important role that EU law
attributes to public statements in other contexts.126 Moreover, this solution corresponds
125 Some differences can be observed, cf Art. 14(1) CISG with Art. 2:201(1) PECL and Art. II.–4:201(1)
DCFR.
126 Contract II/Schulze, Art. 4:103 mn. 1 relating to Art. 2(2)(d), (4) and Art. 6(1) CSD, second sentence
of Art. 3(2) PTD; Møgelvang-Hansen, ‘The Binding Effects of Advertising’ in Schulze (ed), New Features
in Contract Law (Sellier 2007) 169, 169–179.
135
Chapter 3 Conclusion and Content of Contracts
with the values of the Unfair Commercial Practices Directive.127 In spite of these indica-
tions for opposing values in the acquis communautaire, the CESL has nevertheless cho-
sen not to follow the approach adopted in the DCFR. Conversely, the CESL does not fol-
low the CISG method of a presumption of invitatio ad offerendum in the absence of clear
statements to the contrary. The CESL instead combines the presumption that a proposal
directed to the public is not an offer with a much broader possibility to refute: the basis
is not solely the statement by the proposing party but rather the ‘circumstances’, i.e. the
facts and processes that the proposing party has not itself expressed and may have not
even considered. Furthermore, these ‘circumstances’ are not linked to the additional re-
quirement of ‘clear indication’ but must rather satisfy the general requirements for notice
(Art. 10 CESL). Although the proposed CESL did not adopt the balanced approach of
Art. II.–4:201(3) DCFR it does differ considerably from the particularly friendly ap-
proach the CISG has adopted for the proposing party.
68 The questions of whether and under what circumstances an offer can be revoked re-
main unanswered in EU contract law. Moreover, the laws of the Member States also do
not contain uniform answers to these issues:128 many national laws provide that the offer
can be revoked until its acceptance by the other party, whereas other national laws stipu-
late that the offeror is principally bound as soon as the offer has been communicated to
the other party (unless the binding effect has been excluded).129 A general statement in
favour of one or the other solution cannot be obtained from the acquis communautaire.
Individual provisions instead indicate that EU law acknowledges both approaches and
abstains from making a specific decision.130 Consequently, the Acquis Principles do not
contain a rule on this matter. In contrast, Art. 16 CISG, Art. 2:202 PECL and Art. II.–
4:202 DCFR adopt the approach of the majority of European states and allow for the re-
vocation of the offer until its acceptance by the offeree. In principle, the CESL follows
the approach of allocating of the risk to the offeree (for instance due to changes in inter-
est resulting from market fluctuations or offers from third parties): Art. 32(1) CESL al-
lows for revocation of an offer when the revocation reaches the offeree before the offeree
has sent its acceptance. The same principle applies in the event of acceptance by conduct
(Art. 34 CESL), i.e. before the contract has been concluded by such conduct. Offers di-
rected at the public can be revoked but the revocation is to be by the same means as were
used to make the offer (Art. 32(2) CESL131). Art. 32(3) CESL provides three limitations
on the principle of revocation: the offer indicates that it is irrevocable; the offer states a
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
fixed period of time for its acceptance; or it was otherwise reasonable for the offeree to
rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.
The latter exception expresses the principle of the protection of reasonable reliance132
and softens the model whereby the offeror is principally bound by its offer.
69 cc) The PECL, DCFR and CESL rules concerning acceptance of the offer mainly fol-
low the same approach. Acceptance can be given either by a statement or conduct in any
form if it expresses the assent to the offer, though mere silence or inactivity will not in
itself constitute acceptance.133 Silence or inactivity are therefore not excluded as methods
of communicating acceptance but require further circumstances in order to have bind-
127 Formore detail see Schulze CESL/Terryn, Art. 31 CESL mn. 10.
128 Zweigert/Kötz, Introduction to Comparative Law (3rd edn, OUP 1998) 356–363.
129 Ibid. 356–364; Lando/Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer
136
II. Conclusion of contract
ing effect (such as statements during the negotiations, framework agreements or agree-
ments on such form of acceptance).134 The relevant period for acceptance primarily de-
termined within the offer itself.135 In the absence of such a contractual stipulation, the
offer will otherwise remain open for a reasonable time after it was made. If an offer can
be accepted by conduct or through practices established between the parties the offeree
must behave in such a manner within the allocated (or reasonable) time frame for ac-
ceptance.136 However, it is possible for late acceptance to be effective if, without undue
delay, the offeror informs the offeree that the acceptance will be treated as being effect-
ive. Furthermore, a late acceptance is effective if the communication of the (late) accep-
tance shows that the acceptance has been sent in such circumstances that have resulted
in late communication of the acceptance. The acceptance will be ineffective if the offeror
informs the offeree without undue delay that the offer has lapsed.137 If the offeree’s reply
to the offer contains material differences or additions to the contract terms, it will be
deemed a rejection and a new offer.138 This principle is adopted by most of the Member
States, though the CESL does deviate in some respects from national approaches. In par-
ticular, it contains the presumption that there is a material difference if the changes or
additional contract terms refer to particular aspects (such as the price, payment, quality
and quantity of the goods, place and time of delivery, extent of one party’s liability to the
other, or the settlement of disputes; Art. 38(2) CESL).139
dd) The acceptance of the offer results in the conclusion of the contract. The state- 70
ment of acceptance must reach the offeror.140 The contract is concluded via conduct
when knowledge of the conduct reaches the offeror. However, if the offeree can accept
via conduct without notice to the offeror,141 the relevant point in time is the moment the
conduct commences.142
the notion of consensus is reflected in Art. 2.1.1. PICC, in which a contract can be con-
cluded ‘by conduct of the parties that is sufficient to show agreement’. In accordance
with this rule the laws of several Member States143 and with the application of the
134 DCFR Full Edition 310–311; Lando/Beale (eds), Principles of European Contract Law, Parts I and II
Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 121, 142–144; Schulze CESL/
Terryn, Art. 38 CESL mn. 2–7, 12–13.
140 Art. 2:205(1) PECL; Art. II.-4:205(1) DCFR; Art. 35(1) CESL. The CESL further requirements for
communication of the acceptance – and thus for the formation and time of conclusion of contract – are
contained in its general provisions on notice (Art. 10 CESL); on notice see Chapter 2, mn. 52 et seq.
141 See mn. 59.
142 Lando/Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer 1999) 172 give the
example of a recently hired opera singer who, under instructions from the manager, begins with rehearsals
whilst the remainder of the ensemble is on tour and cannot be contacted.
137
Chapter 3 Conclusion and Content of Contracts
CISG144, Art. 2:211 PECL, Art. 4:102(2) ACQP, and Art. II.–4:211 DCFR each stipulate
that the provisions on conclusion of contract are applicable if categorization in offer and
acceptance is not possible.145
72 bb) The valid application of rules to ‘crossing statements’ must also apply in the nu-
merous other situations in which there is sufficient agreement for the conclusion of con-
tract but no possible categorization in offer and acceptance. Business needs have given
rise to many such situations that can be described as ‘gradual’ or ‘uneven’ conclusion of
contract. A characteristic of such methods is the gradual substantiation of the contractu-
al intent and content through the use of legal instruments, such as a Letter of Intent,
Punktation, Heads of Agreement, and Memorandum of Understanding,146 with the aid
of diverse rights and duties for a (third) party or partial stipulation or substantiation of
content in one or several steps at different points in time.147 Such forms of ‘gradual’ con-
clusion of contract are not regulated in general in the acquis communautaire however the
absence of such rules does not mean that EU law considers these forms to be insignifi-
cant. In addition, one cannot conclude that the express reference in EU law to the pro-
cess of offer and acceptance148 excludes other forms of conclusion of contract. On the
contrary, the provisions rather indicate that pre-contractual statements or a party's right
of withdrawal are of considerable importance for the conclusion of contract.149 More-
over, the notion of effet utile requires provisions of EU law, which should protect a party
during conclusion of contract, to have no effect because the contract has been concluded
in a manner other than by offer and acceptance. It is rather to be examined in each case
whether the provisions of EU law on conclusion of contract are to be applied in a situa-
tion whereby conclusion does not follow via offer and acceptance (e.g. to statements
made by the protected party in the process of being ‘gradually’ bound).
73 Despite the decision by the aforementioned sets of rules to apply the provisions on
offer and acceptance to cases in which such distinction cannot be drawn, legal doctrine
lacks, however, a sufficient reflection of the consequences which arise in the practice of
contract formation. Clarification is necessary with regard to many questions concerning
the ‘appropriate adaptation’150 in the corresponding application of the provisions (for in-
143 For example, for Germany Staudinger BGB/Bork (Sellier-de Gruyter 2015) § 146 mn. 7; for Italy:
Bianca, Diritto Civile, vol 3: Il contratto (2nd edn, Giuffrè 2015) 238.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
144 See Schlechtriem & Schwenzer CISG/Schmidt-Kessel, Introduction to Art. 14–24 mn. 8.
145 Although the Commission’s proposal for a CESL did not take advantage of an opportunity to pro-
pose an express rule to accommodate the growing importance of contracts that are not concluded via offer
and acceptance, this should not be understood as a rejection of the approaches in the aforementioned sets
of rules, but rather as an expression of the reluctance in favour of how this relatively new field can be
shaped by doctrine and jurisprudence on the basis of principles arising from Art. 30 et seq. CESL.
146 On these and further instruments before and during the conclusion of contract Cordero-Moss, ‘The
Function of Letters of Intent and their Recognition in Modern Legal Systems’ in Schulze (ed), New Fea-
tures in Contract Law (Sellier 2007) 139; Heussen, Letter of Intent (2nd edn, Otto Schmidt 2014); Thüm-
mel, ‘Letter of Intent (Absichtserklärung)’ in Schütze/Weipert/Rieder (eds), Münchener Vertragshandbuch,
vol 4 (7th edn, C.H. Beck 2014) 1–17; Weick/Basse (eds), Recht des internationalen Handels- und
Wirtschaftsverkehrs (C.H. Beck 2013) 85–89.
147 For further detail see Demoulin/Montero, ‘La conclusion des contrats par voie électronique’ in
Fontaine (ed), Le Processus du Formation du Contrat (Bruylant 2002) 771; Fontaine, ‘Offre et acceptation,
approche dépassée du processus de formation des contrats’ in Mélanges offerts à Pierre Van Ommeslaghe
(Bruylant 2000) 115–133; Schulze, ‘Formation of Contract’ in DiMatteo/Janssen/Magnus/Schulze (eds),
International Sales Law (2nd edn, Nomos 2021) mn. 69 et seq.; Siems, ‘Unevenly Formed Contracts’: Ig-
noring the ‘Mirror of Offer and Acceptance’ (2004) ERPL 771 ; van Erp, Contract als Rechtsbetrekking
(Willink 1990).
148 See mn. 64.
149 See mn. 53.
150 See Art. 2:211 PECL.
138
II. Conclusion of contract
stance, the revocation of individual statements during the conclusion of contract and the
time at which individual contractual duties are created151).
151 On the question whether a ‘magic moment’ remains necessary in relation to the ‘gradual’ conclusion
see also Art. 1(1), Art. 2(e) of the proposal for an Online Sales Directive (COM(2015) 635 final), however
the resulting Sale of Goods Directive covers ‘online’ and ‘offline’ contracts, see Chapter 1 mn. 68.
154 Recital 20 CRD. For more detail see Schulze CESL/Wendehorst, Art. 2 CESL-Reg mn. 32–36.
155 See Recital 15 Distance Marketing of Financial Services Directive.
156 It has however been considered not to limit the concept to consumer contracts; European Parliament
legislative resolution of 26 February 2014 on the proposal for a regulation of the European Parliament and
of the Council on a Common European Sales Law (P7_TA-PROV(2014)0159) amendments 26, 49, 60–61.
157 The Acquis Principles provide that the consumer can withdraw from the contract and claim dam-
ages if there has been a breach of the specific information duties in real-time communication
(Art. 4:104(4) ACQP). According to Art. 29(1) CESL, the business is liable for every loss suffered by the
consumer as a result of the business’ failure to perform this duty.
158 Recital 1 and Art. 1(1) E-Commerce Directive. See also the EU’s proposed ‘Digital Services Act’,
139
Chapter 3 Conclusion and Content of Contracts
(e.g. the limited number of characters that can be displayed on mobile phones160).161
However, the approaches for the information duties are just one aspect; the principles
concerning the communication of information and statements before and at the conclu-
sion of contract also require substantiation and development in light of the progress
made in e-commerce. This was shown in the ECJ decision Content Services162 with re-
gard to the use of hyperlinks to information on the right of withdrawal,163 and may be
the subject of future EU legislation and court decisions.164 The same also applies to nu-
merous practical problems concerning the security and evidentiary issues surrounding
the electronic conclusion of contract. Nonetheless, the provisions of the eDIAS Regu-
lation regulate some of the issues concerning e-commerce.165 However, it remains to be
seen whether the user’s confidence in the security, confidentiality, integrity of data as
well as the identity of the business partner has sufficiently increased.166
77 dd) Art. 8(6) CRD provides that, where a distance contract is to be concluded by tele-
phone, the Member States may additionally require the business to confirm the offer to
the consumer. With such a requirement the contract would only be binding once the
consumer has signed the offer or sent its written consent. Such an option for the Mem-
ber States aims at providing additional protection to consumers by, on the one hand, the
warning given through the signature or written consent and, on the other hand, improv-
ing the evidentiary issues. Art. 19(4) CESL has adopted the Consumer Rights Directive’s
optional model as a mandatory provision for contracts concluded via telephone. The re-
quirement of a signature or written consent is therefore not only a requirement for the
consumer to be contractually bound (as in the Directive) but also for the effectiveness of
the contract. The aforementioned protective aims are thus reinforced by the preventative
aspect (irrespective of the consumer’s interest in maintaining the contract) together with
the strict sanction of ipso iure invalidity of the contract.167
Directive reflects the economic significance of data by including the supply of personal
data alongside the payment of a price.
160 On the criteria for determining limited space or limted time under Art. 8(4) CRD see C–430/17 Wal-
magazine. At national level, though with EU wide consequences, see the decision of the LG Munich I on
the violation of the pre-contractual information duties by the (since withdrawn) ‘Amazon Dash Button’,
see Busch, ‘Does the Amazon Dash Button Violate EU Consumer Law?’ (2018) EuCML 78.
165 See Zaccaria/Schmidt-Kessel/Schulze/Gambino (eds), EU eIDAS Regulation (C.H. Beck 2019).
166 For criticism see Spindler/Rockenbauch, ‘Die elektronische Identifizierung – Kritische Analyse des
es the close interaction between the pre-contractual and conclusion phases – though this is not absolutely
necessary from a structural perspective.
168 See Chapter 2 mn. 76 et seq. for difficulties in qualifying personal data as counter-performance.
140
II. Conclusion of contract
Payment of a price and the supply of personal data in Art. 3(1) DCD merely deter- 79
mine the Directive’s scope of application. The Modernization Directive now adds
Art. 3(1a) to the Consumer Rights Directive in order to make the corresponding
changes. However, the provisions themselves express a viewpoint that can be of consid-
erable importance for EU and national law.169 This primarily concerns the nature of the
contract as bilateral/synallagmatic.170 Art. 3(1) DCD and Art. 3(1a) CRD may be rele-
vant (albeit indirectly) for the question whether and under which conditions a contract
is concluded when a customer does not pay a monetary price, but provides personal da-
ta. The conclusion of contract and the validity of contracts still remain in the domain of
national law (Art. 3(10) DCD, Art. 3(5) CRD),171 but these provisions of EU law could
impact on how national law is interpreted. For instance, in principle consideration is
necessary under the common law in order to conclude a valid contract, and therefore the
question arises whether personal data satisfies the requirements for valid considera-
tion.172 Indications of or criteria for the intention to be legally bound may also rest on
the treatment of personal data under national law.173
and remains a feature in the repealing Directives: according to Art. 7(1)(d) and 17(1)
SGD statements made in advertising, labelling and the guarantee can be relevant for de-
termining the content of the seller’s contractual obligations. Similarly, pre-contractual
statements concerning a package holiday are also binding on the organizer or retailer
under Art. 6(1) and 5(1) PTD.175 Furthermore, Art. 8(1)(b) DCD applies this principle
to the broad scope176 of digital content and digital services. The rules in these Directives
ston (ed), The Future of the Law of Contract (Routledge 2020) 141, 151 et seq.
173 See mn. 62.
174 For more detail see Møgelvang-Hansen, ‘The Binding Effects of Advertising’ in Schulze (ed), New
141
Chapter 3 Conclusion and Content of Contracts
have had an innovative effect on the development of contract law in Europe. They take
account of the situation in modern sales practice in which decisive information about
the goods or services are often not first given to the other party at the time the contract
is concluded. The seller can rather use advertising in media, such as television, internet,
magazines or catalogues, to influence the expectations of a large group of persons a long
time before the parties contact one another and negotiate the conclusion of a specific
contract. The customer will possibly not ask important questions about the object of the
contract (e.g. the fuel consumption or engine performance when purchasing a car) be-
cause it considers itself to have been informed by the pre-contractual statements made in
the advertisements. The Directives consider the business’ responsibility in contributing
to the customer’s expectations and therefore bind it to its pre-contractual statements.
81 bb) The binding effect under the Sale of Goods Directive concerns two situations. On
the one hand, a guarantee under Art. 17(1) SGD binds the offeror not only to the condi-
tions contained in the guarantee statement but also to the conditions set out in the asso-
ciated advertising. On the other hand Art. 7(1)(d) SGD determines that public state-
ments made by or on behalf of the seller, are criteria for the (objective) conformity of the
goods with the contract; Art. 8(1)(b) DCD contains the corresponding rule for digital
content and digital services. However, the seller (referred as under the Digital Content
Directive as trader) is not bound by these public statements if he can prove one of the
following: he was not (and could not reasonably have been (aware of the public state-
ment; the public statement had been corrected (in the same was as, or in. a way compa-
rable to how it had been made) by the time of conclusion of contract; the public state-
ment could not have influenced the decision to purchase the goods/acquire the digital
content or digital service.177 The decisive aspect thereby is not whether the customer was
actually aware of the statement but rather whether she could not have been aware there-
of (for instance, the advertising statement was made abroad in a foreign publication).
The provision takes into account the difficulties that are caused by the multitude of in-
fluences in complex advertising strategies when attempting to reconstruct the moment
(as well as the content) of the customer’s opinion in the individual case – the customer,
even when receiving the goods, will often not be aware of the ways and time at which
the advertising impacted on the decision to acquire the goods, digital content or digital
service.
82 The binding effect of pre-contractual statements in travel law concerns the extensive
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
amount of information the organizer (and retailer) is to provide to the traveller in accor-
dance with Art. 5 PTD. Such information includes the main characteristics of the travel
services (such as destination, travel, duration, categories of transport, etc.), the total
price, the arrangements for payment, the minimum number of persons required for the
package to take place, and information that the traveller may terminate the contract at
any time before the start of the package in return for payment of an appropriate termi-
nation fee. The organizer and retailer shall provide this standard information by means
of the relevant form as set out in annex I to the Directive (different versions of the form
are provided depending on whether a hyperlink can be used). According to Art. 6 PTD,
the pre-contractual information shall form an integral part of the package travel con-
tract. The binding effect of this information is especially strong as the information shall
not be altered unless the contracting parties ‘expressly’ agree otherwise. The content of
the contract is therefore determined to a large extent by the pre-contractual details pro-
vided by the organizer and retailer. Moreover, the principle of transparency provides a
142
II. Conclusion of contract
basis for limitations regarding changes to the organizer’s pre-contractual statements even
prior to the conclusion of contract: all changes to the pre-contractual information are to
be provided to the traveller in a ‘clear, comprehensible and prominent manner’ (Art. 6(1)
PTD). The volume of pre-contractual information does however cast doubt on whether
the desired transparency can be obtained in practice.
cc) The provisions in the Sale of Goods Directive and in the Package Travel Directive 83
are restricted to the protection of consumers in the purchase of goods and package holi-
days, respectively.178 The Digital Content Directive extends the protection of the con-
sumer to the supply of digital content or digital services, irrespective of the type of con-
tract concluded. The provisions of the Directives for these specific situations share a
common principle: pre-contractual advertising and other public statements on the char-
acteristics of goods, digital content and services remain key for the performance due un-
der the contract without the need to refer to such statements during the negotiation
stage. Such pre-contractual statements typically aim to influence the customer’s decision
on the contract and therefore form the basis for a reasonable expectation that the char-
acteristics of the goods, digital content or services under the contract will correspond to
the pre-contractual statements made by the trader. The reason for the binding effect of
pre-contractual statements in the Sale of Goods Directive, Digital Content Directive, and
Package Travel Directive lies therein that the pre-contractual behaviour has generated
reasonable expectations in relation to the subject matter of the contract. However, this
basis for liability does not exist only in relation to the types of contracts covered by the
Directives. The business must be aware that marketing these products through public
statements will give rise to reasonable expectations from its customers; it must therefore
assume responsibility for these pre-contractual statements when concluding the con-
tract. Art. 4:107 ACQP has thus proposed a general rule for such pre-contractual public
statements:
dd) Art. 69 CESL largely follows this approach.179 Its generalization of the earlier Di- 84
rectives paved the way for the application of the principle in the Digital Content Direc-
tive. Art. 69(1) and (2) CESL cover the pre-contractual statements made by a business
(both in the conclusion of B–C and B–B contracts). According to the CESL, pre-contrac-
tual public statements shall be binding on the content of the contract without being in-
cluded in the offer made to each individual party and without the need for the other par-
ty to be aware of the statements at the time the contract was concluded. The link be-
178 For different approaches under national law see Ruiz ‘The Integration of Advertising Statements into
the Content of the Contract’ in Plaza Penadés/Martínez Velencoso (eds), European Perspectives on the
Common European Sales Law (Springer 2015) 78 et seq.
179 On the CESL approach, ibid. 75 et seq.
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Chapter 3 Conclusion and Content of Contracts
tween the binding effect of pre-contractual statements and the reasonable expectations
assists in explaining the exceptions provided in Art. 69(1) CESL. These follow Art. 2(3)
and (4) CSD and Art. 6(1) PTD, albeit with minor differences.180 The public statements
could therefore not generate such reasonable expectations if the other party knew or
could be expected to have known that the statement was incorrect or that the statement
could not have influenced the decision to conclude the contract.
Article 69 CESL
Contract terms derived from certain pre-contractual statements
(1) Where the trader makes a statement before the contract is concluded, either to the other party
or publicly, about the characteristics of what is to be supplied by that trader under the contract,
the statement is incorporated as a term of the contract unless:
(a) the other party was aware, or could be expected to have been aware when the contract
was concluded that the statement was incorrect or could not otherwise be relied on as
such a term; or
(b) the other party’s decision to conclude the contract could not have been influenced by the
statement.
(2) For the purposes of paragraph 1, a statement made by a person engaged in advertising or mar-
keting for the trader is regarded as being made by the trader.
(3) Where the other party is a consumer then, for the purposes of paragraph 1, a public statement
made by or on behalf of a producer or other person in earlier links of the chain of transactions
leading to the contract is regarded as being made by the trader unless the trader, at the time of
conclusion of the contract, did not know and could not be expected to have known of it.181
(4) In relations between a trader and a consumer the parties may not, to the detriment of the con-
sumer, exclude the application of this Article or derogate from or vary its effects.
b) Third parties
85 aa) A party to the contract may also be bound by pre-contractual public statements
made by a third party. This approach is anchored in the acquis communautaire by
Art. 7(1)(d) SGD with regard to pre-contractual public statements (especially in adver-
tising or on labelling) made by the producer or other persons in the previous links of the
chain of transactions with regard to the quantity, qualities and other features of the
goods;182 Art. 8(1)(b) DCD contains the comparable rule for digital content and digital
services. Furthermore, the same principle underpins Art. 6 PTD when the traveller con-
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cludes the contract with the retailer (Art. 3 No. 9 PTD) but the organizer has provided
the standard information. Art. 69(3) CESL contains a corresponding rule for consumer
contracts.
86 The principle of binding effect of pre-contractual public statements has since been ex-
tended in European private law to cover certain statements made by third parties. In this
respect it curtails the principle of privity of contractual rights and obligations as the con-
tent of a party’s obligations does not solely arise from the relationship with the other
180 In particular through the additional limitation that the other party knew or could be expected to
have known that it ‘could not otherwise be relied on as such a term’, see Schulze CESL/Kieninger, Art. 69
CESL mn. 5.
181 The German version reads: ‘Handelt es sich bei der anderen Partei um einen Verbraucher, wird für
die Zwecke des Absatzes 1 eine öffentliche Erklärung, die im Vorfeld des Vertragsschlusses von oder im
Auftrag eines Herstellers oder einer anderen Person abgegeben wurde, als vom Unternehmer abgegeben
angesehen, es sei denn, der Unternehmer kannte diese Erklärung bei Vertragsschluss nicht und hätte sie
auch nicht kennen müssen.’ As the German version does not refer to ‘in earlier links of the chain of trans-
actions leading to the contract’ it is not clear that the ‘other person’ has to be part of one of the earlier links
in the chain; see Schmidt-Kessel CESL/Looschelders/Makowsky, Art. 69 CESL mn. 20.
182 See also Art. 2(2)(d) CSD.
144
II. Conclusion of contract
party but is also determined by third party conduct. In so doing it takes into account the
widespread collaboration in marketing goods and services: advertising, labelling and
other marketing measures affecting the final buyer are often not undertaken by the final
seller (especially where mass-market products are concerned) but instead (and some-
times even almost entirely) by the producer, importer or a distributor. These measures
employed by third parties can have a decisive impact on the final buyer’s decision to
conclude the contract and on its expectations of the content thereof. The final seller can
utilize this influence but has to allow it to be a factor in the contract concluded with the
final buyer, indeed a factor that may later be used against the final seller.
bb) The sets of rules on European contract law express the personal scope of applica- 87
tion of the provisions on pre-contractual public statements by third parties differently. In
contrast to the broad application of the principle in the PECL and Acquis Principles, the
CESL adopts a narrower approach. According to Art. 6:101(3) PECL pre-contractual
public statements are to be treated as a source of the contractual obligations if they are
made by a person who either advertises or markets the goods for the professional suppli-
er, or is an earlier link in the chain of transactions. The requirement ‘professional suppli-
er’ (i.e. a ‘business’ in modern EU legal terminology) means that the rule can generally
be applied to all types of contracts (and not just specifically to consumer contracts).
Art. 4:107 and 4:108 ACQP adopt a similar line as public statements by ‘the producer,
another person in the business chain between producer and ultimate consumer, or any
person advertising or marketing services or goods for the business’ (Art. 4:108 ACQP)
will be binding irrespective of whether the other party to the contract is a business or a
consumer (as long as the final seller is a business). In contrast, the Sale of Goods Direc-
tive and the Digital Content Directive state the binding effect of pre-contractual state-
ments only for consumer contracts. Although this accords with the general limitations
on their scope, it does not allow the conclusion that the underlying principle onlys con-
cern consumer contracts. The general relevance of this principle in the acquis commu-
nautaire is illustrated by Art. 5 and 6 PTD which substantiate the principle for standard
pre-contractual information to be given by the organizer/retailer. According to Art. 3
No. 6 PTD, businesses may also refer to the standard information if they have concluded
a contract with an organizer or retailer.183
In contrast, Art. 69(3) CESL expressly restricts the application of the provisions on 88
pre-contractual statements by a third party to consumer contracts: a public statement
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will be treated as being made by the business at the time of the conclusion of the con-
tract, but it must have been made by (or on behalf of) a producer or other person in
earlier links of the contractual chain.184 A compelling reason for this restriction to con-
sumer contracts is not apparent. The advertising measures taken by the seller, service
provider or previous links in the business chain can exert considerable influence on par-
ties’ expectations irrespective of whether the party is a consumer or business (as is
shown by the Package Travel Directive). The collaborative marketing structure means
that advertising and other public statements by other participants equally benefit the
183 In contrast to the approach generally adopted in EU law, the term ‘traveller’ defined in Art. 3 No. 4
PTD includes consumers as well as businesses that have concluded the contract for a commercial purpose
or other purpose related to their business (e.g. booking a company trip).
184 If the other party is not a consumer, the binding effect of statements by third parties is to be viewed
in light of the requirements under Art. 69(2) CESL; the extent to which statements by third parties will
have binding effect in B–B contracts would depend primarily on the interpretation of ‘engaged’ under
Art. 69(2) CESL. For more detail see Schulze CESL/Kieninger, Art. 69 CESL mn. 11; Looschelders/
Makowski, ‘Inhalt und Wirkungen von Verträgen’ in Schmidt-Kessel (ed), Ein einheitliches europäisches
Kaufrecht? (Sellier 2012), 227, 238; Wendehorst, ‘Regelungen über den Vertragsinhalt’ in Wendehorst/
Zöchling-Jud (eds), Am Vorabend eines Gemeinsamen Europäischen Kaufrechts (Manz 2012) 87, 94.
145
Chapter 3 Conclusion and Content of Contracts
business – this also does not depend on whether the other party is a consumer or a busi-
ness. This issue was taken into account by the ‘gold plating’ of the Consumer Sales Di-
rective by some national legislators when implementing the Directive into national
law.185 A restriction to consumer contracts would not sufficiently consider that produc-
ers, importers and the other links in the business chain often (in collaboration with, but
not engaged by the final seller) organize the marketing even when the final buyer is a
business (or both consumers and businesses are addressed to the same extent). The gen-
eral restriction to consumer contracts may however sufficiently take into account the
differences between B–B and B–C contracts: in the former the parties can waive the
binding effect of pre-contractual statements, whereas in the latter it is in the interest of
consumer protection for these statements to have mandatory effect.
5. Unilateral promises
a) Binding effect
89 Uncertainty still remains in European law in relation to the questions of the manner,
scope and consequences concerning obligations that do not just arise through the con-
clusion of a contract but also from unilateral promises. The CESL does not contain any
provisions on this latter issue as its application requires an agreement between two fu-
ture parties to a contract (Art. 8 CESL-Reg) and accordingly is only tailored to obliga-
tions arising from a contract. In contrast, the PECL and the Acquis Principles (as well as
Art. II.–1:103(2) DCFR) have proposed basic rules defining the unilateral statement as a
further source of legally binding obligations.
(2) If a unilateral promise is binding, provisions of contract law which protect one particular party
apply in its favour.
90 These rules reflect the significance that the unilateral promise has gained both in sev-
eral Member States as well as in international practice186 (e.g. concerning guarantees,
prize notifications,187 securities188 and in relation to contract formation as well as the
‘gradual’ conclusion of contract189). In most European countries, legal doctrine paid rel-
atively little attention to this matter following the 17th and 18th century controversies
185 In Germany with the third sentence of § 434(1) BGB which extended the scope of Art. 2 CSD to all
§ 657 BGB (promises of a reward) and § 661a BGB (promises of prizes); see also Cauffman, ‘Standard
Clauses and Unilateral Promises’ in Collins (ed), Standard Contract Terms in Europe (Wolters Kluwer
2008) 246 et seq.; Schulze, ‘The Formation of Contract: New Features and Developments in Contracting’
in Schulze/Perales Viscasillas (eds), The Formation of Contract (Nomos 2016) 9–24.
187 See Cauffman, ibid. 264 et seq.
188 Kleinschmidt, ‘Unilateral contract und einseitiges Versprechen’ (2007) Jura 250.
189 For example letter of intent; to such (unilateral and bilateral) statements in conclusion of contract,
mn. 72.
146
II. Conclusion of contract
6. Inertia selling
a) Principle
The directives’ provisions regulating unsolicited goods and services are not just im- 92
portant for the concept of contract in European private law196 but also for national con-
tragsrecht (Mohr Siebeck 2013) § 11 mn. 35; Twigg-Flesner/Canavan/MacQueen, Atiyah and Adams‘ Sale
of Goods (13th edn Pearson 2016) 555–557.
194 Accordingly Art. 4:109(1) ACQP is not based on current EU law but rather on Art. 2:107 PECL; see
Contract II/Schulze, Art. 4:109 mn. 1. See also Wiewiórowska-Domagalska, Consumer Sales Guarantees in
the European Union (Sellier 2012) 140 et seq.
195 See mn. 72.
196 See Chapter 2 mn. 35 et seq.
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Chapter 3 Conclusion and Content of Contracts
tract practice and jurisprudence on obligations. The second indent of Art. 9 Distance
Marketing of Financial Services Directive and Art. 27 CRD afford extensive to protec-
tion to consumers in respect of unsolicited demands for payment and aggressive market-
ing practices. They provide that silence or inactivity by the consumer following the re-
ceipt of unsolicited goods or services does not amount to an acceptance of an offer and
may not result in any obligation whatsoever for the consumer (e.g. to provide counter-
performance). These provisions ‘seek to prevent a trader from imposing a contractual re-
lationship on a consumer to which he or she has not freely consented’.197 They are based
on early policy considerations198 indicating the need for a Europe-wide protection of
consumers from demands for payment for unsolicited goods.199 The underlying policy
considerations as well as the terms of the Directives have allowed Art. 4:106 ACQP to
formulate a far-reaching general principle: no obligation will arise from the consumer’s
failure to respond to a delivery of unsolicited goods or services.200
b) Functions
93 The provisions on inertia selling distinctly show the double function that can be fre-
quently observed in European consumer law: combining the protection of the individual
consumer with the objective of generally guiding the supplier’s market behaviour.201 In
this context, the rules serve to combat unwanted market behaviour by excluding the
conclusion of a contract thereby preventing contractual obligations for the consumer
(e.g. to pay for the goods provided). In any event, the exclusion concerns all obligations
that will satisfy the ‘consideration’ requirement. The interpretation by Art. 4:106 ACQP,
Art. II.–3:401 DCFR, as well as the widespread view in the Member States covers the
obligations on the consumer in respect of the acquisition, retention, rejection or use of
the goods (or services).202 Moreover, this may particularly include (depending on the
national legal system) tort law, unjust enrichment, benevolent intervention in another’s
affairs, and the legal relationships between owner and possessor. The increased need for
protection, which can justify extensive consequences, is limited to the imbalance in con-
sumer contracts only.
c) Requirements
94 In addition to the notion of the consumer,203 the ‘unsolicited’ performance forms a
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central requirement in the relevant provisions.204 The ‘unsolicited’ concept will not ex-
tend to goods or services that have been delivered or supplied following an offer sent by
197 Joined cases C–708/17 and C–725/17 EVN Bulgaria Toplofikatsia ECLI:EU:C:2019:1049 para. 65
munity for a consumer protection and information policy [1975] OJ C92/1. See Preliminary programme
of the European Economic Community for a consumer protection and information policy [1975] OJ
C92/2, 6 (as referred to in Recital 5 of the Distance Selling Directive).
199 Howells/Weatherill, Consumer Protection Law (2nd edn, Ashgate 2005) 370–371; Ranieri, Europäi-
such a rule because intertia selling is characterized by the absence of a contractual basis and therefore falls
outside of the CESL’s intended scope of application.
201 In particular the recourse to the policy on protecting the buyer from payment demands for unso-
licited goods and from aggressive sales practices clearly expresses the preventative aim of the policy
(Recital 5 Distance Selling Directive, Council Resolution of 14 April 1975 on a preliminary programme of
the European Economic Community for a consumer protection and information policy [1975] OJ C92/1).
202 Contract II/Schulze, Art. 4:106 mn. 5, 9; DCFR Full Edition 257–261.
203 See Chapter 2 mn. 161 et seq.
204 Art. 27 CRD; Art. 9, 2nd indent Distance Marketing of Financial Services Directive.
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II. Conclusion of contract
the consumer to the business in relation to the particular goods or services subsequently
provided. A distinction will be necessary if the consumer has not sent an offer but mere-
ly an invitatio ad offerendum:205 the goods or services are not unsolicited if the consumer
knew or ought to have known under the circumstances that the business would link the
request for an offer with the delivery of the goods. 206 The goods or services will therefore
be unsolicited if the consumer could not foresee such delivery of goods or services. This
distinction is based on the general consideration that the performance is deemed unso-
licited if it is not tendered on the basis of a decision freely made by the consumer.207
Performance to be tendered under a contract cannot subsequently become ‘unsolicit- 95
ed’ if a party has terminated the contract through a remedy such as withdrawal or avoid-
ance. This must also apply when remedies under national law provide that the contract
is void from the outset (for instance the ex tunc effect of avoidance provided in the CESL
and in many national laws208).209 The mistaken delivery to the incorrect recipient as well
as the delivery in the mistaken belief that an order was placed will at least not be classi-
fied as ‘unsolicited’ if the consumer was aware or could have been aware thereof had it
taken reasonable care.210 In these cases it is also not necessary – both in respect of the
individual consumer and guiding market behaviour – to provide protection through
provisions on unsolicited performance.
d) Legal effects
aa) The Directives expressly stipulate that the ‘absence of a response’ does not consti- 96
tute ‘consent’.211 In this respect, the provisions strengthen the principle that the agree-
ment between the parties forms the basis of contract.212 The delivery of goods or provi-
sion of services can in any case be considered an (implied) offer to conclude a contract.
An acceptance to this offer will therefore be lacking if the consumer (as the recipient)
does not respond and consequently a contract will not be concluded. In some legal sys-
tems it may be possible under particular circumstances for silence to constitute accep-
tance,213 though this will not apply in the context of unsolicited performance covered by
the Directives. Moreover, the mere use or consumption of the goods or services by the
consumer may not be considered an implied acceptance to an offer if there are no fur-
ther circumstances allowing an inference that the consumer intended to be contractually
bound. In each of these situations the consumer’s behaviour is not outward and there-
fore the wording and purpose of the Directives’ provisions do not allow for such be-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
marca 2000 r. o ochronie niektórych praw konsumentów (tj. Dz.U. 2012 poz. 1225).
211 Art. 27 CRD, though already in the second indent of Art. 9 Distance Marketing of Financial Services
nauer (2018) § 241a mn. 3; cf Casper, ‘Die Zusendung unbestellter Waren nach § 241a BGB’ (2000) ZIP
1602, 1607.
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Chapter 3 Conclusion and Content of Contracts
tractual obligations, such as paying the price or other contractual fee: due to the protec-
tive nature of the provision the ‘consideration’ must also encompass other performances
the business could demand due to the delivery of goods or services, for example pay-
ment for use or compensation due to damage or destruction.215 Teleological interpreta-
tion of the provisions therefore means that generally all obligations for the consumer
will be excluded if they can result from the acquisition, use or destruction of the unso-
licited good or service and irrespective of whether the obligations are contractual or
non-contractual under EU or the applicable national law216 (in particular demanding
payment of the price for the goods or the fee for services, damages for depreciation,
damage or loss of the good, compensation for use and return of emoluments; it is irrele-
vant whether the claims are founded in property law, unjust enrichment, tort law or on
another legal basis).217 However, it is questionable whether the exclusion of a claim from
the business also concerns the claim to the return of the unsolicited good itself. Accord-
ing to the widespread opinion, as the protection has an absolute exclusionary effect, the
business cannot demand the return of the good either on the basis of property law, un-
just enrichment, or other provision in the law of obligations.218 Nevertheless, one has to
consider whether such long-term exclusion of the owner’s possession and use of its
things is proportionate with regard to the underlying protection of property. The exclu-
sion of all claims to compensation for use and replacement may result in such a consid-
erable risk for the business that the additional exclusion of a claim to recover possession
is hardly necessary in order to effectively guide market behaviour.219 Permitting the re-
turn of the good would not result in any considerable legal disadvantages for the con-
sumer because it is not under an obligation to keep the goods safe and, moreover, there
would be no claim to damages even if the consumer were to intentionally destroy the
good.
98 cc) The provisions on inertia selling do not exclude the possibility for the consumer
to conclude a contract, if desired. The unsolicited good may be delivered together with
an offer from the business; here the consumer is free to accept this offer.220 Careful ex-
amination will be necessary in relation to whether the consumer has actually accepted
the offer (in conformity with the applicable requirements) or has not made such a state-
ment and simply uses the goods. As noted above, the provisions on unsolicited perfor-
mance will exclude contractual and non-contractual claims in the latter case. However,
the former case will result in the creation of a contractual relationship between the con-
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sumer and the business and therefore in the rights and obligations that generally apply
to (consumer) contracts.
7. Defects in Consent
a) An alternative concept for protecting against flawed decisions?
99 The law on defects in consent is a major part of the entire concept of private autono-
my and thus belongs at the heart of the continental legal tradition. Private autonomy –
as an expression of personal freedom – requires accompanying conditions for a free,
conscious decision that has not been distorted by false expectations. The legal relevance
215 This is even clearer in the second section of Art. 9 Distance Marketing of Financial Services Direc-
150
II. Conclusion of contract
of defects in consent is limited by the need for legal certainty.221 The various continental
legal traditions use different methods to attempt to balance these values and to suitably
protect commerce either by strict requirements for a legally-relevant defect in consent,
procedural barriers (e.g. the contract can only be avoided by a judge) or, in certain cases,
affording the other party with a claim to damages. The liberal common law tradition on-
ly allows for particular types of defects in consent (e.g. fraudulent misrepresentation) to
allow for avoidance of the contract.222 Aside from these differences across Europe, it is to
be emphasized that the regulation of defects in consent primarily stems from the notion
that a contract has been individually negotiated.223 The contract law acquis is however
characterized by mass contracts, an entirely different starting point. The acquis commu-
nautaire has therefore tried to develop alternative instruments that will ensure a free de-
cision, especially on the part of a consumer.224 At the same time, the European legislator
is striving towards creating instruments that shall fulfil the function of market shaping;
these instruments are above all the pre-contractual information duties225 and the rights
of withdrawal226. The two approaches serve to afford the entitled party with a possibility
to make an informed decision; this is especially relevant in situations in which market-
ing practices can exert considerable influence on the customer’s decision. Accordingly,
consumers only have rights of withdrawal in certain situations, such as in distance or
off-premises contracts.
Tensions exist between these European approaches and traditional laws on defects in 100
consent. For example, there are overlaps between the respective functions of right of
withdrawal and the rules on defects in consent, but fundamental differences in the re-
quirements. No reason is required for withdrawal and therefore it is irrelevant whether
the consumer had been induced to make a mistake or she simply changed its mind dur-
ing the withdrawal period;227 such extensive flexibility is indeed not a feature of the rules
on defects in consent. One has to remember that withdrawal rights are however de-
signed for mass contracting and are tailored to fit this purpose. Though shall the possi-
bility of withdrawal limit the right to avoid the contract because of a mistake? Should a
business, who has performed the information duties, be safe in knowing that avoidance
of the contract because of a mistake is excluded once the withdrawal period has expired?
European law cannot give answers to these questions as long as the system of contract
law is incomplete.
European law features an approach that can represent an alternative to rules on de- 101
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fects in consent: adjusting the contract in light of the other party’s (consumer or debtor)
reasonable expectations.228 It concerns those provisions which cause the information or
statement by a third party to become part of the contract:
Kaufrecht? (Sellier 2012) 179, 189; Schmidt-Kessel CESL/Martens, Art. 48 CESL mn. 1.
224 COM(2011) 635 final, 4, 6; Jansen/Zimmermann, ‘Restating the Acquis communautaire? A Critical
Examination of the “Principles of the Existing EC Contract Law’ (2008) MLR 505, 510.
225 See Part 2, Chapter 2 CESL.
226 See Part 2, Chapter 4 CESL.
227 See mn. 118; Schulze, ‘Die Widerrufsrechte im Vorschlag für ein Gemeinsames Europäisches
Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier
2012) 151, 162−163.
228 On the principle of reasonable expectations see Howells/Wilhelmsson, EC Consumer Law (Ashgate
1997) 320–323; Micklitz, ‘Perspektiven eines europäischen Privatrechts’ (1998) ZEuP 253, 263–264; Reich
et al., European Consumer Law (2nd edn, Intersentia 2014) 27–28.
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Chapter 3 Conclusion and Content of Contracts
102 At first glance it appears that these provisions have little to do with the law on defects
in consent. However, it does indeed concern provisions that provide a mechanism for
adapting the contract to take account of the consumer’s reasonable expectations. The
relevance of a mistake is therefore diminished because the contract is automatically ad-
justed in light of potential expectations. Integrating a system of self-correction is a
promising alternative to the traditional solutions under the law of defects in consent.
104 The E-Commerce Directive has designed this duty as an information duty. However,
it concerns a technical possibility to identify and, if necessary, correct the content of no-
tice before it is sent.229 The rule highlights a characteristic of EU law, namely to develop
an instrument that determines a standardized preventative measure though without the
need to question whether the consumer’s decision was influenced by a mistake caused by
the other party. Moreover, it emphasizes a further feature of EU law in relation to infor-
mation duties: the E-Commerce Directive does not provide sanctions for breach of this
152
II. Conclusion of contract
duty but rather the responsibility to introduce sanctions for breach remains with the na-
tional legislator.230
The Acquis Principles have strived to create a complete rule that contains a sanction 105
for breach, namely a right for the other party to withdraw from the contract:231
One may ask whether the Acquis Group has exceeded the limits of its approach232 by 106
introducing the sanction in Art. 4:105(4) ACQP. The Acquis Group did, however, en-
deavour to draft complete rules from fragments in the acquis communautaire, in other
words to also propose sanctions that best correspond to the nature of the duties under
EU law.233 The Acquis Principles therefore do not feature a system of rules on defects in
consent as a result of the lack of sources in acquis communautaire. The right to withdraw
is thus available to the other party irrespective of whether it actually made an input er-
ror; the relevant criterion is the failure by the business to perform its duty vis-à-vis this
technical aspect of the conclusion of contract. The underlying system focuses primarily
on guiding market behaviour and less on the legal consequences in the individual cir-
cumstances.234
The DCFR has adopted a different approach to the ‘duty to make available a means of 107
correcting input errors’ (Art. II.–7:201(1)(b)(iii) DCFR) by creating a direct link to the
regulation of defects in consent:
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The approaches therefore vary between the DCFR and the Acquis Principles. The
DCFR outlines that the breach of this duty is one of many requirements for avoiding the
contract. The key requirement is a mistake. It can be questioned whether this rule is suit-
able for providing an instrument for mass contracting which aims, as the E-Commerce
Directive,235 at guiding business’ market behaviour.
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Chapter 3 Conclusion and Content of Contracts
Article 5 UCPD
Prohibition of unfair commercial practices
(1) Unfair commercial practices shall be prohibited.
(…)
(4) In particular, commercial practices shall be unfair which:
(a) are misleading as set out in Articles 6 and 7,
(…)
109 These provisions are directly attributed to competition law instead of contract law.237
The Unfair Commercial Practices Directive does not require for a specific contract or
statement of intent to be voidable but rather focuses on collective sanctions, though the
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Member States are entitled to introduce sanctions that can be enforced by the consumer
directly affected by the unlawful act:238
146 et seq.; Howells/Watson, ‘Redress for Consumer's in respect of Unfair Commercial Practices’ in
Buttigieg (ed), Rights and Remedies for the Consumer in the European Union (Gutenberg 2012) 69, 77–79.
154
II. Conclusion of contract
Such means shall include legal provisions under which persons or organisations regarded under na-
tional law as having a legitimate interest in combating unfair commercial practices, including com-
petitors, may:
(a) take legal action against such unfair commercial practices; and/or
(b) bring such unfair commercial practices before an administrative authority competent either to
decide on complaints or to initiate appropriate legal proceedings.
(…)
The Misleading and Comparative Advertising Directive also features such preventa- 110
tive measures that shall prevent customers from making their decisions on the basis of
mistaken beliefs:
These aspects of competition law are integral parts of a system that strives to use 111
modern approaches to create conditions for free decision-making. The system aims at
changing the traditional contract law by utilizing instruments such as pre-contractual
information duties, withdrawal rights and the aforementioned self-correction of con-
tracts on the basis of the consumer’s reasonable expectations. In future, one will ask the
question whether there is still space for the traditional law on defects in consent.
CESL has been withdrawn it is nonetheless valuable to examine its solutions in order to
discuss the possible future development in the acquis communautaire.
The CESL lists four types of defects in consent as reasons for the avoidance of the 113
contract: mistake (Art. 48 CESL), fraud (Art. 49 CESL), threat (Art. 50 CESL), and unfair
exploitation (Art. 51 CESL). The system is generally based on the DCFR approach,
which (in applying the restatements-approach240) strives to synthesize various models.241
A defect in consent under Art. 48–51 CESL allows the contract to be avoided via notice
to the other party:
239 On the importance of an avoidance right as a fundamental part of European contract law see
Schmidt-Kessel CESL/Martens, Art. 48 CESL mn. 1; Schulze CESL/Pfeiffer, Art. 48 CESL mn. 1–3.
240 Riedl, Vereinheitlichung des EU-Vertragsrechts in Europa (Nomos 2004) 141–147; Schwartze, ‘Die
Drechtsvergleichung’ in Riesenhuber (ed), Europäische Methodenlehre (2nd edn, de Gruyter 2010) § 4 mn. 27.
241 Martens, ‘Die Regelung der Willensmängel im Vorschlag für ein Gemeinsames Europäisches
155
Chapter 3 Conclusion and Content of Contracts
Article 52 CESL
Notice of avoidance
(1) Avoidance is effected by notice to the other party.
(2) A notice of avoidance is effective only if it is given within the following period after the avoiding
party becomes aware of the relevant circumstances or becomes capable of acting freely:
(a) six months in case of mistake; and
(b) one year in case of fraud, threats and unfair exploitation.
114 It is apparent from this provision that the entitled party does not have to claim avoid-
ance of the contract in order to extinguish the effects of the contract; a statement to that
effect will suffice.242 The specific effects of avoidance on the restitutionary aspects are
given in Chapter 17 CESL (see Art. 172 CESL), whereas Art. 54 CESL contains the gen-
eral effects of avoidance:243
Article 54 CESL
Effects of avoidance
(1) A contract which may be avoided is valid until avoided but, once avoided, is retrospectively in-
valid from the beginning.
(2) Where a ground of avoidance affects only certain contract terms, the effect of avoidance is limi-
ted to those terms unless it is unreasonable to uphold the remainder of the contract.
(3) The question whether either party has a right to the return of whatever has been transferred or
supplied under a contract which has been avoided, or to a monetary equivalent, is regulated by
the rules on restitution in Chapter 17.
115 Art. 54 CESL provides that a voidable contract (e.g. due to mistake) will remain valid
until avoidance by the other party. The result is therefore that no statutory avoidance
will apply, even in serious cases of defects in consent; there is thus no instance of nullité
absolue244 as under French law. A notable aspect is the possibility of partial avoidance
under Art. 54(2) CESL which, in respect of defects in consent, is scarce in national laws;
partial avoidance due to defects in consent is therefore not to be taken for granted.245
According to Art. 48(1)(a) CESL, the mistake must be fundamental246 – the party would
therefore not have otherwise concluded the contract under these terms. The partial
avoidance thus leads to a modification of the contract. If there is no fundamental mis-
take and the party avoids the contract, it must be void as a consequence. However, under
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Art. 54 CESL the avoidance is to lead to a change in the contract: the content is reduced
to those terms that are not affected by the avoidance. This shows the lack of coherency
within the system of defects in consent. It is a consequence of the notion that the conclu-
sion of contract requires the intention to conclude the contract with certain content,
even if this requirement is only sanctioned through the provisions on defects in consent.
In this case, partial avoidance means that the contract is unilaterally changed by a uni-
lateral statement (avoidance), but where the control of terms is concerned (Art. 79(2)
242 Art. 52(1) CESL; on avoidance as a formative right see Schmidt-Kessel CESL/Martens, Art. 52 CESL
Les obligations (11th edn, Dalloz 2007) mn. 208; Stadler, Gestaltungsfreiheit und Verkehrsschutz durch Ab-
straktion (Mohr Siebeck 1996) 160.
245 Martens, ‘Einigungsmängel im EU-Kaufrecht’ in Schmidt-Kessel (ed), Ein einheitliches europäisches
156
III. Right of withdrawal
CESL) the remainder of the contract will be effective despite the ineffectiveness of indi-
vidual terms.247 The customer shall ultimately receive the performance due. However,
defects in consent are not concerned with the fairness of the contract but rather the pro-
tection of freedom in making a decision. The sanction of partial avoidance therefore
does not correspond to this underlying justification.
Furthermore, the CESL also proposed damages as the sanction for loss caused by the 116
defect in consent:248
Article 55 CESL
Damages for loss
A party who has the right to avoid a contract under this Chapter or who had such a right before it
was lost by the effect of time limits or confirmation is entitled, whether or not the contract is avoided,
to damages from the other party for loss suffered as a result of the mistake, fraud, threats or unfair
exploitation, provided that the other party knew or could be expected to have known of the relevant
circumstances.
The provision thus provides a form of liability for culpa in contrahendo.249 As noted
above,250 some Member States regulate culpa in contrahendo under tort law – in this re-
spect the scope of the proposed CESL would have also impacted on the tort law of such
Member States (e.g. France). The potential result could have been a greater than expect-
ed effect of the CESL on national law because its selection would have repressed not just
national contract law.
The regulation of defects in consent in the proposed CESL was an attempt to reduce 117
as many European traditions as possible to a common denominator in order to make
harmonization more attractive. However, the central role placed by the law of defects in
consent may perhaps become unnecessary in a future contract law that is aimed towards
mass contracting and that attaches lesser importance to the statement of intention.
1. Overview
a) Introduction
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A right of withdrawal entitles a party to withdraw from a contract or their statement 118
of intention without giving any reason (e.g. Art. 9 CRD; Art. 40 CESL). In this respect
the right limits the principle of pacta sunt servanda, i.e. that parties are bound to the
contract.251 Several European directives252 grant mandatory withdrawal rights in specific
too different from Belgian law’ in Claeys/Feltkamp (eds), The Draft Common European Sales Law: Towards
an Alternative Sales Law? (Intersentia 2013) 255 et seq.; Lehmann, ‘Damages and Interest’ in Plaza Pe-
nadés/Martínez Velencoso (eds), European Perspectives on the Common European Sales Law (Springer
2015) 243 et seq; Schmidt-Kessel CESL/Martens, Art. 55 CESL; Schmidt-Kessel/Silkens, ‘Breach of Con-
tract’ in Plaza Penadés/Martínez Velencoso, ibid. 130–132; Schulze CESL/Pfeiffer Art. 55 CESL.
249 Schulze CESL/Pfeiffer, Art. 55 CESL mn. 1–2.
250 See mn. 15.
251 Howells/Wilhelmsson/Twigg-Flesner, Rethinking EU Consumer Law (Routledge 2017) 113; Loos,
‘Rights of Withdrawal’ in Howells/Schulze (eds), Modernising and Harmonising Consumer Contract Law
(Sellier 2009) 237, 241; Micklitz/Stuyck/Terryn, Cases, Materials and Text on Consumer Law (Hart 2010)
240; Terryn, Het herroepingsrecht als instrument van consumentenbescherming (Intersentia 2005) 51–52.
157
Chapter 3 Conclusion and Content of Contracts
120 The rights of withdrawal in the earlier European directives displayed a number of in-
consistencies regarding the terminology,258 time periods, exercise of the right as well as
the effects thereof, without any ascertainable objective reason for the differences.259 Sev-
252 In particular the Consumer Credit Directive, Consumer Rights Directive, Distance Marketing of Fi-
nancial Services Directive, Timeshare Directive; in contrast to other directives, Art. 186(1) Solvency II Di-
rective provides that not just consumers are entitled to withdraw from life assurance contracts; see Con-
tract II/Schulze, Art. 5:101 mn. 3.
253 Schulze, ‘Die Widerrufsrechte im Vorschlag für ein Gemeinsames Europäisches Kaufrecht’ in
Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier 2012) 151–168.
254 Art. 4 Doorstep Selling Directive used the expression ‘right of cancellation’.
255 An overview of the implementation of EU minimum harmonization directives is given in Schulte-
tracts, in 2002 for financial services contracts concluded at a distance, in 2008 for consumer credit con-
tracts and extended in 2011 by the Consumer Rights Directive.
257 See Chapter 1 mn. 33; on the later full harmonization of consumer guarantees through the Sale of
158
III. Right of withdrawal
eral Member States therefore attempted to overcome the chaos and occasional inconsis-
tencies by creating overarching rules for the withdrawal rights in several or all relevant
directives.260 General rules for the exercise and effect of withdrawal rights were first pro-
posed at European level by the Acquis Principles and later followed by the DCFR,
whereas special rules tailored for the individual characteristics of contract types are con-
tained in separate sections of these sets of rules.
The Consumer Rights Directive and the proposed CESL have adopted this approach 121
for distance and off-premises consumer contracts.261 Both sets of rules contain a ‘general
part’, which applies in principle to all off-premises and distance contracts, alongside se-
parate specific rules for each of these respective types of contract.262 These ‘general’ pro-
visions concern, in particular, the exercise of the right of the withdrawal, the length of
the withdrawal period (including the extended withdrawal period), the effects of the
withdrawal (including ancillary contracts) and the obligations of the parties after with-
drawal (Art. 9–16 CRD; Art. 40–46 CESL). This academic and now legislative formation
of a ‘general part’ shows that the withdrawal rights in European contract law are greatly
based on the same or similar principles and in this respect can be allocated to a uniform
system.
2. Functions
a) Protection
The directives primarily grant withdrawal rights on the basis of the presumption that 122
one of the parties to the contract is in a weaker position vis-á-vis the other party. This
weakness particularly concerns the party’s decision to conclude and draft the contract
and arises due to the situation in which the contract is concluded (for instance in dis-
tance or off-premises contracts) or the complex nature of the contract (such as in con-
sumer credit, life assurance, and timeshare contracts).263 Withdrawal rights shall partial-
ly compensate for this presumed disadvantage by affording the weaker party additional
time (the withdrawal period) before being definitively contractually bound. Accordingly,
such rights shall reduce the imbalance between the parties regarding the rational deci-
sion made in one’s own interest on the conclusion of the contract.264
The need to protect the weaker party can be based on an asymmetry in information 123
before the conclusion of contract (e.g. when the consumer can not sufficiently inform
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itself on the quality of the product).265 In this respect, the protection afforded by a with-
258 Pozzo, ‘Harmonisation of European Contract Law and the Need of Creating a Common Terminolo-
gy’ (2003) ERPL 754, 764–766; for example, Art. 4 Doorstep Selling Directive refers to ‘cancellation’.
259 Loos, Review of the European Consumer Acquis (Sellier 2008) 49; Mankowski, ‘Widerrufsrecht’ in
Financial Services Directive, Solvency II Directive, and the Timeshare Directive it is not necessary to sepa-
rate the content into general and situation-specific parts. However, there are similarities between the pro-
visions.
263 See, for example, Recital 37 CRD, Recital 23 Distance Marketing of Financial Services Directive;
159
Chapter 3 Conclusion and Content of Contracts
drawal right is linked to the aim of limiting the asymmetry during the formation of con-
tract by providing further possibilities to acquire information. However, withdrawal
rights do not necessarily require that the information was not available to the consumer
prior to the conclusion of contract. This concerns, for example, situations in which the
consumer has acquired knowledge of the good’s properties through previous purchases
or through prior examination of the good in-store (so-called ‘showrooming’).266 In addi-
tion, there is nothing preventing the consumer from using the right of withdrawal as a
means to negotiate better contract terms or price on the basis of alternatives found else-
where during the withdrawal period.267 Irrespective thereof, withdrawal rights rather af-
ford the weaker party with additional time to reconsider the conclusion of the contract
(as reflected in the expression ‘cooling-off period’) as a means of compensating for such
typical disadvantages.268
b) Increasing confidence
124 The increased expansion of the situations affording the consumer with withdrawal
rights poses the question of the further objectives and effects of the withdrawal rights
besides their traditional protective function.269 Particular significance is attached to in-
creasing consumer confidence in relation to certain types of transaction and marketing
techniques. One the one hand, the possibility to use a right of withdrawal in order to
correct a decision on the conclusion of contract offers the entitled party protection
against an unfavourable contract. On the other hand, however, the knowledge of such
protection can increase confidence in relation to the seller, subject-matter of the con-
tract, marketing technique or sector and thereby increase the willingness to contract.
This particular effect often provides the basis for a business to voluntarily offer a right of
withdrawal beyond mere compliance with statutory provisions. Similarly, the statutory
obligation to afford a right of withdrawal in, for example, timeshare or consumer credit
contracts can also increase the consumer’s confidence in these types of transactions.
Rights of withdrawal therefore play a key role in promoting the internal market – this is
especially prominent in distance contracts as such means of supply (e.g. via catalogue,
telephone or online) present the possibility of cross-border contracting with minimum
effort and therefore present the opportunity to maximize the potential of the internal
market. The limitation of the principle pacta sunt servanda serves not only to protect
against possible disadvantages for the weaker party but also has a positive function in
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
265 Ibid. 132–134; Micklitz/Stuyck/Terryn, Cases, Materials and Text on Consumer Law (Hart 2010) 240;
Terryn, Het herroepingsrecht als instrument van consumentenbescherming (Intersentia 2005) 461–432.
266 See Watson, ‘Withdrawal Rights’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and
Contract Law (Sellier 2009) 237, 244–245; Terryn, ‘The Right of Withdrawal’ in Schulze (ed), Common
Frame of Reference and Existing EC Contract Law (2nd edn, Sellier 2009) 143, 148–151.
270 FEDSA, ‘Commission Green Paper on policy options for progress towards European contract law for
consumers and businesses’ as part of the public consultation concerning the Green Paper on policy op-
tions for progress towards a European Contract Law’.
160
III. Right of withdrawal
c) Scope
A variety of different needs and policy considerations underlie how the legislation has 125
determined the situations in which protection is afforded by withdrawal rights. Accord-
ing to the European legislator, the motivation in off-premises contracts (e.g. doorstep
sales) is to compensate for the ‘surprise element’ the consumer experiences in relation to
the conclusion of contract.271 The consumer in a distance contract experiences the dis-
advantage of often being unable to gain a direct impression of the subject matter and
partner to the contract.272 In contrast, timeshare contracts are subject to particular risks
that arise from the (often) foreign element and other circumstances surrounding the
conclusion of the contract.273 Lastly, credit contracts and life assurance contracts fre-
quently involve long-term obligations and with future consequences that the consumer
does not initially recognize because of the complexity of the contract.274 The various jus-
tifications for protection may often feature together in relation to one particular con-
tract. ‘Double’ protection can arise, for example, when credit or life assurance contracts
are concluded in off-premises or distance circumstances.
The protection afforded in these situations by a right of withdrawal was originally in- 126
troduced via separate directives. The Consumer Rights Directive contains the withdraw-
al rights under the Doorstep Selling Directive and Distance Selling Directive,275 whereas
separate sets of rules continue to provide protection in the other aforementioned situa-
tions. These sets of rules also considerably extend the scope of the protection originally
provided in the Doorstep Selling Directive by including, in principle, all contracts that
are concluded in the simultaneous physical presence of the consumer and business but
not at the business’ premises 276 (e.g. on the street or on public transport277). In such situ-
ations, there is typically the risk that the consumer is taken by surprise and concludes a
contract unprepared,278 The protection in distance contracts is generally extended to all
contracts that are concluded with the exclusive use of one or more means of distance
communication under an organized distance sales scheme and without the simultaneous
physical presence of the parties.279 Consequently, the far-reaching protection is similar
to Art. 5:A–01 ACQP, which proposed the single category of ‘contracts negotiated away
from business premises’280 for both off-premises and distance sales contracts.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
271 Recital 37 CRD. On the application to the rules to a stand at a trade fair see C–485/17 Ver-
Schulze (eds), Modernising and Harmonising Consumer Contract Law (Sellier 2009) 237, 246.
274 Recital 27 Consumer Credit Directive; Recital 23 Distance Marketing of Financial Services Directive.
275 See also Art. 40 et seq. CESL.
276 Art. 9(1) in conjunction with Art. 2(8)(a) CRD; extended by Art. 2(8)(b)–(d) for similar situations
which are also to be considered as off-premises contracts; Art. 40(1) in conjunction with Art. 2(q) CESL-
Reg.
277 As was already provided in German law as part of the ‘gold plating’ of the Doorstep Selling Direc-
not to be viewed as ‘off-premises’ when the average consumer could reasonably assume that the trader is
carrying out his activity there (C–485/17 Verbraucherzentrale Berlin ECLI:EU:C:2018:642). In contrast, a
contract concluded at a trade fair is ‘off-premises’ if the location of the stand was such that access to all
traders’ stands was provided (C–465/19 B&L Elektrogeräte ECLI:EU:C:2019:1091).
279 Art. 9(1) in conjunction with Art. 2(7) CRD; Art. 40(1) in conjunction with Art. 2(p) CESL-Reg; on
the question of internet auctions Riefa, ‘A Dangerous Erosion of Consumer Rights: The Absence of a Right
to Withdraw from Online Auctions’ in Howells/Schulze (eds), Modernising and Harmonising Consumer
Contract Law (Sellier 2009) 237,177–187; see also Neubauer/Steinmetz, ‘Internetauktionen’ in Hoeren/
Sieber/Holznagel, Handbuch Mulitmedia Recht (51st supplement, C.H. Beck 2020) Teil 14 mn. 73–89.
161
Chapter 3 Conclusion and Content of Contracts
127 The Directives contain numerous exceptions that restrict the right of withdrawal in
the various situations.281 These exceptions particularly aim at avoiding the dispropor-
tionate burdens for the business which would arise under specific circumstances, but at
the same time finding an appropriate balance between a high level of consumer protec-
tion, commercial competition,282 and avoiding the abuse of rights. (e.g. goods created
according to the consumer’s specifications could not be resold283) and, furthermore, pre-
venting the risk of abuse (e.g. in relation to goods subject to fluctuating market value).284
3. Features
a) Formative right
128 aa) The protection afforded by a right of withdrawal shall ensure the possibility of a
self-determined, rational decision and therefore ensure freedom of contract in a ‘sub-
stantive’ sense.285 In light of this objective, a withdrawal right is milder than the ipso iure
rescission of the contract, such as is provided in many Member States in situations in
which the imbalance between the parties is exploited (e.g. usury, see § 138(2) BGB) or
specific formal requirements have not been observed (e.g. § 311b(1) BGB).286 In these
circumstances the ‘automatic’ rescission prevents the effectiveness of the contract even if
this is contrary to the interests and intentions of both parties. In contrast, a withdrawal
right affords the disadvantaged party with the withdrawal period in order to allow her
time to decide whether or not the contract should be upheld. The freedom to decide on
the conclusion of the contract is thus extended beyond the time of conclusion and ac-
cordingly limits the binding nature of the contract.
129 bb) A three-tier structure is central to withdrawal rights. Firstly, the legislative re-
quirements for the protection in a given situation must be fulfilled. Secondly, the entitled
party must effectively exercise the right of withdrawal within the allocated period – this
requirement is conditional for the third tier, namely the effect of the withdrawal in re-
leasing parties from their respective obligations to perform the contract. Situations af-
fording withdrawal rights and the effect thereof are therefore not linked by a strict au-
tomatism but are instead underpinned by the flexible, procedural model of a ‘formative
right’, namely the power for a party to create, modify or end a legal relationship through
a unilateral act.
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280 The term ‘contracts negotiated away from business premises’ used Art. 5:A–01 ACQP is broader
than the Consumer Rights Directive and the proposed CESL as it includes not only face-to-face contracts
but also distance contracts.
281 Art. 16 CRD and Art. 40(2), (3) CESL contain extensive exceptions, Art. 6(2) Distance Marketing of
Financial Services Directive; see also Art. 5:A–01(3) to (5) ACQP. See also See Watson, ‘Withdrawal
Rights’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward Elgar
2016) 241, 253–258.
282 See C–681/17 slewo ECLI:EU:C:2019:255 para. 39 with reference to Recital 4 CRD.
283 See C–529/19 Möbel Kraft ECLI:EU:C:2020:846, in which the exception applies irrespective of
200 AcP 276, 344–345; Schulze, ‘Die Widerrufsrechte im Vorschlag für ein Gemeinsames Europäisches
Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier
2012) 151, 165–166.
286 In instances of excessive benefit or unfair advantage, under Art. 4:109 PECL the contract is not void,
but voidable. On the law in France, Luxembourg and in other countries see Witz, ‘Störung des ver-
traglichen Gleichgewichts im neuen französischen Schuldrecht’ in Bien/Borghetti (eds), Die Reform des
französischen Vertragsrechts (Mohr Siebeck 2018) 119, 126 et seq.; Ancel, ‘Article 1142: violence
économique’ (2015) Revue des contrat 747.
162
III. Right of withdrawal
The contract is therefore not definitively effective during the withdrawal period, even 130
if the parties’ agreement has been made in accordance with the provisions on the conclu-
sion of contract. During this time the contract is instead ‘pending effectiveness’:287 the
withdrawal period does not prevent the parties from performing their contractual obli-
gations, for example to deliver or to make payment (Art. 9(3) CRD;288 Art. 44(1) and
45(1) CESL). Such an approach thus ensures that, in relation to the claim for perfor-
mance, the consumer is not in a worse position than without a withdrawal right. It is
however for the consumer to decide whether to exercise the withdrawal right and there-
by for the effectiveness of original performance obligations of both parties to be termi-
nated. The contract becomes definitively effective if the consumer does not exercise the
withdrawal right during the withdrawal period.289
directives instead provide that the withdrawing party does not have to give a reason for
the withdrawal295 – the mere existence of a particular situation will suffice in order for a
drawal period may however be maintained for off-premises contracts, see Art. 9(3) CRD.
289 On the relationship to the duty of acceptance see Watson, Das Right to Reject im Consumer Rights
Gemeinsames Europäisches Kaufrecht’ (2011) 211 AcP 845, 854–855; Watson, ‘Withdrawal Rights’ in
Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward Elgar 2016) 241,
256–258.
293 See Chapter 6 mn. 138–139.
294 See mn. 118.
163
Chapter 3 Conclusion and Content of Contracts
c) Mandatory nature
135 aa) Rights of withdrawal can be granted either voluntarily to the consumer by virtue
of freedom of contract or by reason of mandatory legislative provisions. EU consumer
directives often provide for mandatory rights of withdrawal. An important justification
is that the extension of the disadvantage surrounding the conclusion of the contract
would extend to the negotiation of a right of withdrawal – the position of the weaker
party would be weakened even further if such negotiations were left to the parties. If the
ability to form decisions surrounding the conclusion of the contract is impaired (e.g. by
the information asymmetry), one can therefore presume that this imbalance extends to
such a decision on the right of withdrawal. The substantive protection of freedom of
contract by a withdrawal right is reflected in the mandatory nature of this right. Where
confidence is concerned, a mandatory right provides greater legal certainty to the con-
sumer can thereby increase the consumer’s confidence in relation to particular sales
methods, especially as the consumer will often not take knowledge of the terms and con-
ditions in low-cost transactions). The standardization of withdrawal rights in areas such
as distance sales can further consumer confidence and therefore contribute to the econo-
mic development.299
136 Arguments have been raised against the use of mandatory withdrawal rights in dis-
tance contracts,300 though these are not fully convincing. The need to protect the con-
sumer in distance contracts due to the lack of the opportunity to physically examine the
good before purchase is to be viewed in the context of the extensive information avail-
able via the Internet. Such new possibilities in the ‘digital age’ are not limited to contracts
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
concluded online (e.g. checking information online whilst in store) and do not negate
the specific disadvantages of distance contracts in comparison to contracts concluded
in-store (e.g. information about the contract partner). The contribution of ‘optional’
rights of withdrawal to consumer protection and strengthening consumer confidence is
295 For example, Art. 14(1) Consumer Credit Directive; Art. 9(1) CRD; Art. 6(1) Distance Marketing of
tained alongside the provisions on conclusion of contract in the ‘General Part’ of the BGB but rather in the
law of obligations in the context of revocation (§§ 355 et seq. BGB), see German Civil Code/Watson, § 355
BGB mn. 2.
299 cf. in particular Eidenmüller, ‘Why withdrawal rights?’ (2011) ERCL 1, 11–14, who does however
Withdrawal in Consumer Contract Law’ (2011) M-EPLI Working Paper No. 1; Wagner, ‘Mandatory Con-
tract Law: Functions and Principles in Light of the Proposal for a Directive on Consumer Rights’ (2010)
Erasmus Law Review 47.
164
III. Right of withdrawal
less effective than mandatory rights (also due to the general advantages of standardiza-
tion).301 Such optional rights may encourage the consumer to acquire as much informa-
tion prior to the conclusion of the contract, but they do not ensure that the consumer is
sufficiently informed of aspects such as the risks (such as those which justify affording
the consumer a right of withdrawal) and the effort that is involved in obtaining informa-
tion in the particular situation (so that the consumer is perhaps indifferent as to the con-
clusion of the contract with a right of withdrawal). The deficits regarding a self-deter-
mined decision would not be eliminated but would rather be extended by the risk that
the consumer would, without the necessary reflection, refrain from choosing a right of
withdrawal.302 Ultimately, the apparent increase in the freedom of contract means to for-
feit decision-making possibilities surrounding the conclusion of contract and thus sub-
stantive freedom of contract.
4. Exercise
a) Notice
137
Article 5:102 ACQP
Exercise of a right of withdrawal
A right of withdrawal is exercised by notice to the other party. No reasons need to be given. Return-
ing the subject matter of the contract is considered a notice of withdrawal unless the circumstances
indicate otherwise.
Right of withdrawal
Save where the exceptions provided for in Article 16 apply, the consumer shall have a period of 14
days to withdraw from a distance or off-premises contract, without giving any reason, and without
incurring any costs other than those provided for in Article 13(2) and Article 14.
(…)
165
Chapter 3 Conclusion and Content of Contracts
(2) The consumer shall have exercised his right of withdrawal within the withdrawal period re-
ferred to in Article 9(2) and Article 10 if the communication concerning the exercise of the
right of withdrawal is sent by the consumer before that period has expired.
The Acquis Principles contain general rules for the exercise of the withdrawal right
and the withdrawal period, which were designed in order to be applicable to all with-
drawal rights.303 The Consumer Rights Directive (and Art. 40–42 CESL) followed this
approach by also adopting a uniform 14-day withdrawal period304 (as also in the Time-
share Directive and Consumer Credit Directive) and overarching rules on the exercise of
the withdrawal right.305 The Consumer Rights Directive provides that the withdrawal
period in a sales contract generally begins at the moment in which the consumer ac-
quires ‘physical possession’ of the goods. However, other criteria provide greater differ-
entiation in relation start of the withdrawal period for instalment deliveries and other
modes of delivery (Art. 9(2) CRD). Furthermore, the Consumer Rights Directive gives
the consumer two further options for exercising the right of withdrawal: in addition to
an unequivocal statement, the consumer may use a model withdrawal form or (if avail-
able) submit the withdrawal statement electronically via the business’ website (Art. 11(1)
and (3) CRD).306 The mere return of the good is not considered as an unequivocal decla-
ration of withdrawal, therefore in this respect there is a gap in relation to Art. 5:102 AC-
QP.307
b) Dispatch principle
138 The timely exercise of the right of withdrawal does not depend on when the commu-
nication of the withdrawal is received by the business but rather on whether the notice
of withdrawal is sent within the withdrawal period (e.g. Art. 14(3) Consumer Credit Di-
rective; Art. 11(2) CRD; Art. 41(4) CESL). This rule ensures that the consumer has the
entire length of the withdrawal period in order to reflect on the contract and to make a
decision. However, the concept only concerns the timely exercise of the withdrawal right
and not its effectiveness. In European contract law (as in most Member States)308 the lat-
ter issue is generally subject to the receipt principle (Art. 10(3) CESL; Art. I.–1:109(3)
DCFR),309 namely the communication is effective if it is sent before the end of the peri-
od and irrespective of when it is received. However, the burden of proving the timely
dispatch (as well as the other requirements for the correct exercise of the withdrawal
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
303 For the most part adopted from Art. II.–5:102–5:103 DCFR.
304 In contrast Art. 5(1) Doorstep Selling Directive provided a minimum withdrawal period of 7 days
and Art. 6(1) Distance Selling Directive a minimum of 7 working days (under minimum harmonization),
see also Art. 14(6) Mortgage Credit Directive. A 14-day withdrawal period was already provided in several
Member States e.g. Czech Republic, Denmark and Portugal; see Schulte-Nölke/Twigg-Flesner/Ebers (eds),
EC Consumer Law Compendium (Sellier 2008) 347. An updated version is available online under https://ec
.europa.eu/consumers/archive/cons_int/safe_shop/acquis/comp_analysis_en.pdf (accessed 11 December
2020).
305 As a result of changes to the Consumer Rights Directive by the Modernization Directive, Member
States may extend the withdrawal period to 30 days for contracts concluded in the context of unsolicited
visits by a trader to a consumer’s home or excursions organised by a trader with the aim or effect of pro-
moting or selling products to consumers for the purpose of protecting legitimate interests of consumers
with regard to aggressive or misleading marketing or selling practices (Art. 9(1a) CRD).
306 See also Art. 41(2) and (3) CESL.
307 See Schulze, ‘The Right of Withdrawal’ in Schulte-Nölke/Tichy (eds), Perspectives for European Con-
(2nd edn, Edward Elgar 2012) 642–643; Zweigert/Kötz, Introduction to Comparative Law (3rd edn, OUP
1998) 357.
309 See Chapter 2 mn. 56.
166
III. Right of withdrawal
right) rests with the consumer (as expressly stipulated in Art. 11(4) CRD; Art. 41(5)
CESL).
310 Art. 3(1)(3) Distance Marketing of Financial Services Directive; Art. 4(1)(f) Distance Selling Direc-
medium’; furthermore, information duties will not be performed through the use of hyperlinks; Schulze/
Morgan, ‘The Right of Withdrawal’ in Dannemann/Vogenauer (eds), The Common European Sales Law in
Context (OUP 2013) 297, 322–323.
312 Art. 6(6) CRD provides that the consumer is not to bear the costs of return or other charges if the
trader has breached the obligation to inform the consumer of such costs. If the contract is concluded
through a means of distance communication which allows limited space or time to display the informa-
tion, the trader is nonetheless to provide the consumer with information regarding the conditions, time
limit and procedures for exercising the right, see C–430/17 Walbusch Walter Busch ECLI:EU:C:2019:47.
313 See also Art. 17(1) CESL.
314 See also Art. 10(2)(q) Consumer Credit Directive on the information requirements concerning the
nex II CESL.
316 Art. 5(1) Consumer Credit Directive, Art. 6(4) CRD, Art. 17(4) CESL. German law also provided
standard forms prior to the introduction of the Consumer Rights Directive (§ 360(1) and (3) BGB in con-
junction with § 355(3) BGB and the model withdrawal information form in Annex 1 to Art. 246 § 2(3)
EGBGB).
317 On the extent and type of the notice in e-commerce see C–49/11 Content Services ECLI:EU:C:
167
Chapter 3 Conclusion and Content of Contracts
Art. 10(2) Consumer Credit Directive). It does not suffice to merely refer to the provi-
sion of national law which serves to implement the respective directive and which itself
also refers to other provisions (a so-called ‘cascade reference’).318 If the business does not
perform this information duty correctly319 (thus resulting in the absence of a typically
necessary basis for the consumer’s decision) the possibility for withdrawal can therefore
not be limited by a 14-day period. Accordingly, the withdrawal period cannot begin if
the information duties on withdrawal have not been performed at or before the conclu-
sion of contract (Art. 14 (1)(b) Consumer Credit Directive and Art. 6(1) Distance Mar-
keting of Financial Services Directive).320 Such an approach therefore results in a right of
withdrawal that is in principle not subject to time limitations and, following the ECJ de-
cision in Heininger321, cannot be limited by the Member States. The Acquis Principles
and DCFR (Art. 5:103(1) ACQP; Art. II.–5:103(3) DCFR) have adopted a different ap-
proach which has been followed in Art. 10(1) CRD:322 in the event of non-performance
of the relevant information duties the withdrawal period is limited to a maximum of one
year beginning from the end of the initial withdrawal period.323 The performance of the
information duties during this extended period will cause the withdrawal period to end
14 days after the day on which the consumer has received the information (Art. 10(2)
CRD; Art. 42(2)(b) CESL); the maximum withdrawal period is therefore one year and 14
days (as expressly stated in Art. 6(3)(a) Timeshare Directive). The use of a maximum
withdrawal period thus avoids the continuous status of ‘pending effectiveness’ and al-
lows the contract to become definitively effective. It therefore protects the business from
an unreasonably lengthy withdrawal period and continuous uncertainty regarding the
status of the contract.324
5. Effect
a) Restitution
141 Comprehensive regulation at European level of the consequences of withdrawal is a
relatively modern development. The Consumer Rights Directive now adopts such an ap-
proach whereas earlier directives instead only provide for specific consequences in rela-
tion to their particular area.325 It was – and in some instances remains – necessary to
refer to national laws in relation to issues such as the return of performance, compensa-
tion for benefits, diminished value or damages, despite there being considerable varia-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
credit agreement which referred to § 492(2) BGB (which itself refers to Art. 247 §§ 6–13 of the Introducto-
ry Act to the BGB (EGBGB)).
319 This represents a breach of unfair competition law, namely Art. 7(1) UCPD.
320 For life assurance contacts see C–355/18 Rust Hacker ECLI:EU:C:2019:1123, para. 67.
321 C–481/99 Heininger ECLI:EU:C:2001:684 refers to a one year limitation in German law; for more
detail see Rott, ‘The Effects of the Consumer’s Withdrawal from the Contract’ in Straetmans/Terryn/
Colaert (eds), Landmark Cases of EU Consumer Law (Intersentia 2013) 523, 526.
322 See also Art. 42(2)(a) CESL.
323 Prior to the Consumer Rights Directive the Distance Selling Directive and the Timeshare Directive
had already provided a maximum of three months for exercising the right to withdraw. The Doorstep Sell-
ing Directive did not provide a maximum period (see C–481/99 Heininger ECLI:EU:C:2001:684).
Art. 5:103(1) ACQP and Art. II.–5:103(3) DCFR have proposed a general one year maximum period for
the exercise of the withdrawal right due to breach of the seller’s information obligations.
324 Koch, ‘Rechte des Unternehmers und Pflichten des Verbrauchers nach Umsetzung der Richtlinie
168
III. Right of withdrawal
b) Termination
The primary effect of the withdrawal is to end the obligations of the parties to per- 142
form the contract (Art. 12(a) CRD; Art. 8(1) Timeshare Directive; Art. 43(a) CESL). The
exercise of the withdrawal right therefore releases the parties from their original con-
tractual obligations,328 though it is not expressly regulated whether the legal relationship
established by contract between the parties also ends.329 It therefore remains unclear
whether the restitution takes place within or outside of a contract-based relationship be-
tween the parties. In the former case the withdrawal would merely change the original
content of the contractual relationship by substituting the original obligations with the
duties of restitution, compensation for diminished value and damage.330 However, the
language in Art. 15(1) Consumer Credit Directive, Art. 15(1) CRD, Art. 11(1) Timeshare
Directive and Art. 46(1) CESL clearly implies that withdrawal ends the contractual rela-
tionship. According to these provisions, the withdrawal will ‘automatically’ terminate
‘any’ ancillary contracts. If one were to thus follow this approach, the parties’ respective
duties of restitution would solely arise from a legislative basis (similar to restitution for
an enrichment with no contractual basis).
The right of withdrawal can be exercised even prior to the conclusion of the contract. 143
In this event the consumer will no longer be bound by her offer (Art. 12(b) CRD;
Art. 43(b) CESL).331 This effect restricts the binding nature of the offer – as stipulated in
several different national laws332 – and modifies the general provision of Art. 32(3) CESL
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
326 As was the approach previously adopted under German law §§ 357, 346 et seq. BGB (former ver-
sion).
327 Terryn, ‘The Right of Withdrawal’ in Schulze (ed), Common Frame of Reference and Existing EC
effect, i.e. the consumer is released from its future obligations under the life assurance contract.
329 See also Art. 5:105(1) ACQP; cf Art. II.–5:105(1) DCFR: ‘Withdrawal terminates the contractual re-
lationship …’.
330 For German law see German Civil Code/Watson, § 355 BGB mn. 14 et seq.; Schulze/Morgan, ‘The
Right of Withdrawal’ in Dannemann/Vogenauer (eds), The Common European Sales Law in Context (OUP
2013) 297, 330 et seq.
331 ‘Withdrawal terminates the obligations of both parties under the contract … to conclude the con-
tract’ is unfortunate wording because the contract is concluded with the acceptance of the offer without
such such an obligation being relevant.
332 See mn. 68; § 145 BGB; Ferrari, ‘Offer and acceptance inter absentes’ in Smits (ed), Elgar Encyclope-
dia of Comparative Law (2nd edn, Edward Elgar 2012) 637–638; Zweigert/Kötz, Introduction to Compara-
tive Law (3rd edn, OUP 1998) 362–363.
333 See also Art. II.–4:202(3) DCFR.
169
Chapter 3 Conclusion and Content of Contracts
with the principles of civil law, such as those of good faith or unjust enrichment, on condition that
the purpose of that directive and, in particular, the efficiency and effectiveness of the right of with-
drawal are not adversely affected, this being a matter for the national court to determine.
334 See also C–489/07 Messner ECLI:EU:C:2008:98 (AG Trstenjak) para. 79; Watson, ‘Withdrawal
Rights’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and Contract Law (Edward Elgar
2016) 241, 248.
335 See C–511/08 Heinrich Heine ECLI:EU:C:2010:189, which concerned the Distance Selling Directive;
Art. 13(2) CRD and Art. 44(2) CESL restrict the reimbursement to the standard delivery costs.
336 14 days in the Consumer Rights Directive and in the CESL, 30 days in the Consumer Credit Direc-
tive and in the Distance Marketing of Financial Services Directive. Timeshare contracts have an additional
feature, namely that the consumer cannot make payments to the provider during the withdrawal period,
see Art. 9 Timeshare Directive.
337 Recital 47 and Art. 14(2) CRD; but see C–681/17 slewo ECLI:EU:C:2019:255.
338 See also Art. 8(2) Timeshare Directive, according to which the consumer does not have to pay for
services provided.
339 The extent to which principles of unjust enrichment can be applied still remains questionable, C–
489/07 Messner ECLI:EU:C:2009:502 para. 26; on the question of recourse to the provisions in Part VII
CESL, Weller, ‘Widerrufsrecht bei Fernabsatz- und Haustürgeschäften’ in Schmidt-Kessel (ed), Ein ein-
heitliches europäisches Kaufrecht? (Sellier 2012) 170.
170
III. Right of withdrawal
The decision in Messner raises a number of points regarding the relationship between 146
the consumer and the business: guaranteeing the consumer’s freedom to exercise the
right of withdrawal in her own interest, and protecting the business against the abuse of
this freedom. One the one hand, this concerns the criteria that, in this respect, substanti-
ate the principle of good faith and the detailed requirements for the application of prin-
ciples of unjust enrichment as noted in this decision. On the other hand, it also presents
the opportunity to review the borderline between permissible use and abuse of the right
of withdrawal and with regard to the practice of ‘blacklisting’ consumers who frequently
exercise their right of withdrawal.340 In principle, freedom of contract allows the busi-
ness to chose the other party to the contract,341 though such a ‘sanction’ impacts on the
consumer’s freedom to exercise the right of withdrawal – a right that ought to protect
her freedom of contract.
e) Ancillary contracts
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The withdrawal from a contract also results in the termination of so-called ancillary 148
or linked contracts (Art. 15(1) CRD and Art. 46(1), (2) CESL); Art. 15(1) Consumer
Credit Directive346 and Art. 11 Timeshare Directive contain similar provisions. The pur-
pose of such rules is to protect the consumer from the risks that may arise from – objec-
340 See Watson, ‘Withdrawal Rights’ in Twigg-Flesner (ed), Research Handbook on EU Consumer and
(a) CRD, there is no right of withdrawal after the service contract has been fully performed but, if the
contract places the consumer under an obligation to pay, only if the performance has begun with the con-
sumer’s prior express consent and acknowledgement that he will lose his right of withdrawal once the con-
tract has been fully performed by the trader.
344 Pursuant to the Modernization Directive, Art. 16 CRD will be amended to include a rule whereby
the Member States may provide that the consumer loses the right of withdrawal after a service, in which
the consumer has specifically requested a visit from the trader for the purpose of carrying out repairs, has
been fully performed provided that the performance has begun with the consumer’s prior express consent.
345 See EU Digital Law/Terryn/Vandenbulcke, Art. 16 DCD mn. 6 et seq.
346 On ancilliary services related to the credit agreement, see Art. 14(4) Consumer Credit Directive.
171
Chapter 3 Conclusion and Content of Contracts
tively – breaking down one transaction into numerous different contracts (in particular
by splitting an instalment contract into a cash sale for the sale of goods or other services
and a consumer credit contract serving to finance the contract).347 The single transac-
tion can be considered as one economic unit, for example the conclusion of a credit
agreement with a car dealership in order to purchase the vehicle. Whereas there is a vari-
ation in the definition of ‘ancillary’ contracts in the directives and the CESL resulting
from the differences in application, the Acquis Principles contain one general definition
of linked contracts.348
149 According to the aforementioned provisions, the effective exercise of the right of
withdrawal of one contract therefore extends to the linked or ancillary contract. The an-
cillary contract is thus terminated without the need for any further actions. As for the
exercise of the withdrawal right, the termination of the ancillary contract should not
cause the consumer any costs (Art. 15(1) CRD; Art. 46(1) CESL). Furthermore,
Art. 46(2) CESL provides that the provisions on termination following withdrawal shall
also apply to the ancillary contract.
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
347 DCFR Full Edition 381–384; Rott, ‘Die neue Verbraucherkredit-Richtlinie 2008/48/EG und ihre
Auswirkungen auf das deutsche Recht’ (2008) WM 1104, 1112; Welter, ‘Verbraucherkredit’ in Gebauer/
Wiedmann (eds), Zivilrecht unter europäischem Einfluss (2nd edn, Boorberg 2010) 641.
348 In principle this adopts Art. II.–5:106(2)(d) DCFR.
172
CHAPTER 4
UNFAIR CONTRACT TERMS
Literature: Baier, Europäische Verbraucherverträge und missbräuchliche Klauseln. Die Umsetzung der Richt-
linie 93/13/EWG über missbräuchliche Klauseln in Verbraucherverträgen in Deutschland, Italien, England
und Frankreich (Kovac 2004); Collins (ed), Standard Contract Terms in Europe (Wolters Kluwer 2008);
Dannemann/Vogenauer (eds), The Common European Sales Law in Context (OUP 2013); Howells/Schulze
(eds), Modernising and Harmonising Consumer Contract Law (Sellier 2009); Howells/Wilhelmsson/Twigg-
Flesner, Rethinking EU Consumer Law (Routledge 2017); Jansen, ‘Klauselkontrolle im europäischen Privat-
recht. Ein Beitrag zur Revision des Verbraucheracquis’ (2010) ZEuP 69; Kötz, Vertragsrecht (2nd edn,
Mohr Siebeck 2012); Loos, ‘Standard Contract Terms Regulation in the Proposal for a Common European
Sales Law. Comment to Jansen’ (2012) ZEuP 776; Ranieri, Europäisches Obligationenrecht (3rd edn,
Springer 2009); Reich et al., European Consumer Law (2nd edn, Intersentia 2014); Riesenhuber, EU-Ver-
tragsrecht (Mohr Siebeck 2013); Research Group on the Existing EC Private Law (Acquis Group), Contract
II – General Provisions, Delivery of Goods, Package Travel and Payment Services (Contract II) (Sellier 2009);
Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier 2012); Steinmetz/
Calais-Auloy, Droit de la consommation (10th edn, Dalloz 2020); Twigg-Flesner (ed), Research Handbook
on EU Consumer and Contract Law (Edward Elgar 2016); Willett, Fairness in Consumer Contracts: The
Case of Unfair Terms (Ashgate 2007); Wolf/Lindacher/Pfeiffer (eds), AGB-Recht (7th edn, C.H. Beck
2020); Zoll, ‘Unfair Terms in the Acquis Principles and Draft Common Frame of Reference: A Study of the
Differences between the Two Closest Members of One Family’ (2008) Juridica International 69.
I. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Unfair terms law as a core area of contract law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Unfair Terms Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Unfair terms in the Acquis Principles and DCFR . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. Unfair terms in the CESL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
II. Comparative law foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1. Development in German law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2. Control of terms under the French system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3. English and Scandinavian systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
III. Unfair Terms Directive as a compromise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
IV. General clause and the list of unfair terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
V. Late Payment Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
VI. Acquis Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
VII. DCFR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
VIII. Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
IX. The exclusion of unfair terms from the Consumer Rights Directive . . . . . . . . . 80
X. CESL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
I. Overview
1 For example, Rutgers, ‘Unfair Terms in Consumer Contracts’ in Vogenauer/Gullifer (eds), English and
European Perspectives on Contract and Commercial Law, Essays in Honour of Hugh Beale (Hart 2014) 279,
280.
2 On the long history see Hellwege/Miller, ‘Control of Standard Contract Terms’ in Dannemann/Voge-
nauer (eds), The Common European Sales Law in Context (OUP 2013) 423.
173
Chapter 4 Unfair Contract Terms
cerning the Directive, but is a consequence of the complex relationship between the pro-
visions in national law that are based on the Directive and other areas of national law, as
well as the spectrum of problems covered by the Directive. The Unfair Terms Directive is
not a self-contained system – its principle of fairness can only be realized in the frame-
work of the Member States’ own legal systems, which are also responsible for the degree
of harmonization achieved by this Directive. The Unfair Terms Directive thus delivers
an instrument whose gaps are to be filled by the values at national level. However, this
instrument is not neutral. It conveys the European perception of good faith that must
also be aligned with the notion at Member State level.3 Consequently, the specific provi-
sions developed in the process of applying the Unfair Terms Directive are the result of
the interaction between European and national law. The Unfair Terms Directive is an ex-
ample of how European and national law are inseparably intertwined.
2 The Unfair Terms Directive is not the only example of a legal instrument that is con-
cerned with the control of contract terms. The Late Payment Directive also provides for
such control though only in the narrow area of the period for payment and only in B–B
contracts.4 However, the recent Platform Regulation contains provisions concerning the
control of contract terms in B–B contracts, an important step in the development of
European contract law.5
3 This chapter will cover both Directives. It will outline the structure of the Unfair
Terms Directive as well as the relationship between the general clause and the list of un-
fair terms. In particular, the chapter will examine the problem of the relationship be-
tween the European and national notion of good faith. The ECJ has been faced with nu-
merous questions regarding financial transactions as a result of the financial crisis and
associated problems that have also required consideration of the principle of transparen-
cy and the consequences of unfair terms.6 The economic crisis has increased the number
of decisions on unfair terms and directed the attention to several of the Unfair Terms
Directive’s underlying concepts. The influence of these changes on the Directive’s func-
tion is also examined in more detail. The procedural aspect of the control of contract
terms has also been the subject of an astonishing number of ECJ decisions even though
the Directive is concerned primarily with substantive law.
4 The 1993 Unfair Terms Directive is the result of a compromise between several legal
traditions, though primarily the French and German.7 Consequently, the Directive fea-
tures inconsistencies resulting from these very different approaches.8
3 On the difficulties, especially in English law, see Howells/Watson, ‘Comparative Law in Consumer Lit-
igation’ in Andenas/Fairgrieve (eds), Courts and Comparative Law (OUP 2015) 621.
4 On the judicial control of contract terms in B–B contracts see Pfeiffer/Wais (eds), Judicial Review of
Pecyna, ‘Nieuczciwe postanowienia umowne w projekcie dyrektywy o prawach konsumenta, Zasadach Ac-
quis i DCFR. Różne środki do tego samego celu’ (2009) 1/2 Transformacje Prawa Prywatnego 91, 95;
Ranieri, Europäisches Obligationenrecht (3rd edn, Springer 2009) 404; Zoll, ‘Unfair Terms in the Acquis
Principles and Draft Common Frame of Reference: A Study of the Differences between the Two Closest
Members of One Family’ (2008) Juridica International 69, 71. On the background to the Unfair Terms Di-
rective see Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 127 et seq.
8 See Nebbia, Unfair Contract Terms in European Law (Hart 2007) 3; Ranieri, ibid. 405 with further
references.
174
I. Overview
Art. 3 UTD contains the ‘general clause’ that stipulates the principles for the control 5
and thus the heart of the Directive. Art. 3(1) anchors the standard by which the unfair-
ness is determined. Art. 3(2) provides that negotiated terms are excluded from the con-
trol. Clauses that reflect mandatory statutory or regulatory provisions are also not sub-
ject to control (Art. 1(2)).
Art. 4 UTD describes the additional criteria that are to be considered when determin- 6
ing the unfairness of a term (nature of goods or services, circumstances attending the
conclusion of the contract, etc.). Art. 4(2) excludes terms that concern the main rights
and duties under the contract, unless these terms are not transparent. Art. 5 contains the
principle of transparency and the standard of interpretation to be applied to ambiguous
terms.
Art. 6(1) UTD regulates the consequences of unfair terms. Art. 6(2) contains a con- 7
flict of laws provision that protects the consumer against contracting out of the protec-
tion afforded by the Directive by virtue of the choice of the law of a non-EU country. In
addition, the Directive requires the Member States to use adequate and effective means
to prevent the use of unfair terms in B–C contracts (Art. 7). Art. 8 UTD stipulates that
the Directive is a minimum harmonization directive; further provisions concern the
technical issues surrounding application of the Directive. An indicative list of terms is
contained in a two-part annex: part 1 lists the terms that may be regarded as unfair; part
2 contains limitations on the scope of the prohibitions of terms listed in part 1.
The concept of good faith is central to this provision. The rule is substantiated by a 9
so-called ‘indicative’ list of terms that are, in cases of doubt, to be regarded as unfair. The
ECJ decisions in the area of unfair terms increasingly concern the question of the extent
to which the control is subject to European standards and the extent to which national
standards should determine the outcome.10
9 Commentaries on European Contract Laws/Jansen, Art 6:202 mn. 2; Stuyck, ‘Unfair Terms’ in Howells/
Schulze (eds) Modernising and Harmonising Consumer Contract Law (Sellier 2009) 116.
10 C–237/02 Freiburger Kommunalbauten ECLI:EU:C:2004:209; joined cases C–240/98 to C–244/98
Océano ECLI:EU:C:2000:346; see also Ranieri, Europäisches Obligationenrecht (3rd edn, Springer 2009)
438–448; Schulte-Nölke/Twigg-Flesner/Ebers (eds), EC Consumer Law Compendium (Sellier 2008) 202.
175
Chapter 4 Unfair Contract Terms
the method of harmonization – full harmonization was to replace the minimum harmo-
nization applied to the Unfair Terms Directive.21 However, the discussions surrounding
of contract law, see Commentaries on European Contract Laws/Jansen, Introduction before Art 6:201
mn. 15.
16 COM (2006) 744 final, 14.
17 See mn. 80.
18 COM (2008) 614 final.
19 Ibid. 3.
20 Ibid. 11.
21 Ibid. 3, 6, 7. See also Micklitz/Reich, ‘Crónica de una muerte anunciada: The Commission proposal
for a “Directive on consumer rights”’ (2009) CMLR 471, 510 et seq.; Stuyck, ‘Unfair Terms’ in Howells/
Schulze (eds) Modernising and Harmonising Consumer Contract Law (Sellier 2009) 116, 128 et seq.; Twigg-
176
I. Overview
the proposal maintained that it would hardly be possible to use full harmonization to
implement important aspects into national law.22 The general view favoured the exclu-
sion of unfair contract terms legislation from the scope of full harmonization;23 the
regulation of unfair contract terms (and also other matters) was therefore not included
in the final version of the Consumer Rights Directive. The outcome does not mean that
a reform is not necessary; on the contrary reform and possibly a new conceptual frame-
work concerning the scope of the rules still remain desirable – in this respect, the work
on an optional instrument presented a new chance for reform.24 The scope of the control
of terms under the Unfair Terms Directive only concerns consumer law25 and the acquis
communautaire only contains very limited control over terms in B–B contracts. the con-
trol under the Late Payment Directive 2000 (as well as under the Late Payment Direc-
tive) only applies to agreements on, inter alia, dates or periods of payment which are
grossly unfair.26 This control also covers negotiated terms, which is surprising because
the control of individually negotiated contract terms is not foreseen for consumer con-
tracts. Moreover, this distinction in approach may serve as an example for the lack of
coherency in EU law. More recently, the Platform Regulation has introduced rules con-
cerning the transparency of terms as well as certain requirements on the content thereof,
though this Regulation only applies to a relatively narrow type of B–B contract.27
terms29 and generally expands on the design outlined by the Unfair Terms Directive.30
Flesner/Metcalf, ‘The proposed Consumer Rights Directive – less haste, more thought?’ (2009) ERCL 368,
388.
22 Wendland refers to this problem of full harmonization in Eckpfeiler des Zivilrechts (6th edn, Sellier-de
adoption of Directive of the European Parliament and of the Council on consumer rights, amending
Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council
and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of
the Council.
24 See mn. 14–16 Chapter 1 mn. 52 et seq.
25 See Art. (1)(1) UTD; for an extensive explanation of control of contract terms in consumer contracts
in Loos, ‘Standard Contract Terms Regulation in the Proposal for a Common European Sales Law. Com-
ment to Jansen’ (2012) ZEuP 776, 788–790; for criticism of the limitation of scope to party status see
Riesenhuber, Europäisches Vertragsrecht (2nd edn, de Gruyter 2006) § 7 mn. 207 (cf § 10 mn. 2, 6 where
Riesenhuber does not criticize the scope of the Unfair Terms Directive and only discusses the issue of
negotiation).
26 Art. 3(3) Late Payment Directive (2000); Art. 7 Late Payment Directive.
27 See Chapter 1 mn. 71.
28 Commentaries on European Contract Laws/Jansen, Introduction before Art 6:201 mn. 15.
177
Chapter 4 Unfair Contract Terms
The CESL refrains from using ‘standard terms’ in its legislative provisions although the
control of terms in B–B contracts is still subject to the ‘non-negotiated’ requirement
(Art. 86(1)(a) CESL). The structure of the control is similar to the original (and, at least
where unfair terms are concerned, failed) proposal for a Consumer Rights Directive. The
control of terms in consumer contracts is therefore regulated by a general clause accom-
panied by lists of particular terms (Art. 83–85 CESL).
Article 83 CESL
Meaning of ‘unfair’ in contracts between a trader and a consumer
(1) In a contract between a trader and a consumer, a contract term supplied by the trader which has
not been individually negotiated31 within the meaning of Article 7 is unfair for the purposes of
this Section if it causes a significant imbalance in the parties’ rights and obligations arising un-
der the contract, to the detriment of the consumer, contrary to good faith and fair dealing.
(2) When assessing the unfairness of a contract term for the purposes of this Section, regard is to be
had to:
(a) whether the trader complied with the duty of transparency set out in Article 82;
(b) the nature of what is to be provided under the contract;
(c) the circumstances prevailing during the conclusion of the contract;
(d) the other contract terms; and
(e) to the terms of any other contract on which the contract depends.
15 The CESL contains lists of ‘grey’ (presumed unfair; Art. 84 CESL) and ‘black’ (always
unfair; Art. 85 CESL) terms and therefore follows the approach adopted by the original
proposal for a Consumer Rights Directive. Although the lists of prohibited terms do not
apply to B–B contracts, the CESL provides for the control of terms in such contracts,
which is also based on a general clause (Art. 86 CESL); as may be expected, the standard
of unfairness in a B–B is subject to requirements much stricter than for B–C contracts.
Article 86 CESL
Meaning of ‘unfair’ in contracts between traders
(1) In a contract between traders, a contract term is unfair for the purposes of this Section only if:
(a) it forms part of not individually negotiated terms within the meaning of Article 7; and
(b) it is of such a nature that its use grossly deviates from good commercial practice, contrary
to good faith and fair dealing.
(2) When assessing the unfairness of a contract term for the purposes of this Section, regard is to be
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had to:
(a) the nature of what is to be provided under the contract;
(b) the circumstances prevailing during the conclusion of the contract;
(c) the other contract terms; and
(d) the terms of any other contract on which the contract depends.
16 As an optional instrument, the proposed CESL would have been relevant for the con-
trol of contract terms once selected by the parties to form the basis of the contract.
Moreover, according to Stürner32 the instrument would rather also have been of impor-
tance for the interpretation of the Unfair Terms Directive. The list of unfair terms under
29 Chapter 8 CESL.
30 Loos, ‘Standard Contract Terms Regulation in the Proposal for a Common European Sales Law.
Comment to Jansen’ (2012) ZEuP 776, 778; Riesenhuber, Europäisches Vertragsrecht (2nd edn, de Gruyter
2006) § 10 mn. 2.
31 The European Parliament omitted ‘not been individually negotiated’ in its amendments; however this
does not mean a change in content see European Parliament legislative resolution of 26 February 2014 on
the proposal for a regulation of the European Parliament and of the Council on a Common European
Sales Law (P7_TA-PROV(2014)0159) amendment 155.
178
II. Comparative law foundations
the CESL could have been used to substantiate and give further detail to the content of
the general clause under Art. 3(1) UTD. The adoption of the proposed CESL could have
thus resulted in a fundamental change to the European contract law in the area of unfair
terms as, in some areas, genuine European provisions with their European notion of fair-
ness would have replaced national provisions. Such an outcome would have brought
about a noticeable change in the role of European law and resulted in a decisive step to-
wards the ‘independence’ of European law. However, it may well be that it was precisely
this potential outcome which contributed to the demise of the proposed CESL.
The Unfair Terms Directive is based on a compromise between two different concepts 17
underlying the control of contract terms.33 In short, the Directive attempts to reduce the
German and French systems to a common denominator. Other models for controlling
contract terms have of course also developed in Europe, in particular in the English and
Scandinavian tradition, but these received less attention during the legislative process
surrounding the Unfair Terms Directive.
Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier 2012) 79–80.
33 Nebbia, Unfair Contract Terms in European Law (Hart 2007) 34; Ranieri, Europäisches Obligationen-
recht (3rd edn, Springer 2009) 404; Zoll, ‘Unfair Terms in the Acquis Principles and Draft Common Frame
of Reference: A Study of the Differences between the Two Closest Members of One Family’ (2008) Juridica
International 69, 71.
34 On the German law of standard terms see German Civil Code/Fries, §§ 305 et seq. BGB. Markesinis/
Unberath/Johnston, The German Law of Contract (2nd edn, Hart 2006) 163 et seq. See also Schmidt-Salz-
er, ‘Recht der AGB und der mißbräuchlichen Klauseln’ (1995) JZ 223. On the use of standard terms in the
Member States see European Commission, ‘Proposal for a Council Directive on Unfair Terms in Con-
sumer Contracts’ COM (90) 322 final, 5 in which the use of standard terms is described (in 1990) as a
widespread practice.
35 See, for example, Akerlof, ‘The Market for Lemons: Qualitative Uncertainty and the Market Mecha-
nism’ (1970) 84 Quarterly Journal of Economics 488; Hatzis, ‘An Offer You Cannot Negotiate: Some
Thoughts on the Economics of Standard Form Consumer Contracts’ in Collins (ed), Standard Contract
Terms in Europe (Wolters Kluwer 2008) 43 et seq.; Jansen, ‘Klauselkontrolle im europäischen Privatrecht.
Ein Beitrag zur Revision des Verbraucheracquis’ (2010) ZEuP 69, 84–86; Kötz, Vertragsrecht (2nd edn,
Mohr Siebeck 2012) § 6 mn. 242; Twigg-Flesner, ‘Standard Terms in International Commercial Law’ in
Schulze (ed), New Features in Contract Law (Sellier 2007) 327. See also COM(90) 322 final, 5 which at-
tributes the use of standard terms to the ‘emergence of a society of mass production, distribution and con-
sumption [that] has resulted in the increasing formailization of contracts’.
179
Chapter 4 Unfair Contract Terms
with the national legislator. The control served to limit the user’s factual one-sided free-
dom to draft the contract37 and the system generally allowed for the control of standard
terms irrespective of the type of customer – the scope of the legislative rule was merely
more flexible for business customers. The 1976 AGB-Gesetz (Standard Contract Terms
Act) did, however, not accommodate the notion of the consumer because the underlying
logic was based on the premise that the control of control of standard terms was not jus-
tified by the need to protect specific parties but rather that the use of standard terms
represented a potential danger for the customer.38 The legislation implemented the con-
trol on three principal levels: control of inclusion39, control by contra proferentem inter-
pretation40 and control of content 41, with the latter being the heart of this system. A gen-
eral clause represented the central basis for the fairness control:42
19 Two lists of prohibited terms also featured alongside this general clause. One list con-
tained indistinct terms which could be assessed for unfairness and therefore afforded
some scope for interpretation;44 the terms in the second list could not be subject to as-
sessment so that, at least in theory, they should lead to clear-cut results.45 By compari-
son, the general clause should only be applied if a questionable standard term did not
fall in either these two lists. The control of terms in B–B contracts was only undertaken
on the basis of the general term, although in these cases the courts used the two lists of
prohibited terms as a guideline. Substantiation of the general clause was therefore to be
found in default law, which reflected the legislative view of justice.46
20 Controlling the inclusion of standard terms should ensure that the customer could
take notice of the standard terms before the contract is concluded. The approach there-
fore linked the law on standard terms to the traditional doctrine in contract.
21 Furthermore, the system was supplemented by a traditional rule on interpretation (in
dubio contra proferentem),47 whereby any doubts in the interpretation of the term would
give rise to an interpretation against the user and, accordingly, in favour of the customer.
22 The structure can be seen in the text of the Unfair Terms Directive but in a simpler
form. One can therefore see why an understanding of German law is important to com-
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prehend the unfair terms legislation at European level. German law can therefore func-
36 See Micklitz, ‘Some Reflections on Cassis de Dijon and the control of Unfair Contract Terms in Con-
tragspartner des Verwenders entgegen den Geboten von Treu und Glauben unangemessen benachteiligen.’.
44 § 10 AGB-Gesetz 1976, § 308 BGB.
45 § 11 AGB-Gesetz 1976, § 309 BGB.
46 Stoffels, Gesetzlich nicht geregelte Schuldverträge: Rechtsfindung und Inhaltskontrolle (Mohr Siebeck
2001) 98–100.
47 § 5 AGB-Gesetz 1976, § 305c(2) BGB.
180
II. Comparative law foundations
tion as a point of reference in helping one to grasp the development of this area of law in
the EU.
tensive competence of the courts to control all contracts irrespective of the status of the
parties (e.g. as business or consumer) and whether or not the terms were negotiated.54
edn, Dalloz 2020) 204; also Aubert, Le contrat. Droit des obligations (4th edn, Dalloz 2010) 82–84; see also
Brock, ibid. 5–6; Nebbia, Unfair Contract Terms in European Law (Hart 2007) 38–40.
52 For an overview of English law see Devenny, ‘England & Wales’ in Pfeiffer/Wais (eds), Judicial Review
on Cassis de Dijon and the control of Unfair Contract Terms in Consumer Contracts’ in Collins (ed), Stan-
dard Contract Terms in Europe (Wolters Kluwer 2008) 19, 27–28; Willett, ‘The Directive of Unfair Terms
in Consumer Contracts and its Implementation in the United Kingdom’ (1997) ERPL 223.
54 See, for Finland, Wilhelmsson, ‘The implementation of the EC directive on unfair terms in Finland’
(1997) ERPL 151; for Sweden Bernitz, ‘Swedish Standard Contracts Law and the EEC Directive’ (1997)
ERPL 213; for Scandinavia Marthinussen, ‘Unfair Contract Terms’ in Plaza Penadés/Martínez Velencoso
181
Chapter 4 Unfair Contract Terms
26 The first proposals for the Unfair Terms Directive focused greatly on the French
model55 for the control of contract terms.56 All terms not directly concerning the prima-
ry contractual obligations could be subject to control and, in consumer contracts, all in-
dividually negotiated terms. Furthermore, the European legislator also intended to fol-
low the French model by applying the control to single-use terms. The original proposal
for the Unfair Terms Directive was therefore very broad and thus difficulties arose in at-
tempting to reach an agreement. The final version of the Unfair Terms Directive adopted
a compromise along different lines: the control of unfair terms should extend to single-
use terms,57 but (in contrast to French law58) negotiated terms would be excluded from
the scope of the control.59 The approach therefore represents the attempt to combine two
different justifications for controlling contract terms: the structural weakness of one par-
ty, who was typified as ‘consumer’, and the lack of a possibility to influence the content of
the contract, a possibility which is needed to take sufficient account of party autonomy.
27 A general clause60 on the unfairness criteria is at the centre of the control of contract
terms. Art. 3(1) UTD stipulates that a term will be unfair if, contrary to the requirement
of good faith, it causes a significant imbalance in the parties’ rights and obligations un-
der the contract, to the detriment of the consumer. These criteria are substantiated in a
non-exhaustive list referred to in Art. 3(3) UTD. The substantiation is assisted by a so-
called ‘indicative’ list of terms that are, in cases of doubt, to be regarded as unfair. These
prohibited terms must be read in conjunction with the criteria outlined in Art. 3(1) UTD
as they clarify the distinctions and indicate the types of terms that the European legisla-
tor sought to counter. The indicative list should therefore also serve as a guideline for the
national legislator. The binding nature of this list is therefore limited and need not be
implemented by the Member States,61 as confirmed by the ECJ in Commission v Swe-
den.62 On the whole, national legislation has included the list, though sometimes with
variations in content in order to accommodate national requirements.
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(eds), European Perspectives on the Common European Sales Law (Springer 2015) 94 et seq. See also the
corresponding national reports in Pfeiffer/Wais (eds), Judicial Review of B2B Contracts (C.H. Beck 2021).
55 See Callais-Auloy/Steinmetz, Droit de la consommation (10th edn, Dalloz 2020) mn. 176–196.
56 See also Schulte-Nölke/Twigg-Flesner/Ebers (eds), EC Consumer Law Compendium (Sellier 2008)
197, 204.
58 Callais-Auloy/Steinmetz, Droit de la consommation (10th edn, Dalloz 2020) mn. 179.
59 Schulte-Nölke/Twigg-Flesner/Ebers (eds), EC Consumer Law Compendium (Sellier 2008) 197, 204;
Zoll, ‘Unfair Terms in the Acquis Principles and Draft Common Frame of Reference: A Study of the Dif-
ferences between the Two Closest Members of One Family’ (2008) Juridica International 69, 71.
60 See mn. 8–9.
61 See, however, Rutgers, ‘Unfair Terms in Consumer Contracts’ in Vogenauer/Gullifer (eds), English
and European Perspectives on Contract and Commercial Law, Essays in Honour of Hugh Beale (Hart 2014)
279, 284 and the differing ECJ case law on the importance of the list.
62 Stuyck, ‘Unfair Terms’ in Howells/Schulze (eds) Modernising and Harmonising Consumer Contract
182
IV. General clause and the list of unfair terms
A key question for control of terms under EU law arises in this context: is the sub- 28
stantiation of the general clause (Art. 3(1) UTD) actually a matter belonging to the ac-
quis communautaire? Is the principle of good faith in Art. 3(1) UTD to be uniformly un-
derstood in a European context or does the substantiation of the general criteria under
Art. 3(1) (as well as the answer to the question whether the term at issue could survive
the fairness test) remain exclusively a national matter?
It was initially clear that there was absolute unawareness of the need for such a dis- 29
tinction. There appeared to be satisfaction with the presumption that the control of the
content of unfair terms became part of Community law once the Unfair Terms Directive
entered into force. One must therefore observe the list of prohibited terms when inter-
preting the general clause under Art. 3(1) UTD because the list expresses the legislative
intention at European level. The question concerning the interpretation of the general
clause – and thus the understanding and substantiation of the principle of good faith –
can therefore be answered in the affirmative. The general clause is thus a matter of Euro-
pean law and subject to interpretation by the ECJ.
The decision in Océano shows that the ECJ initially understood its competence to 30
that effect.63
object or effect of excluding or hindering the consumer’s right to take legal action, a category
referred to in subparagraph (q) of paragraph 1 of the Annex to the Directive.
(…)
24. It follows that where a jurisdiction clause is included, without being individually negotiated, in a
contract between a consumer and a seller or supplier within the meaning of the Directive and
where it confers exclusive jurisdiction on a court in the territorial jurisdiction of which the seller
or supplier has his principal place of business, it must be regarded as unfair within the meaning
of Article 3 of the Directive in so far as it causes, contrary to the requirement of good faith, a
significant imbalance in the parties’ rights and obligations arising under the contract, to the
detriment of the consumer.
The ECJ decided here on the premise that the question of the unfairness of a contract
term due to a breach of good faith can be answered from the perspective of European
law. Furthermore, it is has been often indicated that the Court in Océano viewed the
term in question (on court jurisdiction) as always being unfair. The ECJ therefore laid
the foundation for the European black list of prohibited contract terms, an approach that
has also been followed by the DCFR64 and the Acquis Principles65.
63 Ibid. 120.
183
Chapter 4 Unfair Contract Terms
31 This decision does not allow the conclusion that agreements on jurisdiction are al-
ways prohibited.66 The ECJ also emphasized that this type of agreement belongs to the
terms contained in the list. One has to therefore remember that this list does not contain
terms which are always prohibited but rather only indicates terms which will have to be
assessed under the criteria in Art. 3(1) UTD. This would rather imply that the ECJ does
not entirely exclude the possibility for additional consideration by applying the general
clause. However, there is no doubt that the ECJ categorically states its view in relation to
the incompatibility between jurisdiction clauses and the principle of good faith.
32 The aforementioned view gives rise to a number of questions on theoretical as well as
practical aspects. Can the ECJ fill a concept such as good faith with content that is gen-
erally binding across the EU? Since the legislator uses wording such as good faith in or-
der to ensure flexibility when applying the law, is it therefore possible to substantiate the
principle with the same content for the whole of the EU? The content of good faith
strongly depends on extra-legal rules which an individual society strives to respect and
which are considered as the glue holding the society together.67 The use of these princi-
ples therefore rather implies that the European legislator wanted to create a scope allow-
ing the inclusion of local values. Consequently, the examination of unfairness has to take
place in accordance with such values. The harmonization of law in Europe does not and
shall not mean that it will eliminate the cultural diversity in Europe. However, cultural
diversity also plays a role in relation to contractual relationships and therefore gains in-
direct legal relevance. The principle of good faith therefore serves as a door allowing this
diversity to flow into harmonized and uniform law. In this sense the ECJ went too far in
its decision in Océano. However, this theoretical problem does not just arise from the
decision in this case:68 if the approach were correct the ECJ would be faced with the con-
siderable problem of a multitude of preliminary rulings – each control of terms in Euro-
pe would give rise to the question of interpreting good faith from a European perspec-
tive. This would ultimately paralyse the Court, permanently.
33 The ECJ did, however, soon recognize the problems emerging from its decision in
Océano. This can be seen in a subsequent decision in the clear (though not stated) dis-
tancing from the substantive aspects of the control of terms. The German Federal Court
of Justice (Bundesgerichtshof; BGH) posed the following question to the ECJ in Freiburg-
er Kommunalbauten:
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ence’ in Wilhelmsson/Paunio/Pohjolainen (eds), Private Law and the Many Cultures of Europe (Kluwer
2007) 189; Markesinis/Unberath/Johnston, The German Law of Contract (2nd edn, Hart 2006) 119 et seq.
68 See Zoll, ‘Die Grundregeln der Acquis-Gruppe im Spannungsverhältnis zwischen acquis commun
184
IV. General clause and the list of unfair terms
One can clearly see that the decision is incompatible with Océano. The ECJ empha-
sized in Freiburger Kommunalbauten that it does not have the competence to assess the
contract term in light of the principle of good faith.69 Additionally, it could not also sub-
stantiate the principle of good faith for the whole of the EU. However, the ECJ did at-
tempt to maintain the impression that in this respect there is no fundamental difference
between Océano and Freiburger Kommunalbauten. In its reference to Océano the ECJ
states that the term in this case was clearly unfair because it was ‘solely to the benefit of
the seller and contained no benefit in return for the consumer’70. On this basis it was
possible to determine the unfairness of the term without ‘having to consider all the cir-
cumstances in which the contract was concluded and without having to assess the ad-
vantages and disadvantages that that term would have under the national law applicable
to the contract’71. The ECJ therefore attempts to divide the terms into two categories:
firstly, terms that are so clearly in violation of the principle of good faith that they have
to be prohibited across Europe; this prohibition represents a part of the acquis commu-
nautaire. Secondly, those terms that are only ineffective at local level thereby European
law merely provides the framework for assessing the term.72
A problem exists in relation to criteria that are to be applied to defining the first 35
group of terms prohibited across the EU. The approach is, in principle, understandable
as the EU does have many common values, though at the same time there are of course
many differences at local level. In theory, one could imagine a system in which two dif-
ferent standards apply when interpreting the principle of good faith: good faith under
European and under national standards. In a technical sense this would mean that the
concept of good faith would partly belong to the acquis communautaire and partly to na-
tional law. However, this somewhat attractive notion of double content for good faith
could, from a practical perspective, hardly be realized as many unsolvable problems
would arise in relation to the boundaries between the terms ‘European’ and ‘national’
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content. The ECJ would be faced with numerous instances in which it would have the
exceptionally difficult task of determining the border between European and domestic
breaches of the principle of good faith. The term in Océano would breach the principle
of good faith and would therefore be unfair, whereas this jurisdiction clause in Freiburg-
er Kommunalbauten would be categorized as unfair without requiring an additional as-
sessment that should apply to the same extent in all Member States.
It is questionable whether a jurisdiction clause such as in Océano would always be un- 36
fair irrespective of all other circumstances. It is clear that such a clause particularly af-
fects those consumers who live far away from the place named in the term. Nonetheless,
it is not unlikely that the term does not present such a problem for those parties who live
close to the chosen jurisdiction and therefore the term must not necessarily be unfair. It
was precisely in this respect that ECJ softened its approach in later decisions. The Court
Océano Grupo, Freiburger Kommunalbauten, Leitner and Veedfalt’ (2005) HanseLR 6, 12.
185
Chapter 4 Unfair Contract Terms
held in Pannon that the national court is to determine whether a contract term (a juris-
diction clause) fulfils the criteria in order to be unfair under Art. 3(1) UTD.73 In so do-
ing the ECJ distanced itself further from its opinion in Océano, namely on the absolute
unfairness of a jurisdiction clause.
37
C–243/08 Pannon ECLI:EU:C:2009:350
It is for the national court to determine whether a contractual term, such as a term conferring juris-
diction, satisfies the criteria to be categorised as unfair within the meaning of Article 3(1) of Direc-
tive 93/13 on unfair terms in consumer contracts. In so doing, the national court must take account
of the fact that a term, contained in a contract concluded between a consumer and a seller or suppli-
er, which has been included without being individually negotiated and which confers exclusive juris-
diction on the court in the territorial jurisdiction of which the seller or supplier has his principal
place of business, may be considered to be unfair.
The Court’s treatment of a jurisdiction clause differs between Pannon and Océano.
There is a repeat of the Freiburger Kommunalbauten principle that it is for the national
courts to determine a breach of good faith, however Pannon refers again to the typical
unfairness of a jurisdiction clause (without this being understood as an automatic re-
sponse).
38 Recent decisions show that the ECJ has taken the middle ground between Océano and
Freiburger Kommunalbauten.74 In principle, no conclusive decisions are made as to the
unfairness of an individual term. However, the ECJ has made a very clear statement de-
termining the ‘European framework’ of good faith, as is illustrated by the decision in
Invitel:
which could supplement those provided by the general business conditions at issue, the reasons for,
or the method of, the amendment of the fees connected with the service to be provided are set out in
plain, intelligible language and, as the case may be, whether consumers have a right to terminate the
contract.
(…)
The ECJ expressly outlines the criteria by which the national court is to substantiate
the notion of good faith. However, the national court has to adapt this notion to the in-
dividual circumstances of the case with regard to national law and in accordance with
the ECJ criteria.75
39 The role of transparency is not to be underestimated in relation to the control of un-
fair terms, as is expressed in Unfair Terms Directive:
73 See C–243/08 Pannon ECLI:EU:C:2009:350 para. 32; see also C–472/10 Invitel ECLI:EU:C:2012:242.
74 Commentaries on European Contract Laws/Jansen, Art 6:201 mn. 15. However, Jansen accepts that the
ECJ lessens the role of the national courts.
75 For a detailed clarification of the principle of transparency in Polish law see Luzak, ‘Doprecyzowanie
zasady transparentności w polskim prawie konsumenckim’ (2020) 1 Studia Prawa Prywatnego 43–60.
186
IV. General clause and the list of unfair terms
The first sentence of Art. 5 anchors the principle of transparency: written terms must
always be drafted in plain, intelligible language. As according to the second sentence of
Art. 4(2), this is a positive requirement for the control of terms concerning the main per-
formance obligations.
Transparency is considered in the scope of the control of the content of the term. It 40
may first appear to be somewhat surprising as the plain language requirement rather in-
directly concerns the problem of a conscious decision, i.e. the problem of conclusion of
contract.76 However, the distinction between conclusion, stipulation of content, and per-
formance is less defined in modern contract law.77 At the same time, the law of unfair
terms is also relevant for a guarantee of fair market behaviour. The Unfair Terms Direc-
tive is thus characteristic for a European contract law tailored to mass contracting.
The consideration of transparency with regard to the control of content is expressed 41
in the ECJ decision Kásler:78
The decision in Kásler gives a very broad understanding to the principle of trans-
parency. It no longer concerns just the control of the clarity of the language but also cov-
ers the awareness of the risks and dangers arising from the term. The ECJ emphasizes:
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17–18.
77 Zoll, ‘Der immer werdende Vertrag’ in Stelmach/Schmidt (eds), Die Rolle des Rechts in der Zeit der
187
Chapter 4 Unfair Contract Terms
In light of this decision, the principle of transparency also acquires the task of pro-
tecting the consumer’s particular perceptions and expectations. An indirect effect of the
role of reasonable expectations is therefore apparent in this context.
42 The control of content does not extend to terms concerning the main subject matter
of the contract, as is clearly shown by Art. 4(2) UTD. It is therefore clear that it is not the
task for the Directive to examine the relationship between the price and counter-perfor-
mance. The Directive does not serve to ensure that the consumer concludes a cost-ef-
fective contract. Ensuring a ‘just price’ (iustum pretium) is a task for the market, not the
courts.79 Such notion is however influenced from the standpoint of a sales contract – the
greater the distinction between this form of contract and the contract concluded the
most difficult it is to separate the main and ancillary obligations.
43 The difficulties in distinguishing between main and ancillary obligations are exempli-
fied by the 2007–2008 financial crisis, namely the control of contracts for financial prod-
ucts. The description of the performance was either complicated or contained factors
that were often of a speculative nature. The inherent risks for the consumer became
manifest through the crisis and resulted in extensive litigation, as is illustrated by the
ECJ decision in Kásler:
It is clear that the concept of main performance obligations is narrowing. One has to
consider that the main performance obligations often lack transparency in complex con-
tracts.80 As such, the problem of a doctrinal marginalization of such terms is less acute.
44 Interpretation of the term is necessary in order to allow examination. The Unfair
Terms Directive contains only the principle of a consumer-friendly interpretation:
79 See, however, Commentaries on European Contract Laws/Jansen, Art 6:205 mn. 1, 7 et seq. Jansen
maintains that it is not obvious that the terms on main performance obligations are not subject to control.
80 e.g. the decision in C–125/18 Gómez de Moral Guasch ECLI:EU:C:2020:138 in which the ECJ ex-
pands on Käsler and holds in para. 51 that ‘the term in question must be formally and grammatically intel-
ligible to the consumer, but also that an average consumer, who is reasonably well-informed and reason-
ably observant and circumspect, is in a position to understand the specific functioning of the method used
for calculating that rate and thus evaluate, on the basis of clear, intelligible criteria, the potentially signifi-
cant economic consequences of such a term on his or her financial obligations’.
188
IV. General clause and the list of unfair terms
The approach reflects a traditional rule in the control of terms81 – the consumer shall 45
also be protected via interpretation. However, the European legislator has also recog-
nized that the principle of a consumer-friendly interpretation does not always have a
positive effect on the consumer. In an in abstracto approach82 to the control of terms, the
interpretation that is (theoretically) more advantageous to the consumer would often
have the consequence that a term could be considered effective and could endanger con-
sumer interests, whereas a restrictive interpretation could classify the same term as un-
fair.83
The ECJ decision in Commission v Spain concerned the question whether the Unfair 46
Terms Directive is implemented incorrectly if national law does not include the reserva-
tion in Art. 5(2) that excludes the consumer-friendly interpretation in assessments in ab-
stracto.
The failure to correctly transpose the Unfair Terms Directive is, however, harmless.
The problem of potential consumer-unfriendliness of a supposed consumer-friendly in-
terpretation is also posed in an incidental process. Consequently, it is suggested to con-
duct a dual process combined with a control of the content of the term. The first step is
to conduct a consumer-unfriendly interpretation of the content: the term is rendered in-
effective if it proves to be unfair. Should the term withstand such interpretation, the sec-
ond step is to subject the term to a consumer-friendly interpretation.84 It is for this rea-
son that the consumer-friendly interpretation has to be distinguished from an interpre-
tation that is ultimately, in consideration of the content, more advantageous for the con-
sumer. The decision in Commission v Spain would be incorrect if one were to follow this
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Chapter V § 3.III.
84 Ulmer in Ulmer/Brandner/Hensen, AGB-Recht (12th edn, Otto Schmidt 2016) § 5 mn. 7–8.
85 Gorzko, ‘Transformacje Prawa Prywatnego’ (2013) 1 ISSN 1641–1609, Do Wyroku Europejskiego
Trybunału Sprawiedliwości z Dnia 9 Września 2004 r. w Sprawie Komisja UE Vs. Królestwo Hiszpanii
C-70/0 7, 19.
189
Chapter 4 Unfair Contract Terms
that the contract shall continue to bind the parties upon those terms if it is capable of continuing in
existence without the unfair terms.
The European legislator proceeds from the principle that the unfair term will not
bind the consumer. The sanction is asymmetric as the business may not invoke the non-
binding nature of the term.86 The contract shall continue to remain in existence as far as
it is able to do so without the unfair term. The European legislator seeks to avoid the
ineffectiveness of the entire contract and, consequently, the loss of the performance de-
sired by the consumer.
48
C–260/18 Dziuback ECLI:EU:C:2018:819
4. Article 6(1) of Directive 93/13 must be interpreted as precluding unfair terms contained in a con-
tract from being upheld where their removal would entail that contract being annulled and the court
takes the view that that annulment would give rise to unfavourable effects for the consumer, if the
latter has not consented to them being upheld.
The decision in Dzuiback clearly shows the asymmetry in the sanction. The ECJ nev-
ertheless views unfair terms (without which the contract cannot be maintained) as non-
binding even where this would have unfavourable effects for the consumer. However, the
consumer has the right to subsequently consent to the term and thus to uphold the con-
tract. In such cases, the effectiveness of the contract rests on the consumer’s decision.
49
C–452/18 Ibercaja Banco ECLI:EU:C:2020:536
1. Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts
must be interpreted as not precluding a term in a contract concluded between a seller or supplier and
a consumer, which might be found by a court to be unfair, from being the subject of a novation agree-
ment between that seller or supplier and that consumer, whereby the consumer waives the effects that
would result from that term being found to be unfair, provided that that waiver is the result of the
consumer’s free and informed consent, which it is for the national court to verify.
2. Article 3(2) of Directive 93/13 must be interpreted as meaning that a term in a contract concluded
between a seller or supplier and a consumer for the purpose of amending a potentially unfair term in
a previous contract concluded between them or for the purpose of dealing with the consequences of
that other term being unfair may itself be regarded as not having been individually negotiated and,
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Ibercaja Banco further develops the essence of the decision in Dzuiback by setting the
limits on the parties’ decision to determine the fate of the contract. The parties may de-
termine their contractual relationship through a novation agreement, even if the con-
tract contained an unfair term. Such subsequent agreements are, however, subject to
limitations: in principle they may be subject to control unless the amendment to the un-
fair term was not individually negotiated. However, the opposite is to be presumed.
50 It is in this context that the question arises whether European law prohibits the so-
called ‘preservative reduction’, whereby the court is permitted to reduce the unfair term
to legally-acceptable content (even if such content presents a disadvantage to the con-
sumer). This question formed the basis of two ECJ decisions. The Court expressly ex-
cluded the possibility of ‘preservative reduction’ in its decision in Banco Español de
Crédito SA.
86 Pfeiffer in Wolf/Lindacher/Pfeiffer (eds), AGB-Recht Kommentar (6th edn, C.H. Beck 2013) Part 7
Art. 6 mn. 3.
190
IV. General clause and the list of unfair terms
The approach does not solve the problem. The ECJ has rejected a preservative reduc- 52
tion even if it could aid the consumer. The Court can nullify the entire contract if this is
in the consumer’s interest despite it being technically possible to maintain the contract,
as can be seen in the decision in Pereničová.
void as a whole where that will ensure better protection of the consumer.
Dziuback concerned the question whether national law can replace a non-binding 53
unfair term using general principles, e.g. whether the national court may use the princi-
ple of good faith to fill the gap created by a term that is no longer binding.
The Court correctly recognized that the case would concern a variation on preserva- 54
tive reduction. Deciding differently would have the effect that the consumer could not
191
Chapter 4 Unfair Contract Terms
predict the effect of the contract at the time of its conclusion. This would also contradict
the essence of the principle of transparency.
55 Many ECJ decisions concern the question of the procedural enforceability of the con-
trol of unfair terms, namely the extent to which the Court should protect the passive
consumer. The Court has emphasized on numerous occasions the principle of ex officio
control even when the national provisions proceed from the requirement of active be-
haviour. A number of decisions relate to the different stages in the procedure.88
56 Océano is the first decision in the series. The case concerned the question whether the
court had jurisdiction over a payment order as the consumers were not domiciled in its
jurisdiction.
The decision has an extensive effect on national law. It thus demands an extensive in-
terpretation of national law in conformity with EU law in order to ensure that the con-
sumer does not lose the protection afforded by substantive law.
57 A similar decision can be seen in Mostaza Claro. The case concerned the effectiveness
of an arbitration clause that was not objected to in arbitration proceedings.
The ECJ required the national court to examine the arbitration clause even where the
consumer has been inactive. The protection afforded to the consumer should not suffer
as a result of solutions based on procedural economy.
58 Furthermore, the ECJ did not exclude the examination of a term in enforcement pro-
ceedings. However, in this case the rules of procedure in the Member State procedural
law must have the possibility for similar (domestic) actions to be assessed.
88 See also Reich et al., European Consumer Law (2nd edn, Intersentia 2014) 161–162.
192
IV. General clause and the list of unfair terms
sequences thereby arising under national law, in order to ensure that the consumer is not bound by
that clause.
The Unfair Terms Directive also stipulates a duty for the Member States to provide an 59
abstract examination procedure in order to prevent the continued use of unfair terms.
The Directive does not specify a particular form of this procedure at national level 60
but rather only outlines the minimum requirements for such a procedure (Art. 6(2)).
However, in Invitel the ECJ had to answer the question whether it would be in breach of
the Directive if decisions from such proceedings were binding in general.
such proceedings, national courts are required, of their own motion, and also with regard to the
future, to take such action thereon as is provided for by national law in order to ensure that con-
sumers who have concluded a contract with the seller or supplier to which those general busi-
ness conditions apply will not be bound by that term.
The ECJ made the correct decision that European law does not prevent such an effect.
The requirement of such an effect would, however, be an over interpretation of this deci-
sion.89 More recently, doubts were raised in Biuro podróży whether it is possible to ex-
tend a decision declaring unfair terms unlawful to all consumers who have concluded a
contract containing the same terms but with a different seller or supplier who was not a
party to the proceedings giving rise to the declaration that the terms in question were
unfair.
89 Mathiak, ‘Anmerkung zum Urteil des EuGH v. 26.4.2012, Rechtswirkung der Feststellung der Miss-
193
Chapter 4 Unfair Contract Terms
61 The acquis communautaire does not just contain rules concerning the regulation of
unfair terms in B–C contracts but also provides for the control of terms in B–B con-
tracts, however to a much more limited extent. The Late Payment Directive 2000 already
outlined the control of an agreement on an excessive deferral of the payment period;90
such control applied irrespective of whether the term was individually negotiated.91 This
system has been adopted and extended by the new Late Payment Directive. Art. 7 Late
Payment Directive compels the Member States to provide that such contract terms or
practices relating to the date or period for payment, the rate of interest for late payment
or the compensation for recovery costs, will either be unenforceable or will give rise to a
claim for damages if they are grossly unfair to the creditor. One can therefore observe
that the Late Payment Directive contains an entirely different system of control than is
provided under the Unfair Terms Directive. Contract terms are controlled in a similar
manner to practices between the parties. The abuse of freedom of contract is placed on a
level of prohibited behaviour in the sense of the Unfair Commercial Practices Directive,
which also conveys the departure from the traditional understanding of contract. The
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450–454.
194
VI. Acquis Principles
The Acquis Principles serve to provide a structure and create internal coherency 63
within the acquis communautaire,94 therefore it is not surprising that the structure of its
control of terms was strongly based on the Unfair Terms Directive. The Directive was
not simply copied as other directives (e.g. the 2000 Late Payment Directive) were also
considered when devising the system for the Acquis Principles. In addition, attention
was also paid to legislation from the Member States – the inspiration from the German
law on standard terms is readily apparent. Moreover, the method adopted by the Acquis
Group was also applied in order to propose generalizations of EU rules that, although
narrowly worded, have extendable content. Although the Unfair Terms Directive is a
part of European consumer law, the problem of controlling contract terms is not just li-
mited to consumers – freedom of contract can also be compromised in relation to other
parties. The Acquis Principles have taken this into account by extending the scope of the
control of contract terms to include B–B and B–C contracts as well as other contracts
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
(e.g. between businesses and parties who are neither a business nor a consumer, such as
non-profit associations). However, it does not mean that the control adopts the same cri-
teria in each of these situations and that the party’s status is ultimately irrelevant.
The Acquis Principles also adopt the model in the Unfair Terms Directive by includ- 64
ing the control of single-use terms and thereby greatly reducing the importance of stan-
dard terms in this set of rules. Standard terms only play a role in relation to a battle of
the forms between the parties (Art. 6:204 ACQP).95 The Acquis Principles are also based
on the Directive as they only subject non-negotiated terms to control (Art. 6:301 AC-
QP). However, extending the control to contracts other than B–C contracts is more than
merely extending the scope of the Unfair Terms Directive. As has been shown, the no-
tion of controlling terms of B–B contracts is not alien to the acquis communautaire due
to the Late Payment Directive and now in part throught the Platform Regulation.96 The
94 See Contract II/Dannemann, Introductory Part vi, xxv; see also Zoll, ‘Unfair Terms in the Acquis
Principles and Draft Common Frame of Reference: A Study of the Differences between the Two Closest
Members of One Family’ (2008) Juridica International 69.
95 This ‘Grey-Rule’ is taken from Art. II.–4:209 DCFR.
96 See Chapter 2 mn. 129 et seq.
195
Chapter 4 Unfair Contract Terms
criteria concerning the control under the Late Payment Directive have therefore also in-
fluenced the corresponding criteria in the Acquis Principles.
65 The Acquis Principles structure the control in accordance with the traditional ap-
proach, namely by providing for control in relation to three different aspects: inclu-
sion97, interpretation98 and, most importantly, content99.
66 Art. 6:201 ACQP concerns the control surrounding the inclusion of standard terms
which is indeed explained by a long tradition in the individual legal systems, but one
which has not been adopted by the Unfair Terms Directive. The Acquis Principles at-
tempt – in a rather traditional manner – to clearly separate the control of inclusion from
the control of content,100 whereas the Unfair Terms Directive has followed a different
path. This distinction is demonstrated when one compares Art. 6:201 ACQP with point
(1)(i) of the Annex to the Unfair Terms Directive. According to Art. 6:201(4) ACQP,
terms are not binding on a consumer if it has not had a real opportunity to become ac-
quainted with the terms before the conclusion of the contract. The concept employed by
the Unfair Terms Directive means that this problem is shifted to the control of content –
this conclusion is rather implied by the Directive as it is only drawn from point (1)(i) of
the Annex and the absence of provisions on inclusion.
pands on this requirement by providing that the terms are to be made available to the
other party in text form if the contract is to be concluded by electronic means. Stricter
requirements are provided if the customer is a consumer. In this case, the effective inclu-
sion depends on the real opportunity to become acquainted with the terms before the
contract is concluded (Art. 6:201(4) ACQP).
68 Art. 6:201 ACQP on inclusion reflects the problems that are caused by the departure
from the concept of standard terms. Controlling the inclusion of terms is only sensible
when it is based on a particular phenomenon, such as standard terms. In this context,
there is the question of how contract terms devised for mass contracting become part of
the individual contract. In comparison there is no need to impose additional rules in re-
spect of single-use clauses. The Acquis Principles therefore show the uncertainties un-
derlying the development in this area of law. The control of contract terms is based on a
196
VI. Acquis Principles
framework devised for standard terms although the standard terms characteristic is no
longer a criterion of the control.
The remaining parts of the Acquis Principles are closer to the structure from the fa- 69
miliar system under the Unfair Terms Directive. The differences arise in relation to the
extended scope of application to B–B contracts as well as to contracts in which it is not
necessary to qualify the status of the parties.
The centre of the system is formed by a general clause (Art. 6:301(1) ACQP),101 which 70
refers to criteria taken from the Unfair Terms Directive:102
According to this provision, a term is unfair when, contrary to good faith, it creates a 71
significant imbalance between the rights and obligations of the parties under the con-
tract to the disadvantage of the customer. In contrast to the Unfair Terms Directive, this
provision shall not just apply to consumer contracts. The general clause will be applied,
unchanged, to contracts in which the customer is neither a consumer nor a business. An
exception applies to B–B contracts in the application of an additional criterion for un-
fairness that is inspired by the Late Payment Directive: the gross deviation from good
commercial practice:103
In contrast to the Late Payment Directive,104 the deviation from ‘good commercial
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practice’ has become an additional, but independent criterion. This additional require-
ment serves to clarify that the examination of the unfairness of a term in a B–B contract
has to be more restrained because it is essential to retain more drafting flexibility in B–B
contracts.
One can nevertheless not neglect the differences between the different types of con- 72
tract parties. The Acquis Principles provides two lists of prohibited terms in consumer
contracts: the grey (Art. 6:305 ACQP) and the black (Art. 6:304 ACQP) lists. The black
list only contains one term, which was motivated by the decision in Océano.105 It serves
as an example of how a system could look if it were to include a black list. The approach
in the Acquis Principles concerning control of terms in other types of contracts is based
on a general clause, though the three different types of contract covered in these Princi-
197
Chapter 4 Unfair Contract Terms
ples are each subject to a slightly different control. Terms in B–C contracts are subject to
the application of a general clause as well as a grey (which is somewhat surprisingly la-
belled as an ‘indicative list’) and black list of prohibited terms.106 The control of content
in B–B contracts is undertaken on the basis of a general clause, which is however distin-
guished by stricter criteria of unfairness. Furthermore, neither the grey nor the black list
of prohibited terms applies to B–B contracts. The general clause will apply to other con-
tracts, though without the application of the ‘gross deviation from good commercial
practice’. However, both lists of prohibited terms will also not be used here in order to
substantiate the general clause.
VII. DCFR
73 The parts of the DCFR based on the acquis communautaire are related to the text of
the Acquis Principles and have generally been drafted on the basis of the same method,
i.e. to reflect and structure EU law.107 The text of Acquis Principles thus served as a basis
for the corresponding provisions in the DCFR but one can nevertheless identify striking
differences between the two texts. The basic structure is initially similar: control of in-
clusion and content of the terms. At first glance it would appear that – barring editorial
differences – the content of Art. II.–9:103 DCFR is almost identical in content to
Art. 6:201 ACQP. This presumed similarity is misleading as considerable differences be-
tween the texts become apparent on closer examination of the provisions. The DCFR
contains two quite detailed provisions concerning the duty of transparency, i.e. the duty
to supply non-negotiated terms in clear language (Art. II.–9:402 DCFR), and the factors
to be taken into account in assessing unfairness, in particular the absence of a real op-
portunity for a consumer to become acquainted with the terms before the conclusion of
contract (Art. II.–9:407(2) DCFR).
74 The Acquis Principles also contain a transparency requirement (Art. 6:302 ACQP),
but drafted in a very general manner without outlining sanctions for breach. In compari-
son, the DCFR expressly considers the duty of transparency as an aspect of the control of
content; this can be seen in the wording of Art. II.–9:401(2) DCFR. This provision deter-
mines that just a breach of the duty of transparency can lead to the unfairness of a term
in a consumer contract.108 It is apparent from Art. II.–9:407 DCFR that, in light of the
circumstances prevailing during the conclusion of the contract, a further point of con-
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sideration for the unfairness of a term in a B–C contract is whether the consumer had a
real opportunity to become acquainted with the term.109 This provision can be traced
back to the concept of presumed unfairness descended from the Unfair Terms Direc-
tive110 and which wants to derive the unfairness from the lack of an opportunity to be-
come acquainted with the term. The heart of the control of contract terms in the DCFR
is shifted to the control of content. Here these aspects will also be considered which do
not directly concern the relationship between the rights and obligations between the
consumer and the business, but extend beyond this to also include aspects related to the
customer’s decision-making process. The potential possibility for the customer to be-
15, in which Ben-Shahar views that the consumer does not want to read the terms so that improved access
to the terms would not actually increase the consumer's knowledge.
110 Recital 20 UTD.
198
VII. DCFR
come acquainted with the content and meaning of the term, as well as the extent of the
possibilities to influence the content, shall be relevant under this system when assessing
the fairness of the term. The editors of the DCFR could not come to an agreement as to
whether negotiated terms should be subject to control, at least in consumer contracts.
This indecisiveness is clear from the parenthesis used in Art. II.–9:403 DCFR.111 How-
ever, the DCFR’s system in consumer law rather appears to tend to give greater protec-
tion to the freedom to make decisions and individual responsibility, and does not solely
examine the content of contractual rights and duties on the basis of an objective exami-
nation. Nonetheless, the DCFR also includes the general presumption that the term of a
consumer contract was not individually negotiated (Art. II.–1:110(4) DCFR). One can
see a difference between the DCFR and the content of the Unfair Terms Directive, which
only links such a presumption with the use of standard contract terms.112 The DCFR
therefore also differs from the Acquis Principles as these have followed the Directive in
this respect (Art. 6:101(4) ACQP).113
Surprisingly, the DCFR has – in contrast to the Acquis Principles – restricted the con- 75
trol of terms in non-consumer contracts just to the standard terms, i.e. contract terms
drafted in advance for multiple transactions (Art. II.–9:404, Art. II.–9:405 in conjunc-
tion with Art. II.–1:109 DCFR). The systems of control in and outside of consumer law
are therefore underpinned by different principles and values even though both systems
are partly served by the same or similarly worded provisions.
Furthermore, the DCFR makes distinctions within the control of standard terms. 76
Both general clauses are distinguished by the additional requirement of deviation from
‘good commercial practice’ introduced for B–B contracts.
A term in a contract between businesses is unfair for the purposes of this Section only if it is a term
forming part of standard terms supplied by one party and of such a nature that its use grossly devi-
ates from good commercial practice, contrary to good faith and fair dealing.
The additional criterion shall express that the control in B–B contracts is to consider
the necessary drafting scope that must be retained in such types of contract. The DCFR
follows the Acquis Principles in this respect.114
The DCFR also adopts a similar approach to the Acquis Principles by including two 77
lists of prohibited terms: the grey (Art. II.–9:410 DCFR) and the black list (Art. II.–9:409
DCFR). The latter contains (as the Acquis Principles) just one prohibited term. However,
111 Stuyck, ‘Unfair Terms’ in Howells/Schulze (eds) Modernising and Harmonising Consumer Contract
B–C contracts, although for B–B contracts the use of standard terms is relevant for determining that there
has not been a neogitation.
114 Stuyck, ‘Unfair Terms’ in Howells/Schulze (eds) Modernising and Harmonising Consumer Contract
199
Chapter 4 Unfair Contract Terms
these two lists are only applicable to consumer contracts. The DCFR and Acquis Princi-
ples are therefore identical in this respect, also.
VIII. Reform
78 The 2007 Green Paper on the Review of the Consumer Acquis also included the con-
trol of contract terms.115 The Commission debated whether to just maintain the indica-
tive list of prohibited terms or whether to supplement the general clause with a black (al-
ways unfair) or a grey (presumed unfair) list or with both lists. Furthermore, the Com-
mission sought to examine the scope of the unfairness test: should the test also encom-
pass negotiated terms or should the status quo be maintained, i.e. only non-negotiated
terms can be assessed under the Unfair Terms Directive? The Commission also consid-
ered an extension to the unfairness test. Under the Unfair Terms Directive (which is re-
flected in the DCFR and Acquis Principles) terms will be excluded from the unfairness
test if they cover the main subject matter of the contract, unless they are not in plain
intelligible language (Art. 4(2) UTD). The control of the price : performance ratio
should be left to the market. However, it is exceptionally difficult in practice to separate
the terms on the main subject matter from the additional provisions.116 Furthermore, for
several contracts (e.g. for insurance117) this results in – from a policy perspective – an
undesirable limitation on the extent of the unfairness test. Consequently, the Commis-
sion considered abolishing this requirement.
79 However, the Commission above all considered a step concerning a general question
of EU consumer law, but which would have had considerable impact on the control of
contract terms. The Commission posed the question whether the future consumer law
should be regulated on the basis of a fully harmonizing directive. The consequence of
this approach for the Member States would be the withdrawal of the scope to determine
the level of consumer protection: national legislators could no longer provide rules more
protective than foreseen in the relevant European directive. The control of contract
terms is however a part of national contract law and does not exclude the traditional na-
tional instruments concerning the content of contract – good morals, principles of good
faith and other comparable standards determine the general boundaries of contractual
freedom in many legal systems. The full harmonization of the control of contract terms
would cast considerable doubt on the extent to which the national legislator should lose
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
the competence to independently regulate its own national contract law. Restricting the
control to non-negotiated terms would lead to the paradox that the national legislator
could introduce more restrictive measures on negotiated terms as these would fall out-
side of the scope of harmonized EU law. The concept of full harmonization affecting
core parts of contract law has therefore proven not to be ripe enough for implementation
in practice.
200
X. CESL
X. CESL
The content of the control of contract terms in the proposed CESL resembles most of 81
all the corresponding content of the Acquis Principles.122 However, the presumptions of
non-negotiation as well as the clear integration of a transparency requirement in this
proposed CESL system were more greatly influenced by the DCFR.123 The inclusion test
is regulated in Art. 70 CESL–D, this overlaps entirely with the rule in Art. 6:201 AC-
QP.124
Article 70 CESL
Duty to raise awareness of not individually negotiated contract terms
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(1) Contract terms supplied by one party and not individually negotiated within the meaning of Ar-
ticle 7 may be invoked against the other party only if the other party was aware of them, or if the
party supplying them took reasonable steps to draw the other party’s attention to them, before
or when the contract was concluded.
(2) For the purposes of this Article, in relations between a trader and a consumer contract terms are
not sufficiently brought to the consumer’s attention by a mere reference to them in a contract
document, even if the consumer signs the document.
(…)
gen’ in Jud/Wendehorst (eds), Neuordnung des Verbraucherprivatrechts in Europa? (Manz 2009) 143–144.
122 Schulze CESL/Kieninger, Art. 70 CESL mn. 3.
123 Ibid. mn. 2.
124 On the inclusion in the CESL see Möslein, ‘Kontrolle vorformulierter Vertragsklauseln’ in Schmidt-
Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 255, 274; Schmidt-Kessel CESL/
Looschelders/Makowsky, Art. 70 CESL; see also Schulze CESL/Kieninger, Art. 70 CESL mn. 2.
201
Chapter 4 Unfair Contract Terms
82 The proposed CESL distinguishes between the control in B–C contracts (Art. 83
CESL)125 and the control in B–B contracts (Art. 86 CESL),126 and thereby covers all the
circumstances covered in the CESL’s proposed personal scope of application (Art. 7(1)
CESL-Reg127). However, non-negotiated terms are not subject to the test,128 thus the pro-
posal has not adopted the DCFR approach on this issue. In addition, single-use terms in
B–B contracts may also be subject to control (Art. 86(1)(a) CESL). The notion of stan-
dard terms does not play a role if one does not abstain from presuming the non-negotia-
tion of standard terms. The requirement of non-negotiated terms is also maintained in
B–C contracts (Art. 83(1) CESL). Both groups exclude contract terms on the main sub-
ject matter of the contract from control unless the trader has not complied with the duty
of transparency (Art. 80(2) CESL).129 In comparison with the Unfair Terms Directive,
the DCFR and the Acquis Principles, the rule was only revised in order to create a re-
strictive interpretation of the exception.
83 The core of the test comprises the general clauses (Art. 83 and 86 CESL)130, which are
regulated separately for both groups of contracts (B–B and B–C).
Article 83 CESL
Meaning of ‘unfair’ in contracts between a trader and a consumer
(1) In a contract between a trader and a consumer, a contract term supplied by the trader which has
not been individually negotiated within the meaning of Article 7 is unfair for the purposes of
this Section if it causes a significant imbalance in the parties’ rights and obligations arising un-
der the contract, to the detriment of the consumer, contrary to good faith and fair dealing.
(2) When assessing the unfairness of a contract term for the purposes of this Section, regard is to be
had to:
(a) whether the trader complied with the duty of transparency set out in Article 82;
(b) the nature of what is to be provided under the contract;
(c) the circumstances prevailing during the conclusion of the contract;
(d) to the other contract terms; and
(e) to the terms of any other contract on which the contract depends.
Article 86 CESL
Meaning of ‘unfair’ in contracts between traders
(1) In a contract between traders, a contract term is unfair for the purposes of this Section only if:
(a) it forms part of not individually negotiated terms within the meaning of Article 7; and
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(b) it is of such a nature that its use grossly deviates from good commercial practice, contrary
to good faith and fair dealing.
(2) When assessing the unfairness of a contract term for the purposes of this Section, regard is to be
had to:
(a) the nature of what is to be provided under the contract;
(b) the circumstances prevailing during the conclusion of the contract;
(c) the other contract terms; and
(d) the terms of any other contract on which the contract depends.
in Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 255, 266; Schulze CESL/
Mazeaud/Sauphanor-Brouillaud, Art. 83 CESL.
128 Möslein, ibid. 267; Schmidt-Kessel CESL/Looschelders/Mankowsky, Art. 70 CESL mn. 1; Schulze
202
X. CESL
The significant imbalance between the rights and obligations of the parties which 84
arises in B–C contracts to the detriment of the consumer, contrary to good faith and fair
dealing, is the decisive criterion for classifying a term as unfair.131 The provision is not as
specific for B–B contracts (no reference to a significant imbalance) but there is the addi-
tion of gross deviation from good commercial practice. The DCFR and Acquis Princi-
ples once again serve as a model for more restricted control in B–B contracts in order to
afford businesses greater freedom when drafting contracts.132
The wording of the general clause in Art. 83(1) CESL–D varies from the correspond- 85
ing provisions in the Unfair Terms Directive (Art. 3), the Acquis Principles
(Art. 6:301(1) ACQP) and the DCFR (Art. II.–9:404 and Art. II.–9:405). The general
clause in the new proposal refers more to the contract as a whole rather than a specific
term. However, it is to be doubted whether this distinction (which could theoretically
allow for less restricted consideration of the terms to be controlled) could actually lead
to lower consumer protection in practice. Two lists are again foreseen for B–C contracts:
a black (Art. 84 CESL)133 and a grey (Art. 85 CESL)134 list. However, the black list is
much longer than its counterparts in the DCFR and Acquis Principles.135
The control of terms in the proposed CESL did not expanded on several of the 86
DCFR’s innovative approaches (e.g. the control of terms of which the consumer was not
aware before the conclusion of the contract). In general, one has remained with the fa-
miliar and practiced solutions and therefore preserved several contradictions in the ac-
quis communautaire that have arisen in this area of law since the Unfair Terms Directive
was passed. In spite of this reserved approach the adoption of the CESL would have re-
sulted in a genuine revolution. It would have meant the creation of self-standing system
with its own requirement of fairness that, despite its optional nature, would have spread
across the whole of European law. This would have represented an important step to-
wards independence of the acquis communautaire.
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131 Hellwege/Miller, ‘Control of Standard Contract Terms’ in Dannemann/Vogenauer (eds), The Com-
mon European Sales Law in Context (OUP 2013) 423, 452; Schulze CESL/Mazeaud/Sauphanor-Brouillaud,
Art. 83 CESL mn. 7.
132 Möslein, ‘Kontrolle vorformulierter Vertragsklauseln’ in Schmidt-Kessel (ed), Ein einheitliches euro-
mn. 4–11.
135 Schulze CESL/Mazeaud/Sauphanor-Brouillaud, Art. 84 CESL mn. 3.
203
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CHAPTER 5
PERFORMANCE OBLIGATIONS
Literature: von Bar/Clive (eds), DCFR Full Edition (Sellier 2009); De Franceschi (ed), European Contract
Law and the Digital Single Market (Intersentia 2016); De Wit, ‘Duties of buyer and seller. Transfer of risk’
in Claeys/Feltkamp (eds), The Draft Common European Sales Law: Towards an Alternative Sales Law? (In-
tersentia 2013) 155; Jansen/Zimmermann (eds), Commentaries on European Contract Laws (OUP 2018);
Lorenz, Das Kaufrecht und die damit verbundenen Dienstverträge im Common European Sales Law (2012)
212 AcP 702; Research Group on the Existing EC Private Law (Acquis Group), Contract II – General Pro-
visions, Delivery of Goods, Package Travel and Payment Services (Contract II) (Sellier 2009); Schmidt-Kessel
(ed), Der Entwurf für ein Gemeinsames Europäisches Kaufrecht – Kommentar (Sellier 2014); Schulze (ed),
Common European Sales Law – Commentary (Nomos 2012); Twigg-Flesner, ‘Conformity of Goods and
Digital Content/Digital Services’ in Arroyo Amayuelas/Cámara Lapuente (eds), El derecho privado en el
nuevo paradigma digital (Marcial Pons 2020) 49.
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Fragmented regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. The development of a general conceptual basis . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Performance obligation and claim for performance . . . . . . . . . . . . . . . . . . . . . . . 6
4. Performance in long-term contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Forms of performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5. Counter-performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
III. Conformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
1. Basic features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2. Subjective criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3. Objective criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4. Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5. Installation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6. Integration into the digital environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7. Third-party rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8. Non-digital services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
IV. Modification and termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
1. Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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I. Introduction
1. Fragmented regulation
A contract founds the obligation for one or both parties to perform for the other or a 1
third party; the content of these obligations can be very diverse.1 The principle of free-
dom of contract – more specifically its form of freedom of content of contract – ensures
that it is primarily the parties who can determine the content of their contractual obliga-
tions. Freedom of contract is acknowledged in the laws of the Member States as well as
in EU contract law.2 Accordingly, mandatory rules in national law often only apply to
performance obligations in a limited number of circumstances. However, the laws of the
Member States contain extensive rules, in particular on the manner of performance
1 For an overview of the history and concept of performance see Commentaries on European Contract
131–132.
205
Chapter 5 Performance Obligations
(such as time and place) as well as default obligations in individual types of contract,
which supplement the parties’ contractual agreement should such terms not have been
specifically stipulated in the contract.3 In contrast to national laws the acquis commu-
nautaire does not contain a comparatively comprehensive set of rules on performance
obligations. Present EU contract law rather limits itself to a series of specific aspects that
are considered to be of great significance for the development of the internal market and
for further functions in the EU. Directives pursuing objectives such as the protection of
consumer or SMEs have indeed contributed to extending the scope of mandatory rules
in national law on performance obligations. Furthermore, despite the fragmented ap-
proach, the new European legislation on the supply of digital content and digital services
has strengthened the earlier approaches from consumer sales law4 in developing overar-
ching concepts for performance obligations and breach thereof.
veloped the acquis communautaire through the performance obligations in contracts for
the supply of digital content or digital services.7
3 bb) The CESL could also not take such developments into account. Nonetheless, it ex-
tended beyond the EU law at the time by attempting to integrate the supply of digital
content into its provisions on performance and breach. The structure proposed by the
CESL summarized the performance obligations for the delivery of goods and the supply
of digital content in its Part IV and for related services in its Part V. The provisions on
performance obligations in contracts for the supply of digital content are, however, de-
rived mostly from the corresponding provisions for sales contracts. These general rules
206
I. Introduction
for sales contracts (and contracts for the supply of digital content) and for related-ser-
vice contracts each follow provisions that determine the manner of performance and
specify the further requirements for conformity. In line with the approach in the CISG
these provisions on the respective contractual obligations for the parties are followed by
the rules on the remedies available to the other party in the event of non-performance.8
The catalogue of the seller’s main obligations forms the peak of the provisions for a sales
contract and contracts for the supply of digital content. ‘Main obligations’ expresses that
these obligations are characteristic for these types of contract but that it does not intend
to represent an exhaustive list of all of the seller’s obligations.9 The ‘main obligations’ un-
der Art. 91 CESL includes the obligation to deliver the goods or to supply the digital
content as well as the obligation to perform in conformity with the contract. Alongside
delivery (which under Art. 94(2) CESL requires the transfer of physical possession or
control), the ‘main obligations’ also include the transfer of ownership of goods, including
the tangible medium on which the digital content is supplied.
Article 91 CESL
Main obligations of the seller
The seller of goods or the supplier of digital content (in this part referred to as ‘the seller’) must:
(a) deliver the goods or supply the digital content;
(b) transfer the ownership of the goods, including the tangible medium on which the digital content
is supplied;
(c) ensure that the goods or the digital content are in conformity with the contract;
(d) ensure that the buyer has the right to use the digital content in accordance with the contract;
and
(e) deliver such documents representing or relating to the goods or documents relating to the digi-
tal content as may be required by the contract.
b) Legislation
The tendency in recent EU legislation to develop a general conceptual basis for per- 4
formance obligations has been partially influenced by the aforementioned set of rules,
but above all by the CISG. The Consumer Sales Directive already introduced the notion
of conformity, as modelled on the CISG,10 as a central concept in European consumer
sales law. However, its scope was limited (as also under the Sale of Goods Directive) to
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regulating the seller’s obligation to perform in conformity with the contract, whereas the
CISG also regulates the nature of the delivery obligation (Art. 31 et seq. CISG). Initially,
the seller’s delivery obligation in a consumer contract remained in the domain of nation-
al law until the Consumer Rights Directive (Art. 18 CRD). The delivery obligation and
the obligation to perform in conformity have thus become two concepts central to the
acquis in the field of sales law. The breach of both of these forms of a contractual obliga-
tion may be understood, in a broad sense, as non-performance of an obligation. How-
ever, a distinction can be drawn in light of the underlying obligations: failure to deliver is
a breach of the obligation to deliver or, in general, no performance whatsoever breaches
the obligation to perform (a non-performance in a narrow sense). In contrast, the per-
8 See De Wit, ‘Duties of buyer and seller. Transfer of risk’ in Claeys/Feltkamp (eds), The Draft Common
European Sales Law: Towards an Alternative Sales Law? (Intersentia 2013) 155.
9 ‘Main obligations’ are not the pendant to the notion of ‘fundamental non-performance’ of contractual
obligations. A breach of the main obligations under Art. 91 CESL will often be considered ‘fundamental’
under Art. 87(2) CESL, however this does not mean that the breach of such obligations will always be con-
sidered ‘fundamental’.
10 See Chapter 1 mn. 19.
207
Chapter 5 Performance Obligations
formance is not in conformity with the contract when the goods, albeit delivered, do not
correspond to the terms of the contract (or when a different type of performance does
not correspond to the contract terms; ‘non-conforming performance’). In this respect,
EU consumer sales law has developed a two-pronged approach to performance obliga-
tions and breach. This approach allows a distinction to be drawn between the conse-
quences of non-performance in the narrow sense and non-conforming performance.
5 More recent directives have adopted this conceptual basis for other areas outside of
consumer sales. One can thus see how concepts from sales law could outline core fea-
tures of a general European contract law. For example, Art. 13 PTD11 transfers the no-
tion of conformity to service contracts and its definition of ‘lack of conformity’ means a
failure to perform (i.e. non-performance) or the improper performance (i.e. non-con-
forming performance) (Art. 3 No. 13 PTD).12 Moreover, Art. 5 and 6 DCD contain pro-
visions on the supply obligation and the obligation to supply in conformity with the con-
tract. These provisions apply irrespective of the distinction between contract types and
in principle apply to all contracts for the supply of digital content or digital services. The
approach therefore removes the concepts from the context of sales law and turns them
into concepts that are not applicable to one specific type of contract. In other words, the
concepts reflect a general contract law.13 A similar development may also be observed
for the legal consequences of non-performance and non-conforming performance: the
Digital Content Directive generalizes principles and concepts from consumer sales law
to create an approach that does not distinguish between contract types. Whereas in con-
sumer sales law the delivery obligation and the obligation to perform in conformity are
each founded in two separate directives,14 the Digital Content Directive brings these two
forms of performance obligations (as well as the consequences of breach) together in one
set of rules.15 This results in a framework for European contract law in the area of per-
formance obligations and breach which, despite the fragmented rules, can make a sig-
nificant contribution to ensuring coherency in this field of law.
has not clearly decided between the continental-European legal tradition, which in prin-
ciple affords the injured party with a claim for performance in natura, and the Common
law, in which specific performance is a discretionary, equitable remedy.16 The CISG has
already paved the way to frame the claim for performance as a remedy (Art. 45 et seq.
CISG). The PECL continued this approach for European contract law – the claim for
11 On the notion of package travel, see C–400/00 Club Tour ECLI:EU:C:272 (the decision concerns the
Package Travel Directive (1990) but is still relevant in relation to the new version of the Package Travel
Directive).
12 See Chapter 6 mn. 9 et seq.
13 Schulze, ‘Supply of Digital Content. A New Challenge for European Contract Law’ in De Franceschi
(ed), European Contract Law and the Digital Single Market (Intersentia 2016) 127, 142–143; Schulze, ‘Die
Digitale-Inhalte-Richtlinie’ (2019) ZEuP 695.
14 On the one hand, in the Consumer Rights Directive and, on the other, in the Consumer Sales Direc-
(eds), Specific Performance in Contract Law: National and Other Perspectives (Intersentia 2008). See also
Chapter 6 mn. 53–54.
208
I. Introduction
performance is the first in a series of remedies (Art. 9:101, 9:102 PECL).17 Accordingly,
the performance obligations in European contract law can – even without a primary
claim for performance – form the basis for the (subsequent) performance as a remedy
alongside others (such as termination and price reduction). The acquis follows this ap-
proach for non-conforming performance in consumer sales law and also in the supply of
digital content or digital services. However, for non-performance in the narrow sense,
European consumer sales law only provides termination, not the claim for (subsequent)
performance.18 It is doubtful whether a claim for performance arises with regard to the
supply of digital content or digital services.19
in nature, for instance the Commercial Agents Directive, the Consumer Credit Direc-
tive, the Timeshare Directive and the Payment Services Directive.22 In addition, the Sale
of Goods Directive and the Digital Content Directive have further developed the notion
of long-term performance (especially with regard to conformity) by distinguishing be-
tween a ‘single act of supply or a series of individual acts of supply’ and ‘continuous sup-
ply over a period of time’.23 This distinction is relevant not only for the provisions on
conformity and liability for non-conformity but also for Art. 19 DCD, a provision specif-
ic to the modification of the digital content or digital service where it is supplied over a
period of time.24
17 See also Art. III.–3:301, III.–3:302 DCFR and Art. 155(1)(a) CESL.
18 For details see Chapter 6 mn. 24–25, 91 et seq.
19 See Chapter 6 mn. 56.
20 In particular, Art. 9:302 PECL concerning contracts to be performed in parts.
21 Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations
and administrative provisions of the Member States concerning consumer credit [1987] OJ L42/48.
22 For an overview see Heiderhoff, Europäisches Privatrecht (5th edn, C.F. Müller 2020) mn. 443–444.
23 See mn. 31.
209
Chapter 5 Performance Obligations
8 Provisions for contracts which provide for performance over a long period of time
therefore concern the performance obligations and breach as well as other matters such
as information duties and formal requirements.25 Such provisions often aim to protect a
party dues to the long-term nature of the contract and its burdens, which may well be
difficult to recognise. The academic sets of rules on European contract law paid particu-
lar attention to the specific features of such contracts when they are terminated by notice
(Art. III.–1:109(2) DCFR).26 However, it is necessary to draw attention to the other is-
sues as well as the development of common terminology and systematic classification:
different types of contract are used not only in contract practice but national legal tradi-
tions also vary. For example, German legal terminology distinguishes between frame-
work contracts (Rahmenverträge) for complex relationships, contracts for services to be
provided over a long period of time, and contracts for successive deliveries (Sukzes-
sivlieferungsverträge). The latter type of contract may concern the delivery in instalments
of a set amount (Ratenlieferungsvertrag) or the delivery of an indetermined total amount
over an indefinite period of time (echte Dauerschuldverhältnisse, or ‘genuine continuing
obligations’).27 The discussion surrounding such contracts also concerns the broader no-
tion of ‘relational contracts’ and the complex links between multiple long-term con-
tracts, namely ‘network contracts’.28 Further research on the differences between the dif-
ferent legal traditions and academic approaches will bring greater clarity to the nature of
long-term obligations in European contract law.
II. Performance
1. Overview
9 Art. 18(1) CRD and Art. 5 DCD play a highly significant role concerning the regu-
lation of performance obligations in specific areas of contract law covered by the acquis
communautaire. These provisions contain the central requirement for the trader to per-
form, i.e. to deliver the goods to the consumer or to supply the digital content or digital
service to the consumer. The provisions therefore not only determine a primary obliga-
tion under the contract but also serve as a basis for liability. Failure to perform this pri-
mary obligation constitutes non-performance in the narrow sense (in contrast to non-
conforming performance). Several provisions of other directives also concern the nature
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210
II. Performance
different forms of transfer of ownership under the laws of the Member States.32 In par-
ticular, concepts such as the consensus principle33 or the German law principles of ab-
straction and separation34 remained unaffected.35
2. Delivery
Art. 18(1) CRD is central to the performance of the delivery obligation in consumer 10
sales contracts. The provision applies when a good is to be delivered to the consumer
and applies in conjunction with Art. 5 et seq. SGD with regard to delivery of goods not
in conformity with the contract. Art. 18(1) CRD determines the scope of the delivery
obligation under the Directive together with the time and the nature of the delivery to
the buyer.36 In this respect, the provision combines the functions of a rule on delay and
non-performance. Art. 18 CRD also provides the legal consequences for non-delivery.37
3. Supply
Art. 5 DCD contains the obligation for the trader to supply the digital content or digi- 11
tal service.38 Whereas the performance obligations in European consumer sales law are
spread across the Consumer Rights Directive and Sale of Goods Directive, the Digital
Content Directive covers both the obligation to supply and the obligation to supply the
digital content or digital service in conformity with the contract. The Digital Content
Directive sets out the supply obligation in Art. 5 DCD before addressing conformity in
Art. 6 et seq. DCD. The first sentence of Art. 5(1) DCD concerns the supply obligation
itself, whereas the second sentence determines the point in time for the supply. Art. 5(2)
DCD contains the criteria for performing the supply obligation.39 In the event of non-
performance pursuant to Art. 5, Art. 11(1) and 13 DCD determine the trader’s liability
and list the consumer’s remedies, respectively. Although these provisions only apply to
consumer contracts, the underlying approaches and concepts are to be considered for
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31 On the notion of a contract of sale as an autonomous concept of EU law, C–247/16 Schottelius ECLI:
EU:C:2017:638 (preceding the Sale of Goods Directive); see Chapter 2 mn. 69. On the concept of seller in
EU law, C–149/15 Whatelet ECLI:EU:C:2016:840.
32 On these different models of transfer of ownership, as well as others, see Ferrari, ‘Vom Abstraktions-
prinzip und Konzensualprinzip vom Traditionsprinzip’ (1993) ZEuP 52; van Erp, ‘Comparative Property
Law’ in Reimann/Zimmermann (eds), The Oxford Handbook of Comparative Law (2nd edn, OUP 2019)
1031; van Erp/Akkermanns (eds), Cases, Materials and Text on Property Law (Hart 2012).
33 The transfer of ownership is part of the sales contract itself, as e.g. under French law.
34 Trennungs- und Abstraktionsprinzip, whereby the sales contract is separate from the transfer of own-
ownership.
36 The delivery obligation was previously outlined in Art. 7(1) Distance Selling Directive. See also mn.
14 et seq.
37 See Chapter 6 mn. 24–25, 88, 91 et seq.
38 Art. 5 DCD does not apply to a tangible medium which serves exclusively as a carrier of digital con-
211
Chapter 5 Performance Obligations
12 The provisions of the Digital Content Directive describe the notion of supply as the
specific form of the primary obligation to be performed by the supplier of the digital
content or digital service. Recital 41 refers to this obligation as ‘the main contractual
obligation’.41 Depending on the terms of the contract, the supply may be in the form of a
single act, a series of individual acts, or continuous over a period of time.42 Whereas the
Commission’s initial proposal, supply was defined as ‘providing access to digital content
or making digital content available’43, the final version of the Digital Content Directive
does not define the notion of supply or the obligation to supply in order to render the
Directive ‘future proof ’ vis-à-vis new technology. Supply should therefore be as broad as
possible in order to cover all forms of transfer and providing access. This includes, for
example, the supply on tangible media, downloading or streaming to the device, or
granting access to the use of social media.44 Digital content or digital services are always
the object of supply. According to Art. 2 No. 1 DCD, digital content means data pro-
duced and supplied in digital form. Under Art. 2 No. 2 DCD, digital services are either
services which allow the consumer to create, process, store or access data in digital form
or which allow the sharing of with data in digital form uploaded or created by the con-
sumer or other users of that service. Examples of digital content falling under the Digital
Content Directive include computer programmes, video files, audio files and e-books;
examples of digital services include services which allow the creation of, or storage of
data in digital form, including video and audio sharing, word processing, and social me-
dia.45
13 The Digital Content Directive therefore extends the performance obligation to ser-
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vice contracts falling within the Directive’s scope (Art. 3 DCD); other types of services
are excluded. According to Art. 3(5)(a) DCD, this also applies when a trader uses digital
means to produce the result of the service or to deliver or transmit the outcome to the
consumer (e.g. when an architect uses software to design a building or when a lawyer
sends a client digital copy of documents). At the same time, however, Art. 5 DCD clari-
fies that the performance obligation is not limited to sales contracts, but is rather based
40 Schulze, ‘Die Digitale-Inhalte-Richtlinie’ (2019) ZEuP 695, 702; see also Beale, ‘Scope of application
and general approach of the new rules for contracts in the digital environment’ (2016) 5, 26, available on-
line under https://op.europa.eu/en/publication-detail/-/publication/0cc9d941-c291-11e6-a6db-01aa75ed7
1a1 (last accessed 11 December 2020).
41 Whereas the Dutch, French and Spanish versions of the Directive use the expressions ‘voornaamste
contractuele verbintenis’, ‘la principale obligation’ and ‘la principal obligation’, respectively, the German ver-
sion of the recital refers to the obligation as ‘die wichtigste Vertragspflicht’, i.e. the most important contrac-
tual obligation (emphasis added).
42 See mn. 47 et seq.
43 Art. 2 No. 10 COM(2015) 634 final.
44 See Recital 19 DCD.
45 For further examples, ibid.
212
II. Performance
on an underlying concept that applies to service contracts and thus constitutes a feature
of general contract law.
4. Forms of performance
a) Overview
In addition to the basic obligation to perform, the laws of the Member States often 14
contain detailed rules concerning time, place, and manner of performance in order to
clearly determine the debtor’s performance obligations and the requirements for the
creditor’s remedies in the event of non-performance. The acquis communautaire also
contains a number of provisions on these matters (mostly in consumer sales law and for
the supply of digital content or digital services), though these do not form part of a com-
plete regulatory basis. In some instances the gaps in these rules may be filled by refer-
ence to general provisions and principles in the acquis communautaire, for instance good
faith and reasonable consumer expectations.46 Due to the incomplete nature of this area
of EU law, the Acquis Principles had to partly refer to the results of the comparative ap-
proach in the PECL and DCFR in order to close the relevant gaps.47 The proposed CESL
followed these drafts so that its chapters on obligations of the parties contain a broader
set of rules for the forms of performance. Admittedly, it was unable answer all questions
arising in relation to performance due to the many different types of clauses that exist in
practice.
to the consumer.50
bb) Art. 5 DCD does not contain an exhaustive list of types of supply or a general des- 16
cription in order to accommodate future technological possibilities.51 Nonetheless,
Art. 5(2) DCD states general criteria which determine whether and when a trader has
performed the obligation to supply. For this purpose, the criteria are underpinned by
notion that the supply obligation is performed when the digital content or digital service
has reached the sphere of the consumer and the trader need not undertake any further
action in order to allow the consumer to use the digital content or digital service in ac-
tive also include such clear language ‘transférant la possession physique’ and ‘physischen Besitz … überträgt’,
respectively.
49 Recital 51 CRD.
50 Zöchling-Jud, ‘Acquis-Revision, Common European Sales Law und Verbraucherrechterichtlinie’
213
Chapter 5 Performance Obligations
cordance with the contract.52 It is therefore decisive that the digital content or digital ser-
vice is made available or accessible to the consumer (or a physical or virtual facility cho-
sen by the consumer for that purpose).53 This provides the basis for the distinction be-
tween the performance of the supply obligation with respect to digital content and to
digital services.54
17 Art. 5(2)(a) DCD provides, in different respects, two alternative forms of perfor-
mance of the obligation to supply. Firstly, the digital content can either be the direct ob-
ject of supply or the supply refers to a ‘means’ that allows the consumer access to or to
download the digital content. For the first variant, the trader can, for example, install the
software on the consumer’s computer. With respect to the second variant, the notion of
‘means’ is to be understood broadly in accordance with the principle of medium neutral-
ity.55 For example, it comprises the use of social media or creating access to online plat-
forms where the digital content can be downloaded. Art. 5(2) DCD does not prioritise
the use of one variant over the other. The trader may therefore choose between either
method if the contract does not state otherwise or if one of the variants is not excluded
or, under the circumstances, is not unreasonable in light of the purpose of the contract
or the nature of the digital content.
18 Secondly, the digital content or the ‘means’ for access or downloading can either be
made available to the consumer (i.e. to the device) or to a ‘physical or virtual facility’
chosen by the consumer (e.g. an online platform or a cloud). It may suffice in such in-
stances for the trader to supply the digital content to this facility. The trader should not
be liable for acts or omissions by the third-party operator of such facility. The trader will
have therefore performed the obligation when the third party has received the digital
content.56 The key requirement for this second method of performance of the supply
obligation is, however, that the consumer has ‘chosen’ the physical or virtual facility for
that purpose. The choice of facility must be made by the consumer through a conscious
and autonomous decision. Accordingly, the consumer will not have selected the facility
where it has been offered by the trader as the only possibility to receive the digital con-
tent.57
19 Thirdly, Art. 5(2)(a) DCD distinguishes between ‘is made available’ and ‘[is made] ac-
cessible’ as methods to supply the digital content. ‘Is made available’ concerns situations
of permanent supply to the consumer. Similar to a sales contract, a degree of permanent
control over the digital content is transferred to the consumer.58 The trader can make the
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
digital content available by, for example, sending the consumer a link allowing the digital
content to be downloaded. In contrast, ‘is made accessible’ applies in situations in which
the consumer does not receive a permanent right but rather access for a particular peri-
od of time, for instance via a streaming subscription (e.g. for software, music, films, etc.).
the only choice offered to the consumer by the trader, the physical or virtually facility cannot be consid-
ered to be chosen by the consumer, ibid. See Sein/Spindler, ‘The new Directive on Contracts for the Supply
of Digital Content and Digital Services – Scope of Application and Trader’s Obligation to Supply – Part 1
(2019) ERCL 257, 277–278; EU Digital Law/Schulze, Art. 5 DCD mn. 26.
58 Wendland, ‘Sonderprivatrecht für Digitale Güter’ (2019) ZVglRWiss 191, 208.
214
II. Performance
Unlike ‘is made available’, where the permanent nature allows for a sales contract analo-
gy, making the digital content ‘accessible’ is better compared with a hire agreement due
to the consumer’s temporary right of use. In this respect, the inclusion of this method of
performance underlines the importance of a right of use (which has received little atten-
tion in European legislation) alongside sale and services (in a narrow sense) for Euro-
pean contract law.59
In contrast, according to Art. 5(2)(b) DCD, the trader can only perform the obliga- 20
tion to supply digital services by making the service accessible to the consumer or to a
physical or virtual facility chosen by the consumer for that purpose. The aforementioned
comments on these facilities and performance by a third party apply accordingly. How-
ever, due to their nature, ‘making available’, i.e. the permanent transfer of the digital con-
tent, and the use of a ‘means’ to access or download the digital content, do not apply to
digital services.
cc) The acquis communautaire therefore contains provisions which determine the 21
performance obligation for the delivery of goods and for the supply of digital content or
digital services. A further central aspect for the delivery of goods is the transfer of the
physical possession or control of the goods (Art. 18(1) CRD). The supply of digital con-
tent or digital services also features a similarly central aspect whereby the digital product
is to reach the consumer's sphere of influence and no further action is required by the
trader in order to enable the consumer to use the digital product. Both therefore feature
the key criteria of control over the subject matter of the control which is afforded by ac-
cess for this purpose. 60 Although the possibility of use is at the core of the supply of digi-
tal content or digital services, a sales contract differs greatly because the use of the goods
follows as the owner thereof (in contrast to a hire contract). The supply of digital content
does not require the consumer to become the owner of such content. The digital content
can still be supplied to the consumer for a set period of time, thereby drawing parallels
to a hire contract.61 These differences arise due to the nature of the subject-matter,
though general provisions on the type of performance and the fulfilment thereof may
nonetheless be expected (in any case in a very abstract form) for European contract law.
dd) In general, the CESL merely proposed to extend approaches from consumer sales 22
law on the type of delivery and in the process did not take sufficient account of the fea-
tures of digital content. However, the CESL does greatly extend beyond current EU law
by linking the rules on the type of delivery with different rules for the place of delivery
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
under various situations. Art. 93 CESL distinguishes between three different circum-
stances if the place of delivery is not stipulated or cannot otherwise be determined (e.g.
no reference to the INCOTERMS62 in B–B contracts): (i) the place of delivery in a dis-
tance or off-premises contract is the consumer’s place of residence at the time of the con-
clusion of the contract. The same applies under a consumer contract if the seller is to
arrange the carriage of the goods to the buyer. (ii) In other cases the place of delivery
will depend on whether the sales contract includes the carriage of the goods by a carri-
er.63 Following the provisions of the CISG, a carrier is independent of the seller, for ex-
ample not an employee. Under such circumstances the place of delivery will be the near-
59 Ibid.
60 Recital 51 CRD. See mn. 15.
61 See mn. 19.
62 Schmidt-Kessel CESL/Remien, Art. 93 CESL mn. 2. The INCOTERMS (International Commercial
Terms) 2020 contain fundamental rules on the obligations for buyers and sellers, see https://iccwbo.org/re
sources-for-business/incoterms-rules/incoterms-2020/ (accessed 11 December 2020).
63 Following the provisions of the CISG, a carrier is independent of the seller, for example not an em-
ployee. See Schlechtriem & Schwenzer CISG/Widmer-Lüchinger, Art. 31 CISG mn. 22–23; Schmidt-Kessel
CESL/Remien, Art. 93 CESL mn. 2.
215
Chapter 5 Performance Obligations
est collection point of the first carrier. (iii) If the sales contract does not include the car-
riage of the goods by an independent carrier, the place of delivery will be the seller’s
place of business at the time of the conclusion of the contract. The obligation to collect
the goods is therefore the residual concept foreseen for the delivery of goods in instances
involving neither a contract of carriage under the aforementioned requirements in (ii)
nor a consumer contract under the above requirements in (i). In contrast, if such a con-
sumer contract exists, an obligation to deliver at the consumer’s residence is provided as
this is more favourable to the consumer.
23 Art. 94 CESL stipulates how the seller is to perform its delivery obligation in each of
these three situations. Where the obligation to deliver is concerned, the seller is to trans-
fer the physical possession or control of the goods or digital content to the consumer
(Art. 94(1)(a) CESL; as also provided under Art. 18(1) CRD). If the contract includes
carriage, the delivery obligation will be performed by handing over the goods to the first
carrier and, if necessary, handing over any document to the buyer which is necessary in
order to enable her to take over the goods from the carrier (Art. 94(1)(b) CESL). Art. 96
CESL contains more specific rules on this mode of performing the delivery obligation.
Where collection of the goods is concerned, the seller has to make the goods or digital
content available to the buyer (or, if agreed, deliver the documents representing the
goods) (Art. 94(1)(c) CESL).64
24 ee) National laws often contain provisions concerned the type and place of perfor-
mance for monetary obligations, whereas the acquis communautaire is limited to regu-
lating particular aspects thereof.65 The (in part) very detailed provisions of the Payment
Services Directive mainly apply to the relationship between payment service providers
and their users, therefore they are mostly of indirect relevance.
25 The Acquis Principles concerning this topic are thus restricted to referring to
Art. III.–2:101 DCFR66 as a model to fill this particular gap. The CESL also follows the
approach in the DCFR. Art. 125 CESL provides that the place of payment in sales con-
tracts is, unless determined otherwise, the seller’s place of business at the time of the
conclusion of contract. Art. 124 CESL contains the details on the means of payment,
which are based in part on Art. 7:108 PECL and Art. III.–2:109 DCFR.67 As under
Art. 19 CRD, Art. 124(4) CESL restricts the extent of the seller’s costs that can be borne
by the consumer: the consumer can be liable to pay fees for using means of payment,
though not fees that exceed the cost borne by the business for the use of such means of
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
payment.68 The consumer may therefore only be burdened with the actual costs that
arise for the business, thereby prohibiting the business from, for example, imposing the
payment of lump sum processing charges.69
c) Time
26 aa) In European contract law, the agreement between the parties – and thus the prin-
ciple of freedom of contract – forms the main basis for determining the due date for per-
64 Furthermore, Art. 94(2) CESL stipulates that the provisions on the buyer in the first and third situa-
tion also apply to a third party (but not the carrier as under Art. 93–94 CESL) who was indicated by the
consumer or the buyer in accordance with the contract.
65 For example, Art. 7 Distance Marketing of Financial Services Directive; Art. 13, 19 and 22 CRD;
216
II. Performance
formance (see Art. 18(1) CRD, Art. (5)(1) DCD). Outside of consumer law, however,
Art. 3(5) Late Payment Directive considerably restricts this principle for the benefit of
the creditor in requests for payment. In the interests of SMEs in particular, the provision
prevents the use of contract terms to excessively extend the claim to interest for late pay-
ment. Accordingly, there must be an express agreement if a period for payment is to ex-
ceed 60 days following receipt of performance. Furthermore, an express agreement may
not be grossly unfair to the creditor within the meaning of Art. 7 Late Payment Direc-
tive. Whether an agreement is grossly unfair depends on all circumstances of the case
and the question whether it is a gross deviation from good commercial practice, con-
trary to good faith and fair dealing. A contract term which excludes interest for late pay-
ment will always be considered as grossly unfair, whereas a term which excludes com-
pensation for recovery costs will be presumed to be grossly unfair (Art. 7(2) and (3) Late
Payment Directive).
Where the parties have not made an express agreement on the due date for perfor- 27
mance, many directives state that the debtor is to perform without any undue delay. This
applies, inter alia, for the sale of goods and for the supply of digital content or digital
services. Art. 18(1) CRD provides that the business is to deliver the goods to the con-
sumer ‘without undue delay, but not later than 30 days from the conclusion of the con-
tract.’ In this respect, the Consumer Rights Directive has further developed70 the 30-day
period not only in relation to the notion of delivery and the right to termination after
non-performance in an additional period71 but also in relation to a time period for de-
livery. For consumer contracts for the supply of digital content or digital services,
Art. 5(1) DCD requires the trader to supply the digital content or digital service without
undue delay after the conclusion of the contract, unless agreed otherwise. Although the
original proposal used the term ‘immediately’, the effect in practice is minimal. 72 The de-
cision to use ‘without undue delay’ also accords with the use in other directives. For in-
stance, Art. 7(1) Distance Marketing of Financial Services Directive stipulates that the
consumer, in exercising the withdrawal right, may only be required to pay ‘without un-
due delay’ for services actually provided. The Acquis Principles thus frame the obliga-
tion for the debtor to perform without undue delay, unless agreed otherwise, as a general
principle of EU contract law (Art. 7:201(1) ACQP). However, this principle is not used
in relation to the time available to the trader to effect subsequent performance, but
rather a ‘reasonable time’ (Art. 14(3) DCD; Art. 14(1)(b) SGD).
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Despite its use, the directives do not provide further detail on the meaning of ‘without 28
undue delay’. § 121 BGB defines ‘without undue delay’ (unverzüglich) as ‘without culpa-
ble delay’,73 which may serve as a starting point, but is of course not binding on Euro-
pean law. The comments to Art. 7:201 ACQP allow one to presume that the time frame
cannot be generalized but rather depends on the individual circumstances, namely the
type and object of the delivery: the debtor has to perform as soon as is possible for a
‘diligent and well-organised person’ to perform under the circumstances.74
bb) The CESL follows the approach adopted by the Acquis Principles in Art. 7:201 29
ACQP75 (deviating from Art. 33 CISG as well as from the complex rules in Art. III.–
2:102 and IV.A.–2:202 DCFR76). The CESL does not explain the meaning of ‘without un-
70 The 30-day period for delivery was originally provided under Art. 7(1) Distance Selling Directive.
71 For further detail on the concept of delivery see above, mn. 3; for termination see Chapter 6 mn. 82 et
seq.
72 According to Recital 41 DCD the expression 'without undue delay' provides a certain degree of flexi-
bility.
73 See German Civil Code/Wais, § 121 BGB mn. 3.
74 Contract II/Aubert de Vincelles et al., Art. 7:201 mn. 10.
217
Chapter 5 Performance Obligations
due delay’,77 but does contains specific rules on the time of payment, namely at the mo-
ment of performance for which payment is due (Art. 90(1), 126(1), 153(2) CESL). In ad-
dition, it contains a general rule for performing the payment obligation, which is to be
distinguished from the time at which payments are due. The former does not concern
the question when the debtor has to perform, but when the debtor may perform. One
may deduce from Art. 126(2) CESL that, in principle, payment is possible before the due
date but the creditor can reject the offer to pay if he has a legitimate interest in doing
so.78
30 cc) Modifications to the time of performance can arise when one party is entitled to
make unilateral changes to the terms of the contract. Such an entitlement is provided by,
for example, Art. 11(1) PTD, though with restrictions. According to Art. 11(1)(b), the
organizer can unilaterally change the time of performance if the change is significant. If
the organizer has to make significant changes to any of the main characteristics, the
traveller may elect to accept the change, to terminate the contract (without paying a ter-
mination fee) or to accept the offer of a substitute package (Art. 11(2) PTD). Changes to
the departure or arrival times are considered significant if, for example, they cause sig-
nificant inconvenience or additional costs to the traveller.79
31 Furthermore, performance or aspects of performance may be conditional. According-
ly, there are particular features in relation to performance over a period of time or with
various ‘layers’. For example Art. 7(5) PTD stipulates that the organizer is to provide the
traveller with the necessary tickets in good time before departure. The time for perfor-
mance of this obligation therefore depends on the time at which the main performance
(i.e. the travel package) is due. The difference between these two points in time is deter-
mined by the term ‘in good time’ (which depends on the circumstances in the individual
case).
5. Counter-performance
a) Protecting the creditor
32 Numerous provisions of EU contract law on performance obligations mostly (or in-
deed only) concern the counter-performance by the creditor. As for many other rules in
the acquis such provisions often aim to protect one of the parties for policy reasons.
With regard to counter-performance, a party may therefore be protected in the role ei-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
ther as the debtor or creditor. For example, the Commercial Agents Directive is one of
the first pieces of legislation which was passed with the aim of protecting SMEs. The
parties under this Directive are the self-employed commercial agent, who is to be pro-
tected, and the principal. Chapter III (Art. 6–12) Commercial Agents Directive is dedi-
cated to the remuneration the commercial agent is to receive for the performance of the
75 In contrast to Art. 7:201 ACQP, however, Art. 95(1) CESL expressly states the moment of conclusion
of contract as the relevant time, whereas the comments to the Acquis Principles favour the time at which
the obligations arise (which may sometimes be difficult to determine); see ibid. mn. 8.
76 For details on the provisions concerning time of performance (in particular in consumer contracts)
in the academic drafts for European contract law and in EU consumer directives, see Commentaries on
European Contract Laws/Martens, Art 7:102 mn. 1 et seq. and Art 7:102-1 mn. 1 et seq.
77 On the controversial doctrinal views see De Wit, ‘Duties of buyer and seller. Transfer of risk’ in
Claeys/Feltkamp (eds), The Draft Common European Sales Law: Towards an Alternative Sales Law? (Inter-
sentia 2013) 155, 167; Lorenz, Das Kaufrecht und die damit verbundenen Dienstverträge im Common Euro-
pean Sales Law (2012) 212 AcP 702, 721; Schmidt-Kessel CESL/Remien, Art. 95 CESL mn. 1; Schulze CESL/
Zoll, Art. 95 CESL mn. 8.
78 Similarly, Art. 25 Mortgage Credit Directive does not provide for such a right of rejection to the
lender but does not exclude a claim to compensation in the event of early repayment by the consumer.
79 Recital 33 PTD.
218
II. Performance
activities (Art. 3 and 4). Art. 6 determines the calculation of the remuneration, whereas
Art. 7 and 8 set out the conditions under which the commercial agent is entitled to re-
ceive commission. Furthermore, Art. 17 Commercial Agents Directive regulates the cir-
cumstances under which the commercial agent is entitled to receive an indemnification
or compensation after termination of the agency contract –a much discussed compro-
mise which takes account of the different traditions amongst the Member States.80 The
provisions of the Commercial Agents Directive therefore ensure the claims to remunera-
tion which the commercial agent is to receive as counter-performance for the activities
undertaken (supplemented by the post-contractual claims to indemnity or compensa-
tion).
ta.83 The Directives therefore take into account the important economic significance of
data in modern day transactions.84 In this respect, the provision of data corresponds to
On the transposition into national law see Study Group on a European Civil Code, Commercial Agency,
Franchise and Distribution Contracts (Sellier 2006) 205 et seq.; see also Saenger/Schulze (eds), Der Aus-
gleichsanspruch des Handelsvertreters (Nomos 2000).
81 See for example the provisions on early repayment and on the calculation of the annual percentage
(Nomos 2020); on the earlier discussion concerning the application of the notion ‘data as counter-perfor-
mance’ to the Consumer Rights Directive and to other fields, see Mischau, ‘Daten als „Gegenleistung“ im
neuen Verbrauchervertragsrecht’ (2020) ZEuP 335; in particular in B–B contracts, see Fries, ‘Data as
Counter-Performance in B2B Contracts’ in Lohsse/Schulze/Staudenmayer, ibid. 251 et seq.
83 In contrast to the original proposal (Art. 3(1) COM(2015) 634 final), the Digital Content Directive no
longer requires the consumer to ‘actively provide’ counter-performance in the form of personal data or any
other data. For criticism see European Data Protection Supervisor, ‘Opinion 4/2017 on the Proposal for a
Directive on certain aspects concerning contracts for the supply of digital content’ (March 2017) 12;
Schulze, ‘Supply of Digital Content. A New Challenge for European Contract Law’ in De Franceschi (ed),
European Contract Law and the Digital Single Market (Intersentia 2016) 127, 140–141.
84 See Chapter 3 mn. 78–79.
219
Chapter 5 Performance Obligations
the payment of a price, however it does not mean that the rights to personal data are
equal to property (or quasi-property) rights. In contrast to the transfer of property, the
transfer of data often does not result in a loss to the transferring party; in principle, data
can be reproduced without any loss in value.85 The approach in the new legislation
recognises, however, that the provision of data, like the payment of a price, is the transfer
of something of value and the trader (as the recipient of this counter-performance) is as
such subject to the same obligations under the Directives as would arise if the consumer
were to pay a price as counter-performance. Accordingly, the rights under the Directives
are available to the consumer who provides personal data as counter-performance.
35 However, this obligation for the trader (and entitlement for the consumer) is not
matched by an equivalent obligation for the consumer to provide data as counter-perfor-
mance (and no equivalent corresponding claim for the trader). The extent to which the
consumer is bound under the contract is instead greatly restricted by data protection
law: the consumer (as the data subject) may at any time withdraw the consent to the
processing of the personal data (Art. 7(3) GDPR). The exercise of this right by the con-
sumer therefore means the loss in value of any data that has been or is to be provided.
From an economic perspective, the withdrawal of consent is comparable to the with-
drawal from a consumer contract due to the uncertainty for the trader, though in a con-
sumer contract the uncertainty ends as the withdrawal right may only be exercised with-
in a particular time frame.86 According to the purpose of Art. 7(3) GDPR, the consumer
cannot be obliged to provide personal data (irrespective of the withdrawal affects the re-
mainder of the contract87). The interaction between consumer protection and data pro-
tection therefore has a particular effect on the reciprocity where personal data is provid-
ed in return for digital content or digital services.88
digital content. Payment is to be made as indicated by the contract terms or, where there
are no such terms, by any means used in the ordinary course of business at the place of
payment (Art. 124(1) CESL).90 Where taking delivery is concerned, Art. 129 CESL pro-
vides that the buyer has to perform all acts that could be expected in order to enable the
seller to perform its delivery obligation, for example informing the seller of the place of
delivery and ensuring he has access.91 The buyer can only refuse to accept early delivery
85 For details see Lohsse/Schulze/Staudenmayer (eds), Trading Data in the Digital Economy: Legal
er look at the relationship between EU consumer law and data protection law’ (2017) 54 CMLR 1427.
89 The customer’s main obligations – payment of the price and provision of access – in a contract for
220
III. Conformity
or delivery of a lesser quantity than agreed if she has a legitimate interest in doing so
(Art. 130(1), (2) CESL).92 The CESL excludes the application of the payment obligation
or the possibility to refuse to accept early delivery or the delivery of the wrong quantity
where digital content is not supplied in exchange for the payment of a price (Art. 123(2),
130(6) CESL). The proposed CESL therefore greatly exceeds the structure and extent of
rules in the acquis communautaire. However, it did not propose general rules on
counter-performance but rather its rules were tied to the type of contract concluded.
III. Conformity
1. Basic features
Despite some differences, the Sale of Goods Directive and the Digital Content Direc- 37
tive use the same basic conceptual framework for the conformity of performance. Both
Directives use and develop approaches from the Consumer Sales Directive both for the
core concept of conformity and for supplementing concepts (such as ‘reasonable expec-
tations’). Beyond these, however, both Directives also feature a considerable amount of
new concepts, especially with regard to the conformity of digital content and digital ser-
vices (such as ‘updates’ and the integration into the digital environment). The concept of
conformity thus serves as common basis for determining the performance obligations
and rights in two exceptionally important areas of European consumer contract law: the
sale of goods, and the supply of digital content and digital services. Although for non-
digital services, the concept only extends to specific areas, such as travel law,93 the
broader importance of this concept is nevertheless clear as travel law does not apply only
to consumer contracts.94
In the new Directives, the further development of the concept of conformity and its 38
constituent parts (such as the combination of objective and subjective criteria) is charac-
terized by their application beyond sales contracts to all types of contracts. Whereas the
Consumer Sales Directive followed the approach in the CISG and applied the concepts
specifically to contracts for the sale of goods, the Sale of Goods Directive and the Digital
Content Directive follow the approach in the CESL and apply and develop the concepts
with respect to the supply of digital content and digital services. For this purpose the
Digital Content Directive applies the concepts not only to the sale of digital content but
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
also to any type of contract for the supply of digital content or digital services.95 Such
overarching application of the notion of conformity to different types of contracts does,
however, feature in some national laws, such as in Germany where concepts from the
CISG and from European consumer contract law feature in the general law of obliga-
tions.96 Understanding conformity as an overarching concept within general contract
92 On the buyer’s right to elect between retaining or rejecting the goods in the event of excess delivery as
well and the restriction of the payment obligation in relation to intentional excess delivery see Schulze
CESL/Dannemann, Art. 130 CESL mn. 13, 19–20.
93 See mn. 56.
94 According to Art. 3 No. 6 PTD, ‘traveller’ means any person who is seeking to conclude a contract,
and thus may also be a person travelling for business purposes. Art. 2 No. 4 PTD (1990) used the term
‘consumer’, however with a definition similar to ‘traveller’ under Art. 3 No. 6 PTD.
95 See mn. 12.
96 See, e.g., § 323 BGB following the 2002 reform of the law of obligations, see German Civil Code/
Oehm, § 323 BGB mn. 3. On the recent reforms in France see Bien/Borghetti (eds), Die Reform des franzö-
sischen Vertragsrechts (Mohr Siebeck 2018), in particular the contributions by Dubarry, ‘Grundsätze des
neuen französischen Leistungsstörungsrechts’ 165 and Remien, ‘Leistungsstörungen nach der Réforme du
droit des contrats in deutscher und europäischer Sicht’ 181.
221
Chapter 5 Performance Obligations
law (or within the general law of obligations) could contribute to reform discussions in
other Member States precisely because it has now taken shape at EU level for the broad
spectrum of contracts for digital content and digital services; contracts which are indeed
of considerable economic significance.97
39 The rules concerning the relationship between subjective and objective criteria98 for
conformity constitute one of the most important changes to consumer sales law. As in
the Consumer Sales Directive, the new Directives contain subjective criteria (i.e. as
agreed by the parties) and the objective criteria (i.e. as determined by law). The subjec-
tive criteria result from Art. 6 SGD and Art. 7 DCD. The objective criteria of fitness for
normal use, reasonable consumer expectations and the update obligations are found in
Art. 7 SGD and Art. 8 DCD.99 Further provisions concern the installation of goods and
the integration of digital content or digital services (Art. 8 SGD; Art. 9 DCD) as well as
third-party rights (Art. 9 SGD; Art. 10 DCD). However, in comparison to the Consumer
Sales Directive, the new Directives place more emphasis on the objective criteria because
these are generally defined as additional requirements (Art. 7(1) SGD; Art. 8(1) DCD).
They are thus also to be considered if the parties agree on a lower standard of conformi-
ty. In this respect, the new provisions follow the model proposed by the CESL and not
the original proposal which prioritized the subjective criteria.100 However, the Directives
do take into account the need to allow such agreements (e.g. in the sale of ‘Grade B
goods’) by providing an exception: deviations from the objective requirements for con-
formity are (only) permitted if, at the time of the conclusion of the contract, the con-
sumer was specifically informed of such deviation and expressly and separately (i.e. in a
separate declaration) accepted such deviation (Art. 7(5) SGD; Art. 8(5) DCD).101 This
approach aims to ensure that the objective standards are not imposed on the parties
against their will, but at the same time protects the consumer from concluding an agree-
ment without sufficient information.
40 A further distinction to the Consumer Sales Directive concerns the manner of the
regulation. In contrast to Art. 2(2) CSD, the new Directives do not embed the require-
ments for conformity within the framework of a legal presumption but instead deter-
mine the aspects giving rise to these requirements. Firstly, they state the overarching rule
that the trader must deliver or supply in accordance with the particular standards as set
out in the Directive (Art. 5 SGD; Art. 6(1) DCD). The rule forms the starting point for
the subjective criteria (Art. 6 SGD; Art. 7 DCD) followed by the objective criteria (Art. 7
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
2. Subjective criteria
41
Article 7 Digital Content Directive
Subjective requirements for conformity
In order to conform with the contract, the digital content or digital service shall, in particular, where
applicable:
Supply of Digital Content to Consumers’ (2016) 18–19; Schulze, ‘Supply of Digital Content. A New Chal-
lenge for European Contract Law’ in De Franceschi (ed), European Contract Law and the Digital Single
Market (Intersentia 2016) 127, 135.
101 On the overlap between the new rule with current practice, Bach, ‘Neue Richtlinien zum Ver-
brauchsgüterkauf und zu Verbraucherverträgen über digitale Inhalte’ (2019) NJW 1705, 1708.
222
III. Conformity
(a) be of the description, quantity and quality, and possess the functionality, compatibility, interop-
erability and other features, as required by the contract;
(b) be fit for any particular purpose for which the consumer requires it and which the consumer
made known to the trader at the latest at the time of the conclusion of the contract, and in re-
spect of which the trader has given acceptance;
(c) be supplied with all accessories, instructions, including on installation, and customer assistance
as required by the contract; and
(d) be updated as stipulated by the contract.
3. Objective criteria
a) Fitness for intended use
42
Article 8(1) Digital Content Directive
Objective requirements for conformity
In addition to complying with any subjective requirement for conformity, the digital content or digi-
tal service shall:
(a) be fit for the purposes for which digital content or digital services of the same type would nor-
mally be used, taking into account, where applicable, any existing Union and national law, tech-
nical standards or, in the absence of such technical standards, applicable sector-specific industry
codes of conduct;
(b) be of the quantity and possess the qualities and performance features, including in relation to
functionality, compatibility, accessibility, continuity and security, normal for digital content or
digital services of the same type and which the consumer may reasonably expect, given the na-
ture of the digital content or digital service and taking into account any public statement made
by or on behalf of the trader, or other persons in previous links of the chain of transactions,
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
102 In detail, Twigg-Flesner, ‘Conformity of Goods and Digital Content/Digital Services’ in Arroyo
Amayuelas/Cámara Lapuente (eds), El derecho privado en el nuevo paradigma digital (Marcial Pons 2020)
49, 58 et seq., 73 et seq.
103 Defined as the ability of the digital content or digital service to perform its functions having regard
with which digital content or digital services of the same type are normally used, without the need to con-
vert the digital content or digital service (Art. 2 No. 8 SGD; Art. 2 No. 10 DCD).
105 Defined as the ability of the digital content or digital service to function with hardware or software
different from those with which digital content or digital services of the same type are normally used
(Art. 2 No. 10 SGD; Art. 2 No. 12 DCD).
223
Chapter 5 Performance Obligations
(c) where applicable, be supplied along with any accessories and instructions which the consumer
may reasonably expect to receive; and
(d) comply with any trial version or preview of the digital content or digital service, made available
by the trader before the conclusion of the contract.
In addition to the subjective requirements, the performance must also satisfy the ob-
jective requirements pursuant to Art. 7 SGD and Art. 8 DCD.106 Each Directive first lists
the ‘fitness-for-purpose test’, whereby the goods or digital content or digital service must
be fit for the purpose for which such products would normally be used (Art. 7(1)(a)
SGD; Art. 8(1)(a) DCD). The new provisions therefore follow the approach outlined by
Art. 2(1)(c) CSD. However, the new Directives add to this underlying rule by referring to
technical standards and applicable sector-specific industry codes of conduct. In light of
potential technological advances, this reference may ease a continuous development of
the standards for conformity, which are often reflected in such non-legal rules rather
than in legislation. Such outsourcing of regulatory competence is, however, often un-
problematic for the internal market with regard to the legitimation of the rule-making
body and also to the influence of such technical standards and codes of conduct often set
by global players.
type (Art. 7(1)(d) SGD; Art. 8(1)(b) DCD). Although the list of performance features is
extensive, it is merely a list of examples and therefore not exhaustive. However, interop-
erability has intentionally only been included as a subjective criterion.110
45 Art. 7(1)(d) SGD also lists durability as an additional criterion for conformity, where-
by goods must have the ability to maintain their required functions and performance
through normal use (Art. 2 No. 13 SGD). This form of contractual conformity is particu-
106 In detail, Twigg-Flesner, ‘Conformity of Goods and Digital Content/Digital Services’ in Arroyo
Amayuelas/Cámara Lapuente (eds), El derecho privado en el nuevo paradigma digital (Marcial Pons 2020)
49, 62 et seq., 74 et seq.
107 Recital 24 SGD; Recital 46 DCD. See also Chapter 2 mn. 7 et seq.
108 For detail and on the restrictions in cases in which the trader was not, and could not reasonably have
been, aware of the public statement in question, the public statement had been corrected or could not have
influenced the consumer, Chapter 2 mn. 17.
109 Unlike the Digital Content Directive, the Sale of Goods Directive makes express reference to the pro-
ducer as a previous link the chain of transactions (Art. 7(1)(d) SGD); the Digital Content Directive does,
however, include the producer of the digital content or digital service, see EU Digital Law/Staudenmayer,
Art. 8 DCD mn. 64.
110 Art. 6(a) SGD and Art. 7(a) DCD in contrast to Art. 7(1)(d) SGD and Art. 8(1)(b) DCD; see ibid.
mn. 47–48.
224
III. Conformity
larly noteworthy as an innovative approach under the Sales of Goods Directive which is
not only a new feature of European contract law but is also a feature that has been
adopted irrespective of the challenges of digitalization. In particular, it is aimed at pro-
moting sustainable consumption patterns and a circular economy and thus pursues ob-
jectives that are also to be served by implementing measures for Art. 15 Ecodesign Di-
rective using other legal instruments. However, the Sale of Goods Directive has not
adopted further concepts to promote sustainability, such as stockpiling spare parts111
and ‘reparability’. 112 Furthermore, the inclusion of durability as a criterion for conformi-
ty represents an innovation compared to traditional principles of sales law because it de-
viates from the principle that the time of delivery is decisive for the existence of confor-
mity (Art. 10(1) SGD). In contrast, the satisfaction of the durability requirement de-
pends on the future developments and thus the requirement applies throughout a period
of time which commences upon delivery.113
c) Innovation
Art. 7(1)(b), (c) SGD and Art. 8(1)(c), (d) DCD also require the goods, digital content 46
or digital service to correspond to a sample or model (or trial version or preview) as well
as their delivery/supply with any accessories and instructions which the consumer may
reasonably expect to receive.114 According to Art. 8(6) DCD, digital content or digital
services must, unless agreed otherwise, be supplied in the most recent version available
at the time of the conclusion of the contract.115
4. Updates
The provisions on updates make a significant contribution to adapting the concept of 47
conformity to the changing needs of contract practice under digitalization. ‘Updates’ en-
sure that the digital content or digital service can continue to be used safely over time. If
the contract contains update obligations, the performance thereof thus falls within the
subjective requirements for conformity.116 However, update obligations also feature in
the objective requirements under Art. 7(3) SGD and Art. 8(2) DCD, thereby ensuring
that the consumer is protected in the absence of corresponding terms under the con-
tract. The inclusion of update obligations as a requirement of conformity concerns not
only contracts for the continuous supply of digital content or digital services over a peri-
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od of time (such as streaming or other quasi-hire agreements) but also applies to con-
tracts for single supply (such as the sale of goods with digital elements or other quasi-
sale contracts).117 In such cases and in contrast to the traditional sale of consumer
goods,118 the trader must provide updates to maintain conformity beyond the perfor-
111 This does not fall within the scope of the Sale of Goods Directive and is thus not covered by the full
harmonization. Recital 33 SGD clarifies that the Directive should not oblige sellers to ensure the availabili-
ty of spare parts throughout a period of time as an objective requirement for conformity. Moreover, the
Directive should not affect other provisions of national law which oblige the seller or other link in the
chain of transactions to ensure that spare parts are available or to inform consumers about such availabili-
ty.
112 For criticism, Kieninger, ‘Recht auf Reparatur („Right to Repair“) und Europäisches Vertragsrecht’
Goods and Digital Content/Digital Services’ in Arroyo Amayuelas/Cámara Lapuente (eds), El derecho pri-
vado en el nuevo paradigma digital (Marcial Pons 2020) 49, 69–70.
225
Chapter 5 Performance Obligations
mance of the primary obligation. Under both types of contract, the obligation to ensure
conformity is thus not limited to one particular point in time, but extends across a peri-
od of time. The trader performs the update obligation by supplying updates (including
security updates) which are necessary for the digital content or digital service to remain
in conformity with the contract. The supply of such updates will often also require regu-
lar monitoring of the technological developments in order to determine whether an up-
date is necessary. The update obligation is therefore a secondary requirement in the sup-
ply of digital content or digital services that aims at maintaining conformity for a period
of time and can thus be understood as a continuous obligation.119
48 Two types of obligations are imposed upon the trader in order to ensure conformity
throughout the period for performance. On the one hand, the trader must inform the
consumer of the updates that are necessary to keep the digital content or digital service
in conformity. Accordingly, the consumer is made aware not only of the need to update
but also of the possibility to update and can then decide whether or not to install the
update. On the other hand, the trader is to supply the consumer with the necessary up-
dates (Art. 7(3) SGD; Art. 8(2) DCD).120 Should the trader fail to supply the necessary
updates, the digital content or digital service will no longer be in conformity with the
contract and thus the trader will be liable pursuant to Art. 10 SGD or Art. 11 DCD. The
same applies if the trader supplies the update, but the digital content or digital service is
no longer in conformity after installation (e.g. the update removes a feature which was
agreed in the contract).121 The responsibility to install the update rests, however, with
the consumer. The trader is therefore not liable if he has performed the aforementioned
obligations pursuant to Art. 7(3) SGD or Art. 8(2) DCD yet the consumer does not in-
stall the necessary update.122 A two-pronged approach to the trader’s obligation there-
fore applies to the update: his (secondary) obligation to supply the update are combined
with the information obligation to inform the consumer about the update.123 In this re-
spect, one can also observe the effects of digitalization on European contract law. The
information obligations in the acquis primarily targeted the pre-contractual phase or the
conclusion of the contract, whereas under the new Directives information obligations
now play a significant role in ensuring conformity well after the contract has been con-
cluded.
49 The time frame for the obligations to inform and to supply depends on a distinction
that is of far-reaching importance for contracts for the supply of digital content or digital
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services: the continuous supply over a (defined or undefined) period of time and the sin-
gle act of supply or a series of individual acts of supply. For the former (e.g. subscription
contracts), the digital content or digital service must be in conformity throughout the
period (Art. 8(4) DCD). Accordingly, the period of time for the supply of the digital con-
tent or digital service is the benchmark for the duration of the update obligation. On this
118 See Art. 3(1) CSD (‘any lack of conformity which exists at the time the goods were delivered’) and
horst/Zöchling-Jud (eds), Das neue Gewährleistungsrecht für Waren, digitale Inhalte und digitale Dienstleis-
tungen (Manz 2019) 111, 118.
120 For details see EU Digital Law/Staudenmayer, Art. 8 DCD mn. 111 et seq.
121 Recitals 28 and 30 SGD; Wendehorst, ‘Aktualisierungen und andere digitale Dauerleistungen’ in
226
III. Conformity
basis, according to Art. 8(2)(a) DCD there is thus an overlap between the period for the
performance of the primary supply obligation and the secondary update obligation
(whereas under Art. 7(3)(a) in conjunction with Art. 10(2), (5) SGD this only applies for
continuous supply longer than two years, whereas for shorter periods the two-year guar-
antee period applies). In contrast, for contracts for the single supply or a series of indi-
vidual acts of supply, the primary supply obligation is not over a period of time but at a
particular point in time (e.g. by making a file available for download) and thus the peri-
od for performance. The period for the performance of the primary obligation therefore
cannot serve as the basis for the update obligation. Instead, the Directives refer to what
the consumer may reasonably expect with regard to the type and purpose of the digital
content or digital service, the circumstances and nature of the contract (Art. 7(3)(a)
SGD; Art. 8(2)(b) DCD). In this respect, the consumer’s reasonable expectations may be
determined by whether in light of the purpose of the digital content or digital service the
time period would be equal to the liability period for lack of conformity or could extend
beyond that period, which may be the case with regard to security updates.124
This distinction between single acts of supply or a series of individual acts over a peri- 50
od of time belongs to the structural features of European contract law responding to dig-
italization.125 It is relevant not only for the aforementioned provisions on updates but
also for liability and consequences of termination (Art. 10(1) and (2) SGD; Art. 11(2)
and (3), 16(1) DCD). The distinction in contracts for digital content and digital services
provides a different type of classification alongside the traditional divisions in the civil
codes of the Member States and alongside the usual comparison between the sale of
goods and service contracts in EU law. The expression ‘single act of supply’ is not to be
understood as the single exchange of performances as in the sale of goods because it is
directed at intangible objects. The ‘continuous supply over a period of time’ is not com-
parable with a service contract as understood in national or EU law. ‘Continuous supply’
can, for instance, comprise contractual relationships which resemble a hire contract,126
or contracts with a fixed period of time or a fixed total quantity. Moreover, ‘continuous’
supply in this sense does not have to be long term in nature.127 In this respect, the dis-
tinction between a single act of supply and continuous supply over a period of time is
concerns concepts that are particular to European contract law in accommodating the
supply of digital content and digital services.
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5. Installation
In addition to the above criteria for conformity, Art. 8 SGD has adopted Art. 2(5) 51
CSD128 concerning incorrect installation and incorrect instructions (the so-called
‘IKEA-clause’), and extended the scope to include goods with digital elements. Accord-
ing to Art. 8 SGD, the goods will not be in conformity with the contract if a lack of con-
formity results from the incorrect installation by the seller or due to shortcomings in the
instructions provided by the seller.
227
Chapter 5 Performance Obligations
(b) the digital content or digital service was intended to be integrated by the consumer and the in-
correct integration was due to shortcomings in the integration instructions provided by the
trader.
Similar to the Sale of Goods Directive, Art. 9 DCD provides two circumstances in
which the trader bears the responsibility for a lack of conformity resulting from incor-
rect integration: the incorrect integration by the trader or under his responsibility, or in-
correct integration by the consumer due to incorrect instructions supplied by the trader.
Incorrect integration under the responsibility of the trader is to be assumed in situations
in which the consumer is supplied with digital content which is automatically installed
on the consumer’s device.130 However, Art. 9 DCD does not detail the scope of the ‘digi-
tal environment’. This will require a reference to the general standards of fitness for pur-
pose and reasonable consumer expectations (Art. 8(1) DCD).131
228
III. Conformity
7. Third-party rights
Whereas the consumer’s digital environment may present a technical barrier to the 54
use of the digital content or digital service, the use also depends on overcoming legal
barriers, i.e. the rights of third parties. Digital content and digital services are typically
protected by copyright law and thus lawful use by the consumer requires a license. The
Digital Content Directive does not contain provisions on the issue of such licenses, but is
rather without prejudice to EU and national law on copyright and related rights
(Art. 3(9) DCD). The lawful use of the digital content or digital service thus depends on
rules that exist outside the scope of the Directive. The consumer can receive the corre-
sponding license from the trader as a sub-license or through transfer. However, con-
sumers will often conclude an ‘End-User-License-Agreement’ (EULA) directly with the
rightholder.
In light of this division between the supply contract and the license agreement, 55
Art. 10 DCD (and Art. 9 SGD) shall ensure that the requirements for conformity are not
undermined by third party rights under copyright law. In particular, reasonable con-
sumer expectations under Art. 7 and 8 DCD serve as the standard for determining the
type and scope of use that is in conformity with the contract. The trader can influence
these expectations by supplying the consumer with sufficient information on the terms
of the license. 132 If the protection of the third party prevents or limits the use of the digi-
tal content or digital service contrary to the consumer’s reasonable expectations when
concluding the contract with the trader, a non-conformity will thus arise. In such in-
stances the consumer is in principle entitled to exercise the remedies under the Digital
Content Directive against the trader.
In contrast, the Digital Content Directive and the Sale of Goods Directive do not pro- 56
vide the consumer with a claim against the third party whose rights limit or prevent the
use of the digital content or digital service, yet who is not a party to the supply contract
under the Directive. The effects of the non-conformity may, however, be experienced by
the third party in the form of a regress claim by the trader (Art. 20 DCD).133 European
contract law therefore continues to adopt the approach developed by Art. 4 CSD for the
sale of goods according to which the consumer does not have an ‘action directe’ (i.e. a
direct claim) against the party actually responsible for the non-conformity. The con-
sumer must instead bring the claim against the other party to the contract who can then
claim against earlier links in the contractual chain (including the producer or righthold-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
er). The Directives therefore avoid bringing contract law within the domain of copyright
law (or more generally intellectual property law). However, it is questionable whether
the strict separation can be maintained dues to the effects of licensing on consumer con-
tract law. It may therefore be possible that the problems illustrated here (including also
the nature of data rights134) require a reconsideration of the relationship between con-
tract law and intellectual property in European private law.
8. Non-digital services
Beyond digital services in the Digital Content Directive and Sale of Goods Directive, 57
the notion of conformity in service contracts has become part of the acquis communau-
taire through its use in package travel contracts. The Package Travel Directive135 deter-
mines the content and scope of performance obligations, in particular through the inter-
229
Chapter 5 Performance Obligations
pretation of a ‘lack of conformity’ (Art. 3 No. 13 PTD), as well as in the provisions on the
binding effect of pre-contractual information and the content of the contract (Art. 6 and
7 PTD). These provisions are closely linked to the Directive’s rules on the responsibility
for performance and the consequences of a lack of conformity, with the notion of a ‘lack
of conformity’ playing a central role (especially in Art. 13(2)–(4), (6) and Art. 14
PTD136). As in the provisions on digital services, the use of this notion in the Package
Travel Directive137 expresses the important position achieved by ‘conformity’ and ‘non-
conformity’ in the acquis communautaire for both sales and service contracts.
1. Modification
a) Overview
58 In principle, the binding effect of the agreement138 excludes subsequent modification
to the content and scope of the contractually-agreed obligations without concluding a
new agreement. The right to make such a unilateral change may, however, be granted by
law or within the contract itself. The acquis communautaire contains provisions concern-
ing both aspects, which are of considerable importance in practice (especially for con-
sumer protection139), but which do not regulate the matter exhaustively. Legislative pro-
visions in EU law which entitle a party to modify the terms of the agreement concern
above all the rights in the event of non-conforming performance (e.g. price reduc-
tion).140 Such rights are the most important types of ‘formative rights’141 in the acquis.
With regard to contractual rights, Art. 11 PTD142 and Art. 19 DCD contain rules for
contracts falling within their scope of application.
such a modification.146 The modification may not be made without additional cost to
the consumer and the consumer must also be informed in a clear and comprehensible
manner of the modification. Moreover, pursuant to Art. 19(2)–(4) DCD the consumer
may terminate the contract if the modification has a negative impact on the access or
contract term may be regarded as unfair where it enables the seller or supplier to alter the terms of the
contract unilaterally without a valid reason which is specified in the contract.
140 See Chapter 6 mn. 50 et seq.
141 See Chapter 3 mn. 128.
142 See mn. 30.
143 See mn. 47 et seq.
144 For criticism of the lack of rules concerning single supply, Bach, ‘Neue Richtlinien zum Ver-
brauchsgüterkauf und zu Verbraucherverträgen über digitale Inhalte’ (2019) NJW 1705, 1707.
145 For details see EU Digital Law/Wendland, Art. 19 DCD.
146 Such as to adapt the digital content or digital service to a new technical environment, see Recital 75
DCD.
230
IV. Modification and termination
use of the digital content or digital service, unless the impact is only minor. In this re-
spect, Art. 19 DCD strives to balance the interests of the trader and of the consumer
with regard to a modification of the performance obligations: the Directive acknowl-
edges and limits the possibility for the trader but at the same time affords the consumer
with the right to terminate the contract; in this respect, an extensive deviation from the
original contract allows the consumer to terminate the contract directly.
2. Termination
a) Overview
The termination of contract is a means by which performance obligations are brought 60
to an end. Usually, performance obligations will end through their performance, as de-
tailed, for example, in Art. 5(2) DCD. A performance obligation or an entire contract
may be brought to an end by an agreement between the parties, or directly by law or
through a formative right, prior to performance. The consumer’s termination right un-
der Art. 19(2) DCD is just one of several examples in the acquis, whereby such unilateral
rights to terminate the contract predominately feature in the context of irregularities in
performance, but not only as a remedy for the consumer in the event of non-perfor-
mance or non-conforming performance. For instance, Art. 12(2) PTD grants the trav-
eller the right to terminate the package travel contract before the start of the package
without paying any termination fee in the event of unavoidable and extraordinary cir-
cumstances occurring at the place of destination or its immediate vicinity and signifi-
cantly affecting the performance of the package, or which significantly affect the carriage
of passengers to the destination. The importance of this provision has been seen in the
termination of a vast number of package travel contracts in the wake of the COVID-19
pandemic. Due to the superiority of EU law, the provisions of the Directive prevented
national legislation which would have allowed the organiser to provide the traveller with
a credit voucher for future travel instead of refunding any payments made for the pack-
age. The Package Travel Directive therefore tackles an issue that may be understood as a
particular instance of extraordinary circumstances. Although this is not generally regu-
lated in the acquis, it is considered in Art. 6:111(2) PECL, Art. III.–1:110(2) DCFR and
Art. 89 CESL. Where performance becomes excessively onerous because of an excep-
tional change of circumstances, Art. 89 CESL provides that the parties have to enter into
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
negotiations with a view to adapting or terminating the contract; if the parties cannot
reach an agreement then termination is to be determined by a court.
EU contract law also uses the expression ‘termination’ in relation to ending long-term 61
contracts.147 However, the use of this term in the context of a long-term contract is mis-
leading because the rules for terminating contracts are typically designed for a single ex-
change of performance and the corresponding restitution obligations – such rules are
not suited to long-term contracts. In particular, some types of long-term contracts do
not stipulate the scope of the performance obligation. As such, if the contract may be
terminated due the breach of a single obligation, such breach cannot be spread across all
obligations. In such instances, termination must only have ex nunc effect without the re-
turn of performances in natura or in a corresponding amount of money. The right for a
party to terminate with such an effect may be included in the contract or be available by
law where there is a sufficiently important reason to terminate the contract. In contrast
to termination due to non-performance or other important reason the termination of a
147 However, the German version of Art. 55 Payment Services Directive uses ‘Kündigung’ in contrast to
the term ‘Beendigung’ used in the Digital Content Directive and the Sale of Goods Directive.
231
Chapter 5 Performance Obligations
long-term contract does not require such a reason but is often subject to a time limit.148
Such form of termination is commonly referred to as ‘ordinary’ or ‘standard’ termina-
tion.
62 ‘Standard’ termination rights feature, for example, in commercial agency contracts –
Art. 15 Commercial Agents Directive regulates the termination periods for each party
and is flanked by the commercial agent’s claim for indemnity or compensation (Art. 17
Commercial Agents Directive).149 Art. 13(1) Consumer Credit Directive stipulates that
the consumer in an open-end credit agreement has a standard termination right that can
be exercised free of charge at any time (unless there is an agreed period of notice, which
may not exceed one month). The same provision provides the creditor with a standard
termination right, however the creditor has to give notice on paper (or another durable
medium) at least two months in advance. In addition to this standard termination right,
Art. 13(2) Consumer Credit Directive provides that the creditor may for ‘objectively jus-
tified reasons’ terminate the consumer’s right to access credit.150 Art. 55(1) Payment Ser-
vices Directive provides the payment service user with a right to terminate the frame-
work at any time (unless there is an agreed period of notice, which may not exceed one
month). The termination is free of charge unless the contract has been in force for less
than six months (Art. 55(2) Payment Services Directive). The payment service provider
can terminate a framework contract concluded for an indefinite period by giving at least
two months’ notice on paper or another durable medium (Art. 55(3) Payment Services
Directive).151
(2) This notice may be given only with a notice period, the length of which depends on the type
and duration of the contract, and on the circumstances of the case.
64 The DCFR contains provisions on this subject matter in its third book (‘Obligations
and Corresponding Rights’). According to Art. III.–1:109 DCFR, each party to a con-
148 On this (lesser considered) type of termination see Chapter 6 mn. 83.
149 See mn. 32.
150 See Reich/Micklitz/Rott/Tonner, European Consumer Law (2nd edn, Intersentia 2014) 223.
151 On termination rights in insurance contracts see Basedow et al. (eds), Principles of European Insu-
rance Contract Law (PEICL) (2nd edn, Sellier 2016) Art. 2:202 C2.
232
IV. Modification and termination
tract involving continuous or periodic performance may terminate the contract with fu-
ture effect by giving the other party reasonable notice. The proposed CESL provides that
the reasonable period may not exceed two months (Art. 77 CESL) – the provision is
however supplemented by more general rules in Art. 8 CESL152 for the different types of
termination and also by the provision on divisible obligations in Art. 117 CESL. It will be
necessary to consider whether this division or an individual rule is preferable for long-
term contracts.
Article 77 CESL
Contracts of indeterminate duration
(1) Where, in a case involving continuous or repeated performance of a contractual obligation, the
contract terms do not stipulate when the contractual relationship is to end or provide for it to be
terminated upon giving notice to that effect, it may be terminated by either party by giving a
reasonable period of notice not exceeding two months.
(2) In relations between a trader and a consumer the parties may not, to the detriment of the con-
sumer, exclude the application of this Article or derogate from or vary its effects.
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233
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CHAPTER 6
BREACH AND REMEDIES
Literature: von Bar/Clive (eds), DCFR Full Edition (Sellier 2009); DiMatteo/Janssen/Magnus/Schulze
(eds), International Sales Law: Contract, Principles & Practice (2nd edn, Nomos 2021); Grabitz/Hilf/
Nettesheim (eds), Das Recht der Europäischen Union (68th edn, C.H. Beck 2019); Howells/Wilhelmsson/
Twigg-Flesner, Rethinking EU Consumer Law (Routledge 2017); Jansen/Zimmermann (eds), Commen-
taries on European Contract Laws (OUP 2018); Research Group on the Existing EC Private Law (Acquis
Group), General Provisions, Delivery of Goods, Package Travel and Payment Service (Contract II) (Sellier
2009); Reich et al., European Consumer Law (2nd edn, Intersentia 2014); Riesenhuber, EU-Vertragsrecht
(Mohr Siebeck 2013); Schmidt-Kessel (ed), Der Entwurf für ein Gemeinsames Europäisches Kaufrecht –
Kommentar (Sellier 2014); Schulte-Nölke et al. (eds), Der Entwurf für ein optionales Kaufrecht (Sellier
2012); Schulze (ed), Common European Sales Law – Commentary (Nomos 2012); Schulze/Staudenmayer
(eds), EU Digital Law – Commentary (Nomos 2020); Wagner, ‘Ökonomische Analyse des CESL: Das Recht
auf zweite Andienung’ (2012) ZEuP 797.
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Innovative approaches in the acquis communautaire . . . . . . . . . . . . . . . . . . . . . 1
2. Approaches to the system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II. Liability for non-performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4. Strict liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5. Burden of proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6. Statutory limitations and exclusion of liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7. Contractual exclusion of liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
III. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2. Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3. Withholding performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5. Price reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
6. Damages and interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
IV. Restitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
2. Sale of Goods Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
3. Digital Content Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
4. DCFR and CESL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
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5. Redress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
I. Introduction
1 The term ‘breach’ is used as a collective term to describe the different acts or omissions that represent
235
Chapter 6 Breach and Remedies
2 For example reg 38 of the Irish European Communities (Consumer Information, Cancellation and
Other Rights) Regulations 2013 (SI No. 484/2013), which served to implement the Consumer Rights Di-
rective into Irish law; or the ‘fraud’ under Art. L 213–1 Code de la consommation, which served to imple-
ment the Consumer Sales Directive; see Thissen, Die Verbrauchsgüterkaufrichtlinie und die Haftung des
Verkäufers für öffentliche Äußerungen Dritter in Frankreich (LIT 2005) 72–74.
3 These include, above all, the Commercial Agents Directive, Consumer Rights Directive, Digital Con-
tent Directive, Late Payment Directive, Package Travel Directive, Payment Services Directive, and the Sale
of Goods Directive.
4 For example, Denied Boarding Regulation, Rail Passenger Regulation, Ship Passenger Regulation,
Contract Law, Acquis Communautaire and Common Frame of Reference’ in Schulze (ed), New Features in
Contract Law (Sellier 2007) 183, 185–187.
7 See Chapter 5 mn. 4, 37 et seq.
236
I. Introduction
building on the Consumer Sales Directive – expands the traditional national criteria for
conformity by including pre-contractual public statements made by the seller and third
parties.8 The notion of defect in the sale of goods is not limited to the physical integrity
of the good but rather also includes the installation instructions and installation by the
seller (see Art. 8 SGD following Art. 2(5) CSD). This concept of defect thus expresses
that the contractual obligations take into account the other party’s reasonable expecta-
tions.9 Such change in perspective towards the reasonable expectations can be seen
throughout the provisions on contractual obligations in relation to breach and therefore
places the criteria in a new context.
The legislation responding to the challenges to digitalization under the ‘Digital Single 4
Market Strategy’ have led to further innovation in contract law, as is shown by two new
approaches to breach. On the one hand, the provisions which, for the purposes of liabili-
ty, take into account the dependence of digital content and digital services on their digi-
tal environment, extend far beyond the installation provisions in sales law, which already
included particular interactions with the good in the liability for non-conformity. This
applies in particular to the liability of the supplier for incorrect integration according to
Art. 9 and 11 DCD, but is also expressed in the lists of subjective and objective confor-
mity criteria (including the characteristics of functionality, interoperability and compati-
bility).10 On the other hand, the liability for failing to supply updates is an innovation
with extensive systemic and practical importance for contract law.11 Furthermore, the
extension of liability due to the update obligation is also linked with a distinction by the
criteria and consequences of liability between single performance and continuous per-
formance over a period of time (inter alia with regard to the burden of proof and un-
winding the contract12) and also introduces a new structural element in European con-
tract law.13
has adopted from the Consumer Sales Directive and which the Digital Content Directive
has extended in scope, have made an important contribution by providing a foundation
for a partial systemization with, for example, the concept of a uniform requirement of
breach as a common requirement for several remedies, the inclusion of (subsequent)
performance as a remedy, the hierarchy of remedies, the division of subsequent perfor-
mance in sales into repair and replacement, and the equal ranking of termination and
price reduction as remedies.14 Not only have some Member States implemented these
8 See Chapter 3 mn. 82–83 See also Art. 8 DCD. The Package Travel Directive also contains a similar
approach in relation to statements from organizers and retailers, see Recital 26 PTD.
9 See Chapter 2 mn. 7 et seq.
10 Art. 7 and 8(1) in conjunction with Art. 11 DCD and Art. 6 and 7 in conjunction with Art. 10 SGD.
11 Art. 7(d) and 8(2) in conjunction with Art. 11 DCD and Art. 6(d) and 7(3) in conjunction with
from the provisions of the Consumer Sales Directive; on remedies for non-performance see Contract II/
Machnikowski/Szpunar, Art. 8:202 mn. 1–2; Schmidt-Kessel, ‘Remedies for Breach of Contract in Euro-
237
Chapter 6 Breach and Remedies
provisions on the design and relationship between remedies beyond the scope of the Di-
rective but have used them as a framework for a new structure of sales law and of the
general law of obligations as a whole (especially in Germany and also in part in
France).15
b) Acquis Principles
6 The Acquis Principles developed their approach to structuring European contract law
concerning breach on the basis of the Consumer Sales Directive, other relevant direc-
tives and associated European case law prior to 2010. This includes, in particular, the use
of overarching principles on the requirements and exercise of remedies, their relation-
ship to one another (including also damages and interest), as well as the extension of
general principles through specific rules for certain fields (e.g. the delivery of goods or
for particular services).16 The Acquis Principles have outlined the possibilities for coher-
ent development of the acquis communautaire, but the gaps in current EU contract law
prevent the further step of drafting a complete system of European law on breach. The
Acquis Principles therefore do not cover important topics such as the restitution after
termination of contract and, furthermore, must refer to the PECL or DCFR as the gaps
cannot be filled through reference to the acquis communautaire itself.17
c) CESL
7 Beyond these academic drafts, the proposed Common European Sales Law chal-
lenged the European legislator to develop an overarching system of rules for breach of
contract that is as comprehensive as possible in order to work in practice. In addition,
the CESL proposes a broad catalogue of remedies that closely followed the system of
remedies in the PECL, Acquis Principles and DCFR. The CESL seeks to provide each of
the parties (seller and buyer) with separate remedies.18 The remedies for parties to a ser-
vice contract were to be regulated separately, however in one general section on reme-
dies.19 The proposed separation into types of contracts and parties expresses that the
remedies in each case are possible reactions to the breach of the contractual obligations
stipulated in the preceding sections. The approach does, however, result in repetitions
and frequent cross-references, particularly to the earlier chapter on general terms20
which concerns the requirements of various remedies (such as non-performance, funda-
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pean Private Law – Principles of European Contract Law, Acquis Communautaire and Common Frame of
Reference’ in Schulze (ed), New Features in Contract Law (Sellier 2007) 183, 188; Zoll, ‘The Remedies for
Non-performance’ in Schulze (ed), Common Frame of Reference and Existing EC Contract Law (2nd edn,
Sellier 2009) 195, 197.
15 See mn. 2 and Chapter 1 mn. 27.
16 Contract II Chapter 8, Part A on ‘doorstep’ sales; Part B on the delivery of goods; Part E on package
to Art. III.–3:301 and III.–3:302 DCFR; Art. 8:302 ACQP on notice of termination, corresponding to
Art. III.–3:507(1) DCFR; Art. 8:304 ACQP on the right to withhold performance, corresponding to
Art. III.–3:401 DCFR; Art. 8:404 ACQP on interest on delayed payment, corresponding to Art. III.–3:708
DCFR.
18 Chapter 11 the remedies for the buyer (Art. 106 et seq. CESL) follow the obligations of the seller in
Chapter 10; the remedies of the seller in Chapter 13 (Art. 131 et seq. CESL) follow the obligations of the
buyer in Chapter 12.
19 Chapter 15, Section 4 (Art. 155 et seq. CESL).
20 Chapter 9 (Art. 87 et seq. CESL).
21 Chapter 16 (Art. 159 et seq. CESL).
238
I. Introduction
and party, yet are positioned after specific rules. Art. 106(1) CESL outlines the basic
structure of the list of remedies available to the buyer in the event of a non-performance
of an obligation by the seller.22 The remedies available to the buyer comprise the request
for performance, withholding performance, termination, price reduction, and dam-
ages.23 Art. 106(6) CESL regulates the general relationship between the remedies by stip-
ulating their cumulative application under the requirement ‘not incompatible’.24
However, the CESL’s chapters on remedies do not regulate all consequences resulting 8
from the exercise of remedies. In particular, Art. 8 CESL covers the termination of con-
tract in general; whether (and to what extent) a party is to return what has been ob-
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tained under the contract falls under the issue of restitution (Art. 172 et seq. CESL).25
This part is innovative in relation to European contract law and the laws of many Mem-
ber States as its provisions concern the return of what has been received not only in the
event of termination but also in the event of avoidance due to a defect in consent. From
the German perspective, it covers the consequences of termination and the compensa-
tion for enrichment.26 Accordingly, the provisions are removed from the chapter on de-
22 Corresponding provisions for the seller, the customer in a service contract, and the service provider
stance, Art. 8(2) CESL (termination and damages), Art. 120(3) CESL (price reduction and damages), and
Art. 8(1) CESL (exclusionary effect of termination). See Lorenz, ‘Das Kaufrecht und die damit verbunde-
nen Dienstverträge im Common European Sales Law’ (2012) 212 AcP 702, 754; Schmidt-Kessel/Silkens,
‘Breach of Contract’ in Plaza Penadés/Martínez Velencoso (eds), European Perspectives on the Common
European Sales Law (Springer 2015) 111, 132–133. On Art. III.–3:102 DCFR see DCFR Full Edition 777–
778.
25 See mn. 125 et seq.
26 §§ 346 et seq. §§ 812 et seq. BGB. See the corresponding explanations in German Civil Code.
239
Chapter 6 Breach and Remedies
fects in consent and from the parts on remedies and – in adhering to the ‘life cycle’ of
the contract27 – placed before prescription in the penultimate chapter of the CESL.
d) Services
9 The developments in services law over recent years have outlined approaches for sys-
tematization in relation to the law surrounding breach. The CESL laid the foundation by
including provisions on related services contracts and, moreover, applying structures de-
veloped for sales law to the services sector, yet without comprehensive regulation or con-
sideration of the latter’s features. Above all, Package Travel Directive and the Digital
Content Directive continue with the approach by adopting several basic elements from
the sales law acquis for key areas of the service sectors and adapting them to suit the par-
ticular needs.
10 Both the Package Travel Directive as well as Digital Content Directive contain a cata-
logue of remedies comprising (as under the system in the CESL) subsequent perfor-
mance, price reduction, and termination (as well as damages under the Package Travel
Directive.28 However, each have their own particular features.29 The Package Travel Di-
rective takes the particular nature of the contract into account as it does not provide re-
pair or replacement as the means for subsequent performance, but rather through allow-
ing alternative arrangements for continuation of the package where a significant propor-
tion of the service cannot be provided (Art. 13(5) PTD). Although modifications are
provided for these types of service contracts it is nevertheless possible to identify an
overarching structure in which the primacy of performance, as outlined for sales law by
the Consumer Sales Directive, is identifiable (e.g. ‘self-help’ in Art. 13(4) PTD, the tran-
sition to price reduction or termination in Art. 12(2) and (3)(b) PTD as well as in
Art. 14(4)(b) DCD).
11 As for the notion of conformity,30 concepts outlined primarily in sales law for the
structure of remedies are also transferred to service contracts. Future developments will
indicate the relevance of these concepts beyond the scope of the directives noted here.
One can at the least consider that the adoption and adaption of these concepts for par-
ticular types of service contracts can also contribute to the development of a general
concept of the law on breach which includes service contracts and continues the ap-
proach for sales contracts, thus strengthening the coherency of European contract law.
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1. Overview
12 The liability for non-performance of contractual obligations is a core feature of Euro-
pean contract law, as well as of national law. For the acquis communautaire, the first
questions are whether and how the circumstances and criteria surrounding liability can
be conceptualized in an overarching manner. This is followed by closer consideration of
the individual legal consequences resulting from this liability, in particular the remedies,
as well as the unwinding of failed contracts.31 This development of European contract
law has been influenced by different legal traditions, which are also reflected in the com-
27 Recitals 6, 26 CESL.
28 Art. 13 and 14 PTD; Art. 11 and 14 DCD.
29 For example, Art. 13(3), (5) and (6) PTD and Art. 14(2), (4) and (5) DCD.
30 Chapter 5 mn. 37 et seq.
31 See mn. 50 et seq., 125 et seq.
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II. Liability for non-performance
promises adopted in some provisions. In the common law tradition, ‘breach of contract’
is a central concept.32 It has found its way into international sales law via Art. 25 CISG
and also into the discussions on European contract law.33 In contrast, continental Euro-
pean legal systems usually distinguish between the contract (as a legal transaction) and
the obligations arising from the contract, so that the basis of the liability is the non-per-
formance or breach of contractual obligations.34 However, the nature and scope of the
obligations in question differ across the individual legal systems. With regard to the sys-
tematization of EU contract law, the acquis features particular approaches towards a sys-
tem of remedies for non-performance of particular obligations. These include above all
the performance obligations in sales contracts, in contracts for the supply of digital con-
tent and digital services, and some other contracts for services (especially package travel
contracts). However, despite their growing importance in the acquis, the information
obligations during the performance of the contract35 have remained largely without a
comparable set of European instruments to regulate the legal consequences for breach.
There is not necessarily an independent claim to performance of these information obli-
gations and thus breach may give rise to different legal consequences than for those obli-
gations for which EU law stipulates (subsequent) performance. On the other hand, lia-
bility for so-called duties of protection36 plays hardly any role in European contract law.
2. Structure
a) Competing approaches
Against this background, it is possible to distinguish between three main approaches 13
to structure the circumstances which, in the acquis communautaire, establish the liability
for non-performance and form the basis for the corresponding remedies: the classifica-
tion of several different types of breach, the combination of all such possibilities in a uni-
form set of criteria, and the distinction between non-performance and non-conforming
performance within the framework of an overarching concept of liability. While the Ac-
quis Principles and the CESL proceeded from the concept of a uniform set of criteria,
the more recent developments in the acquis show a tendency to distinguish between
non-performance and non-conforming performance.
b) Classification approach
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aa) The classification of individual specific types of breach allows for individual legal 14
consequences. How breach is classified is often linked to individual types of breach or
the reasons for such (therefore also called cause approach). However, as in national law,
the facets of breach can also be of quite different nature in the acquis communautaire
(e.g. delay in performance, impossibility, general failure to perform for a majority of
32 See Cartwright, Contract Law: An Introduction to the English Law of Contract for the Civil Lawyer (3rd
Non-Performance’ in Schulze (ed), Common Frame of Reference and Existing EC Contract Law (2nd edn,
Selllier 2009) 199.
34 On the questions arising for the academic drafts on European private law, see Schulze, ‘The Academ-
ic Draft of the CFR and the EC Contract Law’ in Schulze, ibid. 3 et seq.
35 For example, the supplier’s obligation to provide information on updates; Chapter 5 mn. 48–49.
36 German law refers to such obligations as Schutzpflichten. These duties of protection go beyond the
performance of the contractual obligations and related information obligations and are aimed at the con-
sideration of the other party’s other rights and interests, see for example § 241(2) BGB and the corre-
sponding comments in German Civil Code/Schulze, § 241 BGB mn. 8–9.
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Chapter 6 Breach and Remedies
(b) continuation or re-routing, under comparable transport conditions, to the final destination at
the earliest opportunity; or
(c) continuation or re-routing, under comparable transport conditions, to the final destination at a
later date at the passenger’s convenience.
The Denied Boarding Regulation covers numerous different types of breach, such as
denied boarding (Art. 4), cancellation (Art. 5), and delay (Art. 6) and provides different
consequences for each. The European legislator could not be content with a general
clause due to the strict liability and specific type of performance.
242
II. Liability for non-performance
c) Uniform approach
aa) At the other end of the spectrum is a uniform approach which does not draw dis- 17
tinctions between the different types of breach. Broadly speaking, this uniform approach
can be characterized as a breach or non-performance of contractual (performance) obli-
gations. However, the Package Travel Directive, which features this approach, does not
use this term. Instead, it extends the concept of lack of conformity beyond non-con-
forming performance (referred to as ‘improper performance’) to non-performance so
that its scope of application covers both.
bb) The academic drafts for European contract law also generally adopt the uniform 19
approach. However, in contrast to the Package Travel Directive, they do not extend the
notion of a lack of conformity, but rather form the basis for the notion of non-perfor-
mance. Following the approaches under the DCFR and PECL, the Acquis Principles de-
fine non-performance as:
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cc) The CESL developed this uniform approach by presenting the possibility, for the 20
first time, to include the law on breach of contract in a proposal with a near-complete
system of contract law. Art. 87 CESL is the central provision:
Article 87 CESL
Non-performance and fundamental non-performance
(1) Non-performance of an obligation is any failure to perform that obligation, whether or not the
failure is excused, and includes:
(a) non-delivery or delayed delivery of the goods;
(b) non-supply or delayed supply of the digital content;
(c) delivery of goods which are not in conformity with the contract;
(d) supply of digital content which is not in conformity with the contract;
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Chapter 6 Breach and Remedies
43 Schopper, ‘Verpflichtungen und Abhilfen der Parteien eines Kaufvertrages oder eines Vertrages über
Kaufrechts’ in Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 327.
46 Schulze CESL/Zoll, Art. 87 CESL mn. 4.
47 Zöchling-Jud, ‘Rechtsbehelfe des Käufers im Entwurf eines Gemeinsamen Europäischen Kaufrechts’
in Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 327, 332.
48 Schmidt-Kessel CESL/Schmidt-Kessel/Kramme, Art. 87 CESL mn. 12.
49 Art. 25 CISG; see Schlechtriem & Schwenzer CISG/Schroeter, Art. 25 CISG.
50 Schopper, ‘Verpflichtungen und Abhilfen der Parteien eines Kaufvertrages oder eines Vertrages über
ment for consumer sales contracts and consumer contracts for digital content. Furthermore, Art. 106(4)
CESL excluded the claim to performance and to damages in cases of ‘excused non-performance’ according
to Art. 88 CESL; see mn. 111.
244
II. Liability for non-performance
It may be surprising that this provision is given as an example of the uniform concept
of non-performance even though it concerns a specific case of defective or non-perfor-
mance, namely the lack of conformity.53 This lack of conformity is a functional equiva-
lent of the concept of a material defect. However, the underlying concept of the Con-
sumer Sales Directive differs from the traditional understanding of defect and can be de-
duced from the development of this Directive: one can see its relationship to the CISG54
and its uniform notion of breach.55 The use of such a uniform approach does not neces-
sarily result in the complete absence of a distinction between the different sub-forms of
defective and non-performance. The Consumer Sales Directive merely represents a
part of a system that has not fully developed in the acquis communautaire.
cc) In 2011, the European legislator took an important step towards the completion of 24
this system through Consumer Rights Directive. Art. 18 CRD provides the obligation of
timely delivery and the right to terminate the contract for non-performance of this obli-
gation.56 The consumer may terminate the contract if the trader has failed to fulfil his
obligation to deliver the goods at the agreed time or within the 30-day limit set out in
Art. 18(1) CRD. In this respect, the provision refers to a starting point in which the
debtor has not performed at the agreed time and, as such, is in default. However, it not
only covers the failure to perform in this period but also imposes the delivery obligation
even before this period. Furthermore, the right to terminate the contract applies both
where the trader has not yet performed and where there is no performance at all. The
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245
Chapter 6 Breach and Remedies
(2) Where the trader has failed to fulfil his obligation to deliver the goods at the time agreed upon
with the consumer or within the time limit set out in paragraph 1, the consumer shall call upon
him to make the delivery within an additional period of time appropriate to the circumstances.
If the trader fails to deliver the goods within that additional period of time, the consumer shall
be entitled to terminate the contract.
The first subparagraph shall not be applicable to sales contracts where the trader has refused to
deliver the goods or where delivery within the agreed delivery period is essential taking into ac-
count all the circumstances attending the conclusion of the contract or where the consumer in-
forms the trader, prior to the conclusion of the contract, that delivery by or on a specified date is
essential. In those cases, if the trader fails to deliver the goods at the time agreed upon with the
consumer or within the time limit set out in paragraph 1, the consumer shall be entitled to ter-
minate the contract immediately.
(…)
25 Art. 18(1) and (2) CRD thus contain an overarching rule for delivery and the conse-
quences of non-performance in different circumstances and for different reasons. Al-
though the starting point is framed as default, the provision covers non-performance in
each of these different forms and exists alongside the provisions on non-conforming
performance. This functional context began in combination with the Consumer Sales
Directive, but has continued to remain with the Sale of Goods Directive and its concept
of non-conformity. However, it is nonetheless difficult to recognize because two separate
directives contain the provisions concerning both types of breach – non-performance
and non-conforming performance.
26 dd) The overarching conceptual structure and the differences between the two types
of breach have become clearer via the Digital Content Directive. The liability for the fail-
ure to supply the digital content or digital services (i.e. non-performance) and for non-
conforming performance are covered in a single directive. The central provision on lia-
bility combines both types of the performance obligation with the corresponding rules
on the consequences of breach: the obligation to supply with the remedy for the failure
to supply (Art. 11(1), 13 DCD) and the obligation to perform in conformity with the
contract with the remedies for lack of conformity (Art. 11(2), (3), 14 DCD). In line with
the inclusion of different types of contracts for the supply of digital content and digital
services, the concept of non-conformity57 also extends to non-conforming performance
57 On the additional distinction between single supply and continuous supply within a period of time
246
II. Liability for non-performance
in contracts that, in national law, are regarded as, for example contracts to produce a
work or hire contracts.58
Despite these separate provisions for the two types of breach, the link between non- 27
performance and non-conforming performance is especially apparent in the interplay
between the concepts and the structure of their legal consequences in the Digital Con-
tent Directive. Both types of breach entitle the consumer to terminate the contract. In
principle, this right only arises on a ‘second level’ after the consumer has had the oppor-
tunity to receive subsequent performance (‘hierarchy of remedies’; Art. 13, 14(3), (4)
DCD).59 The provisions on exercise and the obligations following termination apply in
both instances (Art. 15 et seq. DCD). The differences can be seen in the details of subse-
quent performance as well as the transition to termination of the contract (e.g. the fail-
ure to supply ‘without undue delay’ upon request as opposed to ‘within a reasonable
time’ after notification of the lack of conformity; Art. 5(1), 14(3) DCD).60 They are also
evident in the inclusion of price reduction as a further remedy for non-conformity and
are also reflected in the provisions on termination (see Art. 16(1) DCD). The distinction
between non-performance and non-conforming performance in European contract law
is therefore not only determined historically by the fact that these types of breach were
regulated at different times for the sales of goods but it also eases the appropriate consid-
eration of the parties’ interests by allowing for different legal consequences.
3. Time
The distinction between non-performance and non-conforming performance may 28
also serve to determine the point in time at which the liability for breach arises. In prin-
ciple, the relevant point in time for non-performance is the moment at which the perfor-
mance is due;61 this moment is the starting point for the provisions on liability. If the
parties have not agreed on the due date, the conclusion of contract may serve as the ba-
sis. Where digital content or a digital service is not supplied, Art. 11(1) DCD refers to
the provisions on supply, including the due date (Art. 5(1) DCD). Due to these provi-
sions, the requirement to supply ‘without undue delay’ after the conclusion of contract
forms the typical starting point for the provisions on liability (unless the parties have
agreed otherwise). In particular, the requirements for remedies for a failure to supply are
linked to this requirement. According to Art. 13(1) DCD, if the trader does not supply
the digital content or digital service without undue delay after the conclusion of the con-
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tract or at the time agreed by the parties, the consumer shall call upon the trader to sup-
ply the digital content or digital service. If the trader fails to do so without undue delay
or within an additional period of time, the consumer may terminate the contract.
Art. 18(1) and (2) CRD apply in instances of non-performance (non-delivery) in sales
contracts, also taking the moment of conclusion of contract as the basis: the trader must
deliver the goods without undue delay, but not later than 30 days from the conclusion of
the contract. If the trader does not deliver the goods to the consumer at the agreed time
or within this 30-day period, the consumer shall call upon the trader to deliver within an
additional period of time; failure to do so will allow the consumer to terminate the con-
tract.
58 See Chapter 5 mn. 19; Schulze, ‘Die Digitale-Inhalte-Richtlinie’ (2019) ZEuP 695, 709–710; Wend-
247
Chapter 6 Breach and Remedies
29 In contrast, the relevant point in time for liability for non-conforming performance is
generally the moment of performance. For the delivery of goods, Art. 10(1) SGD pro-
vides that the delivery of the goods also serves to determine the duration of the liability.
The liability covers any non-conformity which exists at the time when the goods were
delivered and which becomes apparent within two years of that time.62 The limitation
periods under national law shall ensure that such limitation period allows the consumer
to exercise the remedies for any non-conformity which becomes apparent within this
two-year period (see Art. 10(4) SGD). The limitation of liability to non-conformities
which become apparent within two years from delivery is, however, a minimum stan-
dard as Art. 10(3) SGD permits the Member States to introduce or maintain longer time
limits.
30 For the single supply or a series of individual acts of the supply of digital content or
digital services, Art. 11(2) DCD links the liability to the moment of supply, which also
serves as the starting point for the duration of liability. As Art. 10(4) SGD, Art. 11(2) also
provides a minimum two-year period.
Where a contract provides for a single act of supply or a series of individual acts of supply, the trader
shall be liable for any lack of conformity under Articles 7, 8 and 9 which exists at the time of supply,
without prejudice to point (b) of Article 8(2).
If, under national law, the trader is only liable for a lack of conformity that becomes apparent within
a period of time after supply, that period shall not be less than two years from the time of supply,
without prejudice to point (b) of Article 8(2).
If, under national law, the rights laid down in Article 14 are also subject or only subject to a limitation
period, Member States shall ensure that such limitation period allows the consumer to exercise the
remedies laid down in Article 14 for any lack of conformity that exists at the time indicated in the
first subparagraph and becomes apparent within the period of time indicated in the second subpara-
graph. (…)
31 The Directives contain specific rules for the continuous supply of digital content or
digital services over a period of time. These rules also follow the principle that the mo-
ment of performance is relevant for determining liability. However, these rules do not set
a particular point in time but rather a period of time. The liability provision in the Digi-
62 Art. 10(5) and (6) SGD do allow the Member States to provide for exceptions and variations (e.g. for
second-hand goods).
248
II. Liability for non-performance
tal Content Directive is thus inserted into an overarching structure which Art. 8(2) DCD
outlined for non-conformity.63 Under Art. 11(3) DCD, the liability extends to each lack
of conformity which occurs or becomes apparent during the period of time during
which the digital content or digital service is to be supplied under the contract. For the
sale of goods with digital elements, Art. 10(2) SGD shapes the liability to fit within the
model used in sales law (i.e. the delivery of the goods) and modifies this where continu-
ous supply exceeds the standard two-year period (e.g. a navigation system with ‘lifetime’
updates).
4. Strict liability
The aforementioned provisions from the acquis communautaire do not require fault 32
for liability, instead favouring a system of strict liability (i.e. ‘objective’ liability). As out-
lined by Art. 8:101 PECL, European contract law thereby follows the approach under the
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CISG, which in turn is based on the common law standard rather than the notion of
fault-based liability familiar in continental-European legal systems. As a consequence,
Art. 8:101 and 8:102 ACQP as well as Art. 106(4) CESL provide, as also in various direc-
tives, that the exercise of the remedies does not require fault on the part of the debtor.
However, this focus on strict liability for breach under European contract law does not
prevent other instruments (in particular the reasons for excluding liability64 and limiting
the extent of damages65) from adopting similar functions in order to balance the inter-
ests of each party as under a fault-based system of liability.
5. Burden of proof
The question of the party bearing the burden of proving breach is of considerable im- 33
portance for enforcing legal rights. However, the acquis communautaire only regulates
this particular matter for specific situations. As the rules on burden of proof in other
249
Chapter 6 Breach and Remedies
areas (such as pre-contractual information duties) these provisions are based on the gen-
eral assumption that the party must prove the fact she seeks to rely on in order to exer-
cise a right.66 The provisions in the directives primarily serve to deviate from this princi-
ple by reversing the burden to favour the party who is particularly worthy of protection
in such situations.
34 Art. 11 SGD and Art. 12 DCD contain such a reversal of the burden of proof. This
provision of the Sale of Goods Directive follows the presumption under Art. 5(3) CSD:
any lack of conformity which becomes apparent within six months of delivery of the
goods shall be presumed to have existed at the time of delivery. However, Art. 11(2) SGD
extends this timeframe to one year and allows the Member States to maintain or intro-
duce a two-year period. In order to enforce his rights, under the general principle the
consumer must merely prove a non-conformity that has become apparent within two
years from the date of delivery (Art. 10(1) SGD). However, where the presumption ap-
plies, the consumer does not have to prove the further criterion that the non-conformity
existed at the time of delivery. Proving this aspect is often difficult to prove in retrospect
and thus often cannot be proven. Art. 11(1) SGD strengthens the protection for the con-
sumer by reversing the burden of proof: the seller must prove that the non-conformity
did not exist at the time of delivery. The seller is therefore obliged to furnish sufficient
proof that the reason for the non-conformity is due to circumstances that arose after the
delivery of the good to the consumer. In contrast, ‘the consumer is not required to prove
the cause of that lack of conformity or to establish that its origin is attributable to the
seller’67. In principle, this also applies to goods with digital elements.68 However, where
there is continuous supply over a period of time, the rule under Art. 10(2) SGD applies,
according to which the liability period corresponds to the length of the particular period
of time for supply (and may exceed two years).69 Art. 11(3) SGD adapts the reversal of
the burden of proof to this rule: the seller bears the burden of proving that the digital
content or digital service was in conformity throughout the entire period of time under
Art. 10(2) SGD.
35 Art. 12 DCD determines the burden of proof in a similar direction, but with more de-
tailed and more extensive rules. Recital 59 DCD justifies these rules, inter alia, on the
basis that the highly complex nature of digital content and digital services puts the trad-
er is in a better position to assess why the digital content or digital service was not sup-
plied or supplied in conformity. In addition, Recital 59 makes clear that whereas it is for
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the consumer to provide evidence of the non-conformity, the consumer should not have
to prove that the non-conformity existed at the time of supply. In contrast to the Sale of
Goods Directive, the Digital Content Directive includes non-performance (i.e. failure to
supply) in addition to non-conforming performance.70 Art. 12(1) DCD provides that the
trader bears the burden of proving that the digital content or digital service was supplied
to the consumer. In the event the trader seeks to enforce his rights (especially regarding
the claim to payment), applying the general principle to this distribution of the burden
of proof would mean that each party must prove the facts on which it seeks to rely. Al-
though the task of regulating claims by the trader is left to the Member States, Art. 11(1),
13 DCD regulate the reverse situation in which the consumer seeks to enforce rights
against the trader due to his non-performance. Under the general principle, in this case
250
II. Liability for non-performance
the consumer would have to prove that the trader did not supply the digital content or
digital service in accordance with Art. 5 DCD. In deviation, Art. 12(1) places the burden
upon the trader due to the consumer’s supposedly weaker position.
The Digital Content Directive extends the distinction between single supply and con- 36
tinuous supply over a period of time71 to the burden of proof. In the former instance
(which also includes a series of single acts of supply), Art. 12(2) DCD provides that trad-
er bears the burden of proving that the supplied digital content or digital service was in
conformity at the time of supply where a lack of conformity becomes apparent within
one year from supply. In this respect, the reversal of the burden of proof covers a shorter
period of time than the liability under Art. 11(2) DCD (no less than two years after sup-
ply). In comparison with the rule concerning goods with digital elements, the time of
supply as starting point corresponds with the time of delivery, but unlike Art. 11(2) SGD
the Member States may not extend the time period to two years. However, if the contract
provides for the continuous supply over a period of time, such period is also relevant as
the reversal of the burden of proof covers the non-conformities which become apparent
during this period for supply. It does not extend to non-conformities which occur dur-
ing the period for supply but first become apparent later (even though the trader is liable
in accordance with Art. 11(3) DCD).
Art. 12(4) DCD excludes a reversal of the burden of proof in both instances if the dig- 37
ital environment 72 of the consumer is not compatible with the technical requirements of
the digital content or digital service (e.g. insufficient processing capacity, incorrect oper-
ating system, etc.).73 The incompatibility must be due to technical requirements of which
the trader informed the consumer in a clear and comprehensible manner before the con-
clusion of the contract. This exception is nonetheless linked with a reversal of the burden
of proof: the trader bears the burden of proving the requirements under Art. 12(4) DCD.
Where the trader can furnish proof, the consumer does not benefit from the reversal of
the burden of proof under Art. 12(2) and (3) DCD. The burden of proof then follows the
general principle and as such the onus is on the consumer to prove the non-conformity.
Art. 12(5) DCD places the consumer under an ‘obligation to cooperate’ with the trad- 38
er in order to ascertain whether the cause of non-conformity at the time specified in
Art. 11(2) or (3) lay in the consumer’s digital environment. This ‘obligation to cooperate’
is, however, not comparable with the general duty to cooperate under Art. 1:202 PECL
(and Art. 3 CESL). According to Art. 1:202 PECL, each party owes to the other a duty to
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cooperate in order to give full effect to the contract. In contrast, the obligation to coop-
erate under Art. 12(5) DCD serves the specific purpose of allowing the trader to exam-
ine whether he is liable for the non-conformity or can furnish evidence to the contrary.
Specifically, the obligation is directed towards the cooperation by the consumer in the
use of technical means which would allow the trader to determine the cause of the non-
conformity (such as the provision of automatically generated incident reports or with
details of the consumer’s internet connection74). However, due to the effect of the princi-
ple of proportionality on Art. 12(5) DCD, the consumer is only obliged to cooperate to
the extent that is reasonably possible and necessary.75 In particular, the protection of the
consumer’s privacy and her personal data are to be considered and as such the obligation
is limited to the technically available means which are least intrusive for the consumer.
251
Chapter 6 Breach and Remedies
Virtual access to the consumer’s digital environment is only permitted under exceptional
and duly justified circumstances.76
39 The obligation to cooperate under Art. 12(5) DCD also differs from the information
obligations as well as the performance obligations in the acquis communautaire. Unlike
information obligations, where the debtor is typically the trader and the obligation
specifically concerns the provision of information, the obligation to cooperate may
oblige the consumer to give particular information to the trader. In contrast to the per-
formance obligations under Art. 5 and 6 DCD, the failure to cooperate is not linked to
liability for non-performance which would allow the other party recourse to particular
remedies (as provided in Art. 13 and 14 DCD). The consumer’s failure to cooperate
merely excludes the reversal of the burden of proof under Art. 12(2) and (3) DCD which
would otherwise be to her benefit. However, this is subject to the further requirement
that the trader has fulfilled his information obligation under Art. 12(5) DCD: to inform
the consumer in a clear and comprehensible manner of the obligation to cooperate. If
the consumer receives this information and fails to cooperate in ascertaining the cause
of the non-conformity, the position of the consumer will therefore be as though the trad-
er has proven that – as per Art. 12(4) DCD – the consumer’s digital environment is not
compatible with the digital content or digital service. The obligation to cooperate is a
particular type of obligation whereby the other party does not have a claim to perfor-
mance or any other remedies in the event of breach.77 Together with the rules on burden
of proof and supplemented by pre-contractual information obligations, the approach
taken by the Digital Content Directive can justifiably lessen the considerable weight on
the trader with regard to his liability for non-conforming performance.
76 Recital 60 DCD.
77 German legal terminology refers to this type of obligation as an Obliegenheit. It is in the interest of
the debtor to perform such an obligation in order to be able to exercise particular rights or receive certain
benefits, such as the reversal of the burden of proof.
78 See DCFR Full Edition 788–792.
252
II. Liability for non-performance
the scope of (functionally equivalent) approaches also extends from the release of the
performance obligation (and not first from the liability for non-performance79) to ex-
cluding the application of particular remedies.
Despite the lack of a uniform structure, EU legislation does contain provisions on the 41
limitation or exclusion of liability in several areas, yet such provisions mostly concern
the creditor’s remedies and not liability as a whole. For example, under Art. 13(3) PTD
the organizer need not remedy the non-conformity if it is impossible to do so or would
entail disproportionate costs. However, the claim to price reduction is only excluded if
the non-conformity is attributable to the traveller. According to Art. 14(3) PTD, the
claim to compensation for damages is only excluded in such instances, if the non-con-
formity is attributable to a third party, or is due to unavoidable and extraordinary cir-
cumstances. In addition to impossibility and disproportionality, the attribution to the
traveller or third party, the foreseeability and avoidability as well as the ‘unavoidable and
extraordinary circumstances’ form a conceptual basis for specific limitations of liability
across several levels. In consumer contracts, Art. 14(2) DCD and Art. 13(2) and (3) SGD
also use impossibility or disproportionality to exclude particular remedies. Neither Di-
rective includes unavoidable extraordinary circumstances, however Art. 5(3) Denied
Boarding Regulation does – similar to the Package Travel Directive – use this concept to
exclude a particular type of liability (i.e. compensation for cancelled flights).
The regulation of other limitations of liability and, above all, the reasons for general 42
exclusions of liability is mostly left to the Member States. As expressly stated in
Art. 13(7) SGD, the Member States may regulate whether and to what extent a contribu-
tion of the consumer to the lack of conformity affects the consumer’s right to remedies.
Art. 12 SGD further provides that Member States may maintain or introduce provisions
stipulating that the consumer has to inform the seller of a lack of conformity and, should
the consumer fail to do so, the consumer cannot rely on the remedies otherwise avail-
able to him. This latter consequence is one of the most important practical consequences
of the exclusion of liability.80 In general, one can observe a notable range of reasons for
excluding liability which is either regulated by EU law itself or under national law. The
approach is mostly piecemeal and lacks an overarching structure which could protect
the limited scope of contractual liability under EU law from inconsistencies within the
system and variations across the national laws.
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79 For example under German law; see German Civil Code/Schulze, § 275 BGB.
80 See SWD(2017) 209, 148–149 for an overview of national laws.
81 On the scope of this rule see C–48/16 ERGO Poist’ovňa ECLI:EU:C:2017:377.
82 Contract II/Magnus, Art. 8:102 mn. 1.
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Chapter 6 Breach and Remedies
Art. 106(5) CESL furthered this approach with the rule that the buyer may not resort
to any of the remedies available to her to the extent that she caused the non-perfor-
mance by the seller. This does not exclude the liability for non-performance or non-con-
forming performance, but rather denies the buyer recourse to the remedies.83 The Ac-
quis Principles do not contain any additional provisions on the release from liability in
the event that the reason for the non-performance is beyond the control of the debtor. It
would appear that the acquis communautaire did not provide a sufficient basis for a rule
resembling Art. 79 CISG.
44 In contrast, Art. 8:108 PECL provides that the ‘excuse due to an impediment’ is to be
adopted for European contract law in accordance with the model in Art. 79 CISG;
Art. III.–3:104 and Art. 88 CESL follow this approach. However, according to Art. 106
CESL, where non-performance is excused, the buyer may only resort to termination and
price reduction.
Article 88 CESL
Excused non-performance
(1) A party’s non-performance of an obligation is excused if it is due to an impediment beyond that
party’s control and if that party could not be expected to have taken the impediment into ac-
count at the time of the conclusion of the contract, or to have avoided or overcome the impedi-
ment or its consequences.
(2) Where the impediment is only temporary the non-performance is excused for the period during
which the impediment exists. However, if the delay amounts to a fundamental non-perfor-
mance, the other party may treat it as such.
(…)
in Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 327, 330.
84 Schopper, ‘Verpflichtungen und Abhilfen der Parteien eines Kaufvertrages oder eines Vertrages über
254
II. Liability for non-performance
contractual liability).85 In this respect, the list of prohibited contract terms under the
Unfair Terms Directive plays an important role:
b) Assumption of liability
In addition to the contractual limitation or exclusion of the provisions on liability to 47
the extent permitted by law, freedom of contract also allows the parties to assume liabili-
ty for particular circumstances (e.g. the suitability of goods for a specific purpose). The
parties may also extend the modes and time frames of liability beyond those set by legis-
lation, for example the assumption of liability for the existence of certain characteristics
(quality guarantee) or the continued existence of certain characteristics over a period of
time (durability guarantee). Such assumption may be effected by an agreement between
the party assuming liability (guarantor) and the party to whom rights are to be granted.
For example, the seller of a washing machine may guarantee its durability for five years
(thus exceeding the statutory two-year period for conformity). Such an agreement may
be concluded separately or form part of the sales or supply contract. The guarantor may
also assume the liability unilaterally – a key example of the legally binding nature of a
unilateral promise – in the aforementioned example, it would thus be the manufacturer
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(not the seller) of the washing machine who guarantees the durability for five years.
Art. 17 SGD is the central provision for unilateral and bilateral guarantees. It applies 48
to all commercial guarantees as defined in Art. 2 No. 12 SGD:
Art. 17(1) SGD regulates the scope of the binding nature of the guarantee on the 49
guarantor and, where applicable, the producer:
85 See, as one examples, the limitation on exclusions of contractual liability through setting a one-year
minimum liability period for second-hand goods in Art. 10(6) in conjunction with Art. 21(1) SGD (previ-
ously in Art. 5(1) in conjunction with Art. 7(1) CSD, see C–133/16 Ferenschild ECLI:EU:2017:541).
255
Chapter 6 Breach and Remedies
Art. 17(2) SGD regulates the form (durable medium), transparency (plain and intelli-
gible language), and the minimum content of the guarantee statement, which pursuant
to Art. 17(2)(a) shall include the clear statement that the consumer is entitled by law to
remedies from the seller free of charge86 in the event of a lack of conformity of the goods
and that those remedies are not affected by the commercial guarantee. These provisions
show that Art. 17 SGD serves to protect the consumer with regard to the design of com-
mercial guarantees. Freedom of contract serves foremost as the legal basis for the use of
such guarantees. However, their use for the purposes of supply and marketing of prod-
ucts by the seller, producer or other third party ought not be driven by the interests of
such parties, but should be based on a balance of interests which takes into account the
consumer’s reasonable expectations surrounding a guarantee as an additional base for li-
ability alongside the legal guarantee.
III. Remedies
1. Overview
50 In the event a party does not perform its contractual obligation, particular remedies
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may be available to the injured party. The term ‘remedies’ has made its way into Euro-
pean contract law through the CISG (see Art. 45 et seq. CISG) and the PECL (e.g.
Art. 8:101 PECL). The Digital Content Directive and the Sale of Goods Directive have
made several changes to the system of remedies under the Consumer Sales Directive,
which include accommodating the effects of digitalization on contract practice. Both Di-
rectives will therefore set the basic framework for the present development of remedies
in the acquis communautaire.
51 As will be discussed in detail below, the system of remedies under both Directives
prioritizes the (subsequent87) performance of the obligation as the first tier of remedies
(‘hierarchy of remedies’). This status is ensured in particular by the requirement of an
additional period for performance before allowing the transition to other remedies. Un-
der the Digital Content Directive and Sales of Goods Directive, termination and price
reduction are available to the consumer as second-tier remedies. Neither Directive con-
tains provisions on damages, thus leaving the provisions on this remedy to national law.
256
III. Remedies
However, rules on damages do feature in other EU legislation (in particular the Package
Travel Directive), in the CESL and in the academic drafts on European contract law. In
addition, the CESL also provides a right to withhold performance.
2. Performance
a) Foundations
aa) The right to performance under European contract law is not designed as a ‘pri- 52
mary’ claim to performance, in contrast to ‘secondary’ rights for non-performance (as in
Germany and in other continental-European Member States). By falling under the reme-
dies, the claim to performance in European contract law follows the approach under the
CISG.88 Where the debtor does not perform of an obligation, the creditor may in princi-
ple first claim performance. The PECL outlined this notion of performance as a remedy
for European contract law and became a core element of European consumer sales law
via Art. 3 CSD (albeit in the form of subsequent performance). Art. 13(1)–(3) SGD now
contain the central provisions on subsequent performance in consumer sales contracts.
The Sale of Goods Directive thus grants the buyer of a non-conforming good a claim 53
to have the goods brought into conformity (subsequent performance) via repair or re-
placement of the non-conforming good. It therefore does not refrain from including an
enforceable claim to performance in natura. In contrast to many continental-European
legal systems, the Directive does not afford the buyer with a ‘primary right’ but rather a
remedy in the event of non-conforming performance. Due to this approach, the obliga-
tion to perform in conformity with the contract is not mirrored by a right to demand
performance in conformity with the contract. An enforceable right to conforming per-
formance with the contract is rather to be found as one of several ‘remedies’ for non-
conforming performance. By following this approach adopted by the CISG, the Con-
sumer Sales Directive and now the Sale of Goods Directive could integrate the ap-
proaches from common law jurisdictions (which generally do not feature a primary
right to performance) and civil law jurisdictions.
Under the Sale of Goods Directive, the right to have the goods brought into confor- 54
mity only concerns a remedy for non-conforming performance. The Sale of Goods Di-
257
Chapter 6 Breach and Remedies
rective (and the Consumer Sales Directive beforehand) does not provide for the remedy
of performance in the event the trader fails to deliver the good to the consumer (non-
performance). The Consumer Rights Directive closes this gap with its provisions on the
delivery obligation and the consumer’s right to terminate the contract should the trader
fail to deliver after the consumer has set an additional period.89 However, this does not
allow one to infer a judicially-enforceable right to performance in natura: it is rather left
to the Member States to maintain or introduce a claim to performance under national
law.90 Accordingly, Recital 53 CRD ranks the right to enforce the performance of the
contract amongst the ‘other remedies’ the consumer has under national law.
55 Unlike the Sale of Goods Directive, the two-pronged approach91 under the Digital
Content Directive includes the remedies for breach in the form of non-performance and
non-conforming performance. For the latter, the Digital Content Directive follows the
approach under the Sale of Goods Directive (and therefore underlying approach under
the Consumer Sales Directive) by including a catalogue of remedies with the right to
subsequent performance as the primary remedy (Art. 14(1)–(3) DCD).92 For non-per-
formance, the consumer’s right to claim performance is included in the ‘remedies’ as fol-
lows:
56 It is clear from Art. 13(1) DCD that the consumer must first demand performance
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before being entitled to terminate the contract (unless Art. 13(2) applies). However, it is
questionable whether the consumer is afforded a (judicially) enforceable claim to perfor-
mance. At least at first glance, the partial overlap with Art. 18 CRD (from which such a
claim does not arise) does not support this. In contrast to Recital 53 CRD, Recital 61
DCD does not designate the claim to performance as part of the law of the Member
States. The general focus of the Digital Content Directive towards combining the reme-
dies for breach in one set of rules may also indicate that this is included in the scope its
Art. 13. In this case, the purpose of ensuring a high level of consumer protection would
suggest that the entitlement to call upon the trader to supply the digital content or digital
service should not merely be regarded as a requirement for termination but rather
should be afforded its own significance as an enforceable right to claim performance93
(similar to Art. 46 CISG94).
258
III. Remedies
bb) The positioning of the claim to performance in the structure of the Digital Con- 57
tent Directive mostly follows the approach outlined by the CISG, PECL and thereafter
the DCFR and CESL. This especially concerns the understanding of performance as a
remedy and the inclusion of rules for non-performance and non-conforming perfor-
mance in one set of rules with an overarching approach. However, in following Art. III.–
3:302 DCFR, the entitlement to require performance under Art. 106(1) and 110 CESL is
clearly devised for non-performance in general. Furthermore, the CESL also favours the
DCFR approach by extending beyond the directives by integrating each type of non-
conforming performance and non-performance under the single term ‘non-perfor-
mance’95.96 This forms the basis for the inclusion of subsequent performance as a partic-
ular type of performance in its catalogue of remedies (see Art. 106(1) CESL).97 Further-
more, in contrast to the Digital Content Directive and the Sale of Goods Directive, the
CESL uses this general concept not just for consumer contracts and for the seller’s and
buyer’s obligations.98 In addition, it includes obligations for service providers and also
for customers of such services (Art. 87(1), 147(1); 106, 131, 155, 157 CESL). As the Di-
rectives, on a conceptual level the CESL remains on the central path between common
law and civil law as it recognizes the right to performance only as a remedy. However, it
designs this as an enforceable remedy for non-performance in general and generalizes
the remedy to apply to non-performance in sales contracts and service contracts.
Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 287, 292; Schopper, ‘Verpflichtungen
und Abhilfen der Parteien eines Kaufvertrages oder eines Vertrages über die Bereitstellung digitaler In-
halte’ in Wendehorst/Zöchling-Jud (eds), Am Vorabend eines Gemeinsamen Europäischen Kaufrechts
(Manz 2012) 108, 108–109; Schulze CESL/Zoll, Art. 87 CESL mn. 3.
97 For more detail see EU Sales Directive/Grundmann, Art. 2 mn. 1–7; Magnus, ‘Consumer Sales and
Associated Guarantees’ in Twigg-Flesner (ed), The Cambridge Companion to European Union Private Law
(CUP 2010) 249–251; Schulte-Nölke/Twigg-Flenser/Ebers (eds), EC Consumer Law Compendium (Sellier
2008) 420; Schwartze, ‘Sachprobleme für die Umsetzung aus Genese, Inhalt und Dogmatik’ in Schermaier
(ed), Verbraucherkauf in Europa (Sellier 2003) 135–138.
98 However, performance as a remedy is not the same in B2C and B2B contracts. In particular, a right to
cure (mn. 75 et seq.) and notification obligation (Art. 106(2) and (3) CESL) are foreseen in B2B contracts.
For B2C contracts, the consumer has a right to choose between repair and replacement (Art. 111 CESL).
99 See mn. 56.
100 See mn. 40 et seq.
259
Chapter 6 Breach and Remedies
seller may use impossibility as a means to refuse to bring the goods into conformity.
Both provisions can be traced back to Art. 3(3) CSD and express the principle impossibil-
ium nulla obligatio est101. They cover both impossibility at the moment the contract was
concluded (‘initial impossibility’) and impossibility which arises after the conclusion of
the contract (‘subsequent impossibility’).102 However, impossibility under both provi-
sions only arises if it is not possible to bring the goods, digital content or digital service
in conformity with the contract (e.g. where the good is unique or a server failure pre-
vents the streaming of a live event). These are to be distinguished from situations in
which only one possible means to remedy the non-conformity is impossible103 (e.g. a
good is irreparable but not irreplaceable).
61 It may not be impossible to bring about conformity, however subsequent perfor-
mance may nonetheless be excluded if it were to place a disproportionate burden on the
creditor. According to Art. 13(3) SGD and Art. 14(2) DCD, the disproportionality refers
to the costs that would arise in order to bring the goods, digital content or digital service
260
III. Remedies
into conformity.104 Both provisions set the standard for a lack of proportionality through
two criteria; the value of the goods, digital content or digital service would have if there
were no lack of conformity and the significance of the lack of conformity. In addition,
both provisions require the circumstances of the case to be taken into account. The
claim to subsequent performance is excluded if, according to this standard, the costs of
each possible form of subsequent performance in the particular case are disproportion-
ate (a so-called ‘absolute lack of proportionality’ in contrast to a ‘relative lack of propor-
tionality’ where one form of subsequent performance is disproportionate in comparison
to another105). For example, the costs of repairing a unique good or defective software
would be considerable higher than the value of the good or digital content when in con-
formity.106 Such an ‘absolute’ lack of proportionality was not a clear exclusion under the
Consumer Sales Directive; the ECJ held in Weber/Putz107 that recognition by national
law108 was not in conformity with the Consumer Sales Directive. Art. 13(3) SGD and
Art. 14(2) DCD therefore reflect not only the decision to provide a clear rule on ‘abso-
lute’ lack of proportionately but also extend this means to exclude subsequent perfor-
mance beyond sales law.
cc) Impossibility and disproportionality are also limitations to the claim to (subse- 62
quent) performance in a service contract. For example, under Art. 3(3) PTD, the orga-
nizer does not have to remedy the lack of conformity if it is impossible or entails dispro-
portionate costs. In the latter instance, the extent of the lack of conformity and the value
of the travel services affected are to be taken into consideration. It can therefore be seen
that impossibility and disproportionality are relevant limitations in European contract
law not only for sales contracts but also for service contracts. Accordingly, the Acquis
Principles contain a general rule that, in addition, takes into account the particular na-
ture of personal services.
104 On the distinction between this absolute disproportionality under Art. 13(3) SGD in contrast to ‘rel-
into conformity if both repair and replacement are impossible, or they would impose disproportionate
costs on the seller. The same should apply if either repair or replacement is impossible and the alternative
remedy would impose disproportionate costs on the seller.’.
107 Joined cases C–65/09 and C–87/09 Weber/Putz ECLI:EU:C:2011:396.
108 In Germany under § 439(3) BGB, which has since been amended. See German Civil Code/Schaub,
261
Chapter 6 Breach and Remedies
to the remedy for failure to supply under Art. 13 DCD.109 However, if the performance is
not in conformity with the contract, the claim to subsequent performance aims to reme-
dy the non-conformity, for example under Art. 14(1) and (2) DCD. Under the Digital
Content Directive, the general scope of the remedy as ‘to have the […] brought into con-
formity’ is not further defined for particular types of contracts or technology. As such,
the nature of subsequent performance in contracts for the supply of digital content or
digital services exhibits flexibility in relation to the contractual nature of the supply and
technological possibilities. The choice of the method to bring the digital content or digi-
tal service into conformity rests with the trader,110 who often has greater knowledge and
experience, and who must also bear the consequences of a failed attempt to bring the
digital content or digital service into conformity (Art. 14(4)(c) DCD). However,
Art. 14(3) DCD does limit the trader’s choice of method: conformity is to effected not
only within a reasonable time but also free of charge and without any significant conve-
nience to the consumer.111
64 In contrast to contracts for the supply of digital content or digital services, the defini-
tion of a sales contract is clear112 and as such it is possible to state specific means to
bring about conformity. Following Art. 3(2) CSD, Art. 13(2) SGD provides repair and re-
placement as alternative means to remedy the lack of conformity of a good.
65 Subsequent performance in a sales contract therefore refers to either the repair or the
replacement of the non-conforming good. Art. 14(2) SGD provides that the consumer
shall make the goods available to the seller and that the seller shall take back the goods
at his own expense. However, the Sale of Goods Directive does not indicate the place at
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
which the repair or replacement is to take place. Although, in principle, this is for the
Member States to determine,113 the decision in Fülla114 held that the Consumer Sales Di-
rective contains several underlying criteria:
66 Art. 13(2) SGD allows the consumer to choose between repair or replacement. In this
respect, the goal of consumer protection overrides economic efficiency, namely that the
109 On the question whether this provides an enforceable right to performance, see mn. 56.
110 Recital 63 DCD.
111 See mn. 68 et seq.
112 See the definitions of a sales contract and of goods in Art. 2 No. 1 and 5 SGD.
113 Recital 56 SGD.
114 C–52/18 Fülla ECLI:EU:C:2019:447.
262
III. Remedies
seller will often be in the best position to determine whether repair or replacement is the
more appropriate approach.115 However, Art. 13(2) SGD also sets limitations on the
choice if under the circumstances either repair or replacement is impossible or dispro-
portionate. For instance, although it may be impossible to repair a particular good, it
may be easily replaced because it has been mass-produced. In turn, it may not be possi-
ble to replace a unique item, but the non-conformity is reparable or, as a further exam-
ple, it may be legally impossible to replace a particular good due to a trade embargo with
the country of manufacture (‘legal impossibility’). For the purposes of the provision,
there will be a lack of proportionality if the costs of repair would impose costs on the
seller that would be disproportionate compared to the cost of replacement, and vice ver-
sa (‘relative lack of proportionality’ in contrast to an ‘absolute’ lack of proportionality).116
The same criteria as for ‘absolute’ lack of proportionality are to be considered as well as
whether the alternative remedy could be provided without significant inconvenience to
the consumer. The set of criteria is not exhaustive, however, as the circumstances of the
case are also to be taken into account. Depending on the circumstances, the consumer
may thus be denied from having the trader repair the non-conforming good if the costs
of repair are much higher than the cost of replacement; the replacement may be exclud-
ed if, for example, the transport costs would be considerably higher in relation to the
ease of repair.
contract. In particular, the requirements should also prevent such burdens from causing
the creditor to refrain from seeking subsequent performance. The notion ‘free of charge’
therefore covers all costs which are necessary in order to bring the goods into conformi-
ty. In this regard, Art. 2 No. 14 SGD lists the examples of the cost of postage, carriage,
labour or materials – a list that builds on Art. 3(4) CSD, in light of the decision in Fülla:
115 Schulze CESL/Zoll, Art. 111 CESL mn. 4, 5; see also Faust, ‘Das Kaufrecht im Vorschlag für ein
Gemeinsames Europäisches Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales euro-
päisches Kaufrecht (Sellier 2012) 251, 258–259.
116 See mn. 61; Recital 48 SGD.
117 Art. 14(1) SGD; Art. 14(3) DCD.
263
Chapter 6 Breach and Remedies
those costs constitutes such a burden as to deter him from asserting his rights, which it is for the
national court to ascertain.
118 Compare this, however, to Recital 65 DCD: ‘where the trader has failed to bring the digital content
or digital service into conformity within a reasonable time, free of charge and without causing significant
inconvenience to the consumer, the consumer should be entitled to the remedies of price reduction or ter-
mination of the contract.’.
119 See mn. 84 et seq.
120 Joined cases C–65/09 and C–87/09 Weber/Putz ECLI:EU:C:2011:396 para. 57. See Reich et al., Euro-
264
III. Remedies
dd) ‘Free of charge’ also excludes the buyer’s obligation to compensate for the normal 71
use of the non-conforming goods prior to delivery of the replacement. Such exclusion
was initially doubtful under the Consumer Sales Directive because its recitals allowed
Member States to permit a reduction in the amount reimbursed to the consumer in or-
der to take account of the use of the goods since delivery.121 However, the ECJ decision
in Quelle122 clarified that the payment of such compensation for use prior to delivery of
the replacement is excluded. This decision is now reflected in Art. 14(4) SGD, which
limits the extent of use to ‘normal use’.
e) Consequences
The creditor may seek (subsequent) performance from the debtor if the aforemen- 72
tioned criteria are fulfilled and the recourse to the remedy is not excluded. The legal
consequences of subsequent performance do not arise ipso iure. Where the debtor fails
to deliver the good supply the digital content or digital service, Art. 18(2) CRD and
Art. 13(1) DCD requires the creditor to call upon the debtor to deliver or supply. In the
event of non-conforming performance, Art. 14(3) DCD and Art. 14(1)(b) SGD are less
clear with regard to the creditor’s request for subsequent performance as these provi-
sions merely refer to the moment at which the creditor informs the debtor the non-con-
formity. However, such notice suffices to start the period in which the debtor is to reme-
dy the non-conformity; the Directives do not require the creditor to set a time period or
to inform the debtor thereof.
Informing the debtor of the non-performance or non-conformity marks the start of 73
the reasonable time for (subsequent) performance. This period serves a dual function.
On the one hand, the debtor has to (subsequently) perform in natura within this period,
i.e. to deliver the goods (Art. 18(2) CRD) or to supply the digital content or digital ser-
vice (Art. 13(1) DCD); or to remedy the non-conformity (Art. 14(3) DCD; Art. 13(1),
(2) and 14 SGD). The remedy thus gives the creditor the possibility to assert and, if nec-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
essary, enforce her claim.123 On the other hand, the end of the reasonable period marks
the transition to the second-tier remedies of termination and, for non-conforming per-
formance, price reduction (Art. 13(1) and 14(1)(b) DCD; Art. 13(4)(a) SGD). The end of
the period is therefore an important step for the creditor who seeks termination or price
reduction. For the debtor, the reasonable period offers an additional chance to perform
his contractual obligations and receive the counter-performance – this chance no longer
remains once the reasonable period has lapsed.
The reasonable period commences when the creditor has informed the debtor. The 74
length of the period varies in instances of non-performance and non-conformity. If digi-
tal content or a digital service is not supplied in accordance with Art. 5 DCD, it is to be
supplied ‘without undue delay’124 unless the parties have agreed upon an additional peri-
od (Art. 13(1) DCD). However, according to Recital 61 DCD, in the event of non-perfor-
mance ‘the obligation of the trader to supply the digital content or digital service without
265
Chapter 6 Breach and Remedies
undue delay should mean having to supply it immediately’ because the supply in digital
form often should not require additional time. In the case of non-delivery of a good,
Art. 18(2) CRD merely refers to an ‘additional period of time’, however Recital 52 CRD
clarifies that the period is to be reasonable. Where the good is not in conformity with
the contract, Art. 14(1)(b) SGD provides that the seller must repair or replace the goods
within a reasonable period of time. The requirement of a ‘reasonable’ period is flexible
and therefore allows for consideration of the individual circumstances, in particular giv-
en the range of digital content and digital services.125 According to Art. 8:301 ACQP, this
requirement can generally serve to determine the time for (subsequent) performance.
The provision on the supply of digital content or digital services ‘immediately’ therefore
reflects be a special provision due to the nature of how digital content and digital ser-
vices are supplied.
f) Right to cure?
75 aa) (Subsequent) performance as a remedy for the creditor is not to be confused with
the debtor’s right to cure.126 Whether current EU contract law actually contains such a
right for the debtor is highly doubtful. It would be inappropriate to speak of a ‘right to
cure’ in the event of non-performance in those situations covered by Art. 18(2) CRD or
Art. 13 DCD because the performance in such cases is lacking. For non-conforming per-
formance, it is for the creditor to decide whether the debtor is to be given the second
opportunity to perform in conformity. The creditor (i.e. the consumer under the Digital
Content Directive and Sale of Goods Directive) can ‘activate’ the remedy by informing
the debtor of the non-conformity and demanding subsequent performance. There is no
provision for the debtor (i.e. the seller or trader) to claim that he may ‘cure’ the non-
conformity on his own initiative. Accordingly, the debtor may not, for example, deter-
mine the period for subsequent performance or require that the buyer make the non-
conforming goods available for the purpose of repair or replacement.
76 However, from the seller’s perspective a right to cure that may be exercised indepen-
dently of the remedy of subsequent performance could be very desirable, especially with
regard to the possibility of repair. Without such a right to cure, the buyer may request
the replacement of the good, which may result in a much greater loss for the seller.127
From the buyer’s perspective, a right for the seller to cure the non-conformity would be a
disadvantage because it could undermine the right to choose between repair and re-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
placement, and hinder the transition to the second-tier remedies of price reduction or
termination. Neither the Sale of Goods Directive nor the Digital Content Directive has
introduced a right to cure, which is in line with their aim to ensure a high level of con-
sumer protection. The Directives rather pay greater attention to balancing the respective
interests of the trader and consumer (in particular through the ‘absolute’ lack of propor-
tionality, which does not prevent the termination of the contract).
77 bb) The CESL features a right to cure, though this is reserved for B2B-contracts.
Art. 106(2)(a) CESL provides that, where the buyer is a trader, the buyer’s rights to exer-
cise any remedy (except withholding of performance) are subject to cure by the seller. In
contrast, according to Art. 106(3)(a) CESL the remedies for a consumer are not subject
to the seller’s right to cure.128 Art. 106 CESL was inspired by Art. III.-3:202 DCFR.
64 et seq; Wagner, ‘Ökonomische Analyse des CESL: Das Recht auf zweite Andienung’ (2012) ZEuP 797,
809–810.
266
III. Remedies
Although European legislation and the CESL have not adopted this approach for con-
sumer contracts, the question still remains whether it will play a role in future provisions
beyond consumer law.
3. Withholding performance
a) Acquis communautaire
Where the debtor has not yet performed, he generally cannot demand counter-per- 78
formance from the creditor, unless the latter is required to perform in advance. In bilat-
eral contracts this principle is a consequence of the exchange of performances (‘do ut
des’) and is an important instrument in balancing the interests of the parties in the event
of non-performance. It relieves the debtor of the burden to perform in advance (unless
agreed otherwise) and counters the risk that the debtor simply refrains from performing
his obligation without any consequences. Withholding performance first featured in the
acquis communautaire at most through Art. 3(1)(c) Late Payment Directive (2000) (now
Art. 3(1) Late Payment Directive).129 However, it is now a part of sales law through
Art. 13(6) SGD.
determine the conditions and modalities for the consumer to exercise the right to withhold the pay-
ment.
The buyer is thus entitled to withhold payment of any outstanding part of the price or 79
a part thereof until the seller has fulfilled his obligations. This right to withhold perfor-
mance refers to the seller’s obligations under the Sale of Goods Directive and thereby
concerns, in particular, the obligation of subsequent performance in the event of a non-
conformity. However, the wording and purpose of the provision also includes other obli-
gations under the Directive and can therefore be relevant in relation to restitution. Nev-
ertheless, the Directive refers expressly to national law with respect to the conditions and
128 Wagner, ibid. 825; Zoll, ‘Das Dienstleistungsrecht im Vorschlag für ein Gemeinsames Europäisches
Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier
2012) 279, 284. The decision not to include the right to cure in a consumer contract under the CESL at-
tracted considerable criticism. It has been viewed as too great a privilege for the consumer and inappropri-
ately harsh on the business in instances in which the goods have been tailored to the consumer’s individu-
al requirements. The termination of the contract by the consumer would therefore result in a total loss for
the seller as he can no longer use or resell the returned goods.
129 On the meanings of this provision see Contract II/Machnikowski/Szpunar, Art. 8:304 mn. 1.
267
Chapter 6 Breach and Remedies
modalities of the right. In line with the general tendency under the Directive, the right to
withhold performance under the Directive is only available to the consumer, thereby
contributing to the objective of increasing the level of consumer protection. The right to
withhold performance pursuant to the Sale of Goods Directive is therefore not a general
right. However, the right does contribute to the acquis, which a decade ago was consid-
ered by the Acquis Principles to lack a sufficient basis to formulate a general rule.130
CESL the risk is not passed to the buyer if she does not perform its obligation to take
delivery (Art. 129 CESL) because she has exercised its right to withhold performance.
Consequently, the buyer is not liable for loss or damage to the goods as long as she is
entitled to refuse to take delivery.
4. Termination
a) Overview
82 The right to terminate the contract allows one party to unilaterally end the perfor-
mance obligations of both parties. There may be different reasons for such a right, which
are each subject to different rules – the provisions on termination due to non-perfor-
mance are to be distinguished from termination due to a modification of the digital con-
130 Ibid.
131 See, in comparison, German law, in which the right to withhold performance is a defence (§ 320
BGB: Defence of unperformed contract); see German Civil Code/Oehm, § 320 BGB.
132 See Commentaries on European Contract Laws/Boosfeld, Art 9:201 mn. 1.
133 Schulze CESL/Zoll, Art. 113 CESL mn. 2.
268
III. Remedies
and thus greatly disappoints the injured party’s expectations. However, circumstances in
which the non-performance does not have such an extensive impact on the reasonable
expectations the injured party may have due to the content of the contract are not cov-
ered.138
134 However, the Commercial Agents Directive leaves the regulation to the law of the Member States.
135 In the German language versions, however, Art. 9:301 et seq. PECL (and Art. 49 CISG) refer to ‘Ver-
tragsaufhebung’, whereas Art. 8:301 ACQP uses ‘Rücktritt’; the CESL refers to a ‘Beendigung des Vertrages’.
136 See (1)(c) to Art. 106, 131, 155, 157 CESL. The CESL uses the concept of termination in other con-
texts and therefore uses it both in relation to ex tunc and ex nunc termination, for criticism see Wende-
horst, ‘Rücktritt („Beendigung“) im Entwurf für ein Gemeinsames Europäisches Kaufrecht’ in in Schmidt-
Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 371, 371–372.
137 See Kiene, Vertragsaufhebung und Rücktritt des Käufers im UN-Kaufrecht und BGB (Nomos 2010)
68; Schwenzer, ‘The Danger of Domestic Pre-Conceived Views with Respect to the Uniform Interpretation
of the CISG: the Question of Avoidance in the Case of Non-Conforming Goods and Documents’ (2005)
VUWLR 795, 799–800.
138 See Huber, ‘Modellregeln für das Europäische Kaufrecht’ (2008) ZEuP 709, 726–727; Lando/Beale
(eds), Principles of European Contract Law, Parts I and II (Kluwer 1999) 409; Schulze CESL/Zoll, Art. 87
CESL mn. 33–37.
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Chapter 6 Breach and Remedies
86 The Consumer Sales Directive did not adopt the notion of fundamental non-perfor-
mance but instead introduced the additional period model into the acquis communau-
taire (see Art. 3(5) CSD): the injured party has the right to terminate the contract only
after the additional period has expired and subsequent performance has not been ten-
dered.139 In other words, the party in breach has not used its ‘second chance’. The Con-
sumer Rights Directive, Digital Content Directive and the Sale of Goods Directive also
follow this approach. The nature of the non-performance of contractual duties is not of
most significance for this approach as, in principle, every non-performance will give rise
to the possibility to terminate if there is no performance within the additional time.
However, an exception does exist in relation to ‘minor’ non-conformities (Art. 14(6)
DCD;140 Art. 13(5) SGD), a much lower standard than ‘fundamental non-perfor-
mance’.141 Nonetheless, it is unclear whether the ‘minor’ standard is equivalent to the ‘in-
significant’ standard in Art. 114(2) CESL or whether it is stricter.142
87 In spite of the priority the aforementioned Directives afford to subsequent perfor-
mance, the Directives expands the scope of situations in which termination is possible
by foregoing a requirement of fundamental non-performance (in contrast to the CISG).
The Directives intend to protect the consumer. Although this represents a broader scope
than the CISG, it nonetheless reflects the changes in international trade as the costs of
returning the goods are now considerably lower than at the time the CISG was drafted
(due to reduction in prices in international freight shipping). Furthermore, the extension
corresponds to the better conditions for judicial enforcement and execution of restitu-
tionary measures due to judicial cooperation in the European legal community (in com-
parison to the difficulties that the CISG has to approach on a global scale143).144
88 bb) For sales law, Art. 18(1) and (2) CRD and Art. 13(4)(a) in conjunction with
Art. 14(1) SGD constitute the most important provisions which allow for termination of
the sales contract. The provisions of the Sale of Goods Directive stipulate two further
requirements for termination: no subsequent performance within a reasonable addi-
tional period and a non-conformity that is not minor. The additional period commences
when the consumer informs the seller of the non-conformity; no further actions are nec-
essary. According to the Directive, the consumer thus need not set the seller a specific
period for subsequent period.145 Art. 18(2) CRD contains the requirements for termina-
tion due to non-delivery in sales contracts. In the absence of an agreement to the con-
trary, these requirements are split across two stages: (i) the seller has not delivered the
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
139 See §§ 437 No. 2, 323(1) BGB. A much discussed point in German law is whether the requirement
for the consumer to set an additional period for performance is in conformity with the Consumer Sales
Directive. See German Civil Code/Schaub, § 437 BGB, mn. 12; Leible, ‘Kaufvertrag’ in Gebauer/Wiedmann
(eds), Zivilrecht unter europäischem Einfluss (2nd edn, Boorberg 2010), mn. 96.
140 According to this provision, the debtor bears the burden of proving that the non-conformity is mi-
nor. Furthermore, the provision does not cover contracts in which the consumer has not paid a price but
has provided personal data; see EU Digital Law/Gsell, Art. 14 DCD mn. 67 et seq.
141 EU Sales Directive/Bianca Art. 3 mn. 41–45; Schwartze, ‘Das künftige Sachmängelgewährleis-
tungsrecht’ (2000) ZEuP 544, 567; Schmidt-Kessel CESL/Wendehorst, Art. 114 CESL mn. 6–7. On the
problem that variations in protection across the Member States arise due to the influence of national per-
ceptions in determining the extent of the non-conformity see for example, C–32/12 Duarte Hueros ECLI:
EU:C:2013:128 (Opinion of AG Kokott) para. 57.
142 For example, the term ‘mineur’ is used in in the French versions of the Consumer Sales Directive and
the CESL; whereas the German language versions use ‘geringfügig’ and ‘unerheblich’ respectively.
143 Schulze, ‘Gemeinsamer Referenzrahmen und Acquis communautaire’ (2007) ZEuP 130, 140–141.
144 German law has used the approach in the Consumer Sales Directive not only for consumer sales but
as the general scheme for contract law; the revocation, which in German law corresponds to termination
of the contract, depends on the period for subsequent performance not the requirement of a fundamental
breach (§§ 323 et seq. BGB; for defects in sales contracts §§ 434, 437, 440, 323, 326(5) BGB); for details on
these provisions see the corresponding comments in German Civil Code.
270
III. Remedies
goods without undue delay, at the latest within 30 days after the conclusion of the con-
tract; (ii) the seller has not delivered the goods within the (subsequent) additional rea-
sonable period of time set by the consumer. This additional period begins with the re-
quest by the consumer to the trader to deliver within the additional period.
er the goods or where delivery within the agreed delivery period is essential taking into account all
the circumstances attending the conclusion of the contract or where the consumer informs the trader,
prior to the conclusion of the contract, that delivery by or on a specified date is essential. In those
cases, if the trader fails to deliver the goods at the time agreed upon with the consumer or within the
time limit set out in paragraph 1, the consumer shall be entitled to terminate the contract immedi-
ately.
Art. 14(3) and (4) DCD contain provisions similar to the Sale of Goods Directive in 89
relation to termination for non-conforming performance. However, for non-perfor-
mance, Art. 13(1) DCD does not refer to a ‘reasonable’ additional period, but rather
‘without undue delay’ as often the supply of digital content or a digital service should not
require additional time.
cc) The requirement of an additional period for performance also features in relation 90
to package travel contracts. Art. 13(6) PTD provides that the traveller is entitled to ter-
145 It is controversial whether national provisions, which require the consumer to set an additional peri-
od, is in conformity with the Directive. See §§ 437 No. 2, 323(1) BGB and German Civil Code/Schaub,
§ 437 BGB mn. 12.
271
Chapter 6 Breach and Remedies
minate the package travel contract (without paying a termination fee) or request price
reduction where the organizer fails to remedy the substantial lack of conformity within a
reasonable period set by the traveller.146 In this respect, the Package Travel Directive sets
a higher threshold than ‘not minor’ under the Digital Content Directive and the Sale of
Goods Directive. Despite this distinction, the acquis communautaire has adopted the
principle that the creditor may terminate the contract due to a non-conformity if the
debtor had the possibility for subsequent performance within an additional period.
c) Further requirements
91 The debtor may be entitled to terminate the contract without waiting for the addi-
tional period to end. For non-performance, such right is an exception to the general re-
quirements for the creditor to (i) first request performance and (ii) for the debtor to fail
to perform within the additional period (Art. 18(2) CRD; Art. 13(2) DCD). For non-
conforming performance, however, the failure to remedy the non-conformity within an
additional period is one of a series of factors which allows the creditor to terminate the
contract immediately. However, the right is limited by the extent of the non-conformity:
with the exception of digital content or digital content supplied in exchange for the con-
sumer’s personal data, the non-conformity may not be minor (Art. 14(6) DCD;
Art. 13(5) SGD). However, not only do structural differences exist between the require-
ments under the Digital Content Directive and the Sale of Goods Directive but there are
also differences in relation to termination for non-performance.
92 Impossibility or disproportionality. The creditor may terminate the contract immedi-
ately if bringing the goods, digital content or digital service in conformity with the con-
tract is impossible or disproportionate147. This arises directly from Art. 14(4)(a) DCD
and Art. 13(4)(a) SGD through the reference to the trader’s right to refuse to tender sub-
sequent performance in the case of impossibility or disproportionality. In contrast,
Art. 13(2) DCD and Art. 18(2) CRD do not contain an equivalent rule for non-perfor-
mance, but leave the matter to national law.148
93 Anticipatory breach. Immediate termination of the contract is also permitted where
the trader has declared, or it is equally clear from the circumstances, that he will not de-
liver the good or supply the digital content or digital service, or will not remedy the non-
conformity within an additional period and without significant inconvenience
(Art. 13(2)(a) and 14(4) DCD; Art. 13(4)(d) SGD; Art. 18(2) CRD, though with the nar-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
146 However, it may not be necessary to set an additional time limit e.g. where an immediate remedy is
272
III. Remedies
d) Partial termination
Art. 16(2) SGD concerns the partial termination of a sales contract. Under this provi- 97
sion, the buyer may terminate part of the sales contract if the non-conformity only con-
cerns a part of the goods delivered under the contract. However, the buyer may also ter-
minate the contract in relation to other goods which were acquired together with the
non-conforming goods where the buyer cannot be reasonably expected to keep only the
conforming goods. For example, where the buyer purchases a smartphone together with
accessories that are only compatible with that particular model, it may not be reasonably
expected for the buyer to keep the accessories without the smartphone.
e) Notice
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The provisions in the relevant directives and in the other sets of rules of European 98
contract law provide that the mere existence of reasons permitting termination does not
lead to termination ipso iure. As a formative right,153 termination must be exercised in
order to have effect.154 The injured party is therefore free to elect to maintain the con-
tract despite the possibility to terminate (as expressed in, for example, Art. 18 CRD and
Art. 13(1) SGD through the wording ‘the consumer shall be entitled’). The right to ter-
149 For example, where the non-conformity seriously affects the ability of the consumer to make normal
use of the goods and the creditor cannot expect repair or replacement to remedy the non-conformity
(Recital 52 SGD or where the debtor supplies an anti-virus program that is itself infected with a virus
(Recital 65 DCD).
150 Schulze, ‘Die Digitale-Inhalte-Richtlinie’ (2019) ZEuP 695, 719.
151 See Recital 52 SGD. Compare, however, the wording ‘the trader’s attempt’ under Art. 14(4)(c) DCD
with ‘seller having attempted’ under Art. 13(4)(b) SGD; see EU Digital Law/Gsell, Art. 14 DCD mn. 52.
152 Ibid.
153 See mn. 2.
154 Chen-Wishart/Magnus, ‘Termination, Price Reduction, and Damages’ in Dannemann/Vogenauer
(eds), The Common European Sales Law in Context (OUP 2013) 667.
273
Chapter 6 Breach and Remedies
minate is exercised through a statement notifying the other party of the decision to ter-
minate the contract (Art. 15 DCD; Art. 16(1) SGD).155 There are no specific formal re-
quirements – the statement may be made through conclusive behaviour where, under
the circumstances, it clearly expresses the decision to terminate the contract.
f) Consequences
99 Termination ends the performance obligations under the contract; any outstanding
obligations therefore do not need to be performed. Performance tendered under the
contract, as well as any other benefits acquired, will have to be restored to the other par-
ty – the same applies in instances of partial termination. The restitution following termi-
nation is regulated in part by EU law and in part by national law (depending on the ex-
tent of the EU rules).156
5. Price reduction
a) Overview
100 aa) The hierarchy of remedies in EU contract law places price reduction alongside
termination as second-tier remedies for non-conforming performance. With the excep-
tion of the threshold ‘minor’, the requirements for price reduction are generally the same
as for termination, as shown by Art. 14(4) DCD and Art. 13(4) SGD. In contrast, Art. 13
and 14 PTD contain separate and partially differing requirements for termination and
price reduction. In addition, whereas price reduction and termination are alternatives
under the Digital Content Directive and Sale of Goods Directive, price reduction and
termination may be cumulated under Art. 13(6) PTD. Price reduction is a remedy of
considerable importance in practice as it can easily balance the parties’ respective inter-
ests by reducing the price paid for the promised performance in proportion to the actual
performance received.
101 bb) Art. 9:401 PECL and Art. III.–3:601 DCFR foresee price reduction as a general
remedy for European contract law, as is the tendency in the development of the modern
law of obligations.157 In adopting price reduction, European contract law continues with
a tradition that, in national legal systems, can be traced back to the civil law principle
actio quanti minoris158; this tradition is also expressed in international sales law (Art. 50
CISG), yet neither of these systems determines the form and interpretation of the Euro-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
pean rules. Although the common law tradition does not recognize price reduction in
relation to defective goods as a specific legal institution, similar results may be achieved
by a claim to damages. However, the approaches lead to different results if the value of
the performance is reduced in relation to the non-conformity but the creditor has suf-
fered no loss and thus does not have a claim to damages (e.g. where the non-conforming
155 See also the academic drafts on European contract law, e.g. Art. 9:303 PECL, Art. 8:302 ACQP,
Art. III.–3:507 DCFR and Art. 118 CESL. According to Art. 115(3) and Art. 135(3) CESL, notice of termi-
nation is not necessary if the notice on the additional period provides for automatic termination. In fol-
lowing Art. 9:303(2) PECL, Art. 119 CESL provides that, unless in cases of non-performance, the (non-
consumer) buyer loses the right to terminate if notice of termination is not given within a reasonable time
from when the right arose or the buyer became, or could be expected to have become, aware of the non-
performance, whichever is later.
156 See mn. 125 et seq.
157 See Art. 1223 Code civil following the recent reforms of the French law of obligations. German law
contains separate rules on price reduction in particular contracts, e.g. sale (§ 441 BGB), hire (§ 536 BGB)
and contracts to produce a work (§ 638 BGB), for details see the comments in German Civil Code.
158 Lando/Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer 1999) 430; Zimmer-
274
III. Remedies
good could be resold without a loss). The acquis communautaire adopted price reduction
at a relatively early stage (Art. 3(5) CSD for sales law).159 The CESL proposes price re-
duction for sales contracts, contracts for digital content, and contracts for related ser-
vices (Art. 120, 155 CESL).
cc) A disputed aspect of the right to price reduction in European contract law is 102
whether it is a formative right, as was seen in the discussions surrounding the CESL.160
As the concept of such right at European level does not necessarily accord with national
perceptions (such as in German law in which the right cannot be retracted after it has
been exercised) it may therefore be possible to allow the injured party to choose to exer-
cise another remedy even after price reduction has been requested.161 Contention aside,
exercising the right to price reduction requires the creditor to give notice to the debtor.
The notice guarantees that the party in breach is informed of the legal reason for non-
payment and the reduction (or alternatively the obligation to make partial reimburse-
ment of payments received) and can take the appropriate measures.
riod during which there was lack of conformity, unless the organiser proves that the lack of conformi-
ty is attributable to the traveller.
159 See also Art. 8(1)(a) Denied Boarding Regulation; Art. 17(1) Rail Passenger Regulation; Art. 19(1)
Ship Passenger Regulation; Art. 19(2) Coach Passenger Regulation; Art. 8:301(4) ACQP.
160 Lorenz, ‘Das Kaufrecht und die damit verbundenen Dienstverträge im Common European Sales
Law’ (2012) 212 AcP 702, 789; cf Faust, ‘Das Kaufrecht im Vorschlag für ein Gemeinsames Europäisches
Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier
2012) 251, 264.
161 Such an issue is also controversial, favouring this ius variandi Lorenz, ibid. 789; Schulze CESL/Zoll,
275
Chapter 6 Breach and Remedies
Where the contract stipulates that the digital content or digital service shall be supplied over a period
of time in exchange for the payment of a price, the reduction in price shall apply to the period of time
during which the digital content or digital service was not in conformity.
c) Consequences
104 Price reduction changes the content of the contract. According to Art. 14(1) PTD
(and earlier under Art. 3(2) and (5) CSD), the claim is directed at an ‘appropriate’ reduc-
tion in price. In line with the approach under Art. III.–3:601 DCFR and Art. 120(1)
CESL, Art. 14(5) DCD and Art. 15 SGD set out the method for calculating the reduction
in price.
Accordingly, the price is reduced on the basis of the ratio between the reduced value
of the non-conforming performance and the hypothetical value of conforming perfor-
mance (relative calculation).163 The reduced price can be calculated using the formula:
d) CESL
105 The provisions on price reduction under the CESL are more precise than under the
Directives.
In contrast to termination under Art. 114 and 115 CESL, price reduction under the
CESL is neither subject to fundamental non-performance nor to an additional period
and therefore is a simpler and quicker remedy than termination. The right is not exclud-
ed by excused non-performance under Art. 88 CESL (and therefore differs from the
right to performance and to damages; see Art. 106(4) CESL).164 Nevertheless, despite its
broader application vis-à-vis other remedies, price reduction is excluded if the injured
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
party is responsible for the non-conformity (Art. 106(5) CESL). Price reduction may be
excluded in B–B contracts if the examination and notification obligations are not satis-
fied (Art. 121, 122 CESL).
106 To some extent the proposed CESL follows the DCFR’s rules on the consequences of
price reduction. As Art. III.–3:601(2) DCFR, Art. 120(2) CESL also allows recovery of
the excess payment in the event that an amount greater than the reduced price (as calcu-
lated by the above formula) has already been paid. The reimbursement is subject to the
provisions in Chapter 12 CESL, for example concerning form and place of payment
(Art. 90 CESL). The same must also apply for the rules concerning non-performance of
monetary obligations.165 Price reduction may have an effect similar to damages and thus
exercising both rights would allow double recovery. Art. 120(3) CESL therefore provides
163 Schulze CESL/Zoll, Art. 120 CESL mn. 4; for criticism of this method of calculation with regard to
other types of breach see Faust, ‘Das Kaufrecht im Vorschlag für ein Gemeinsames Europäisches
Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches Kaufrecht (Sellier
2012) 251, 264–265.
164 On the debtor’s possibility to cure, see mn. 44.
165 Schulze CESL/Zoll, Art. 120 CESL mn. 5.
276
III. Remedies
that the buyer can only claim damages for further losses and not for loss already com-
pensated by the reduction in price. The rule reflects the general exclusion of a combina-
tion of incompatible remedies (Art. 106(6) CESL) though claims to price reduction and
damages would otherwise be excluded under this general rule without the need for
specificity in a separate provision.166
The Package Travel Directive allows the award of damages for the loss of enjoyment
of a package holiday.169 Other contract law directives are merely limited to individual
points and specific topics, such as the claim to interest on late payments in B–B con-
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tracts. The Acquis Principles therefore contain few basic rules on damages due to the li-
mited basis in the acquis at the time of drafting (Art. 8:401 et seq. ACQP). These rules
refer to sources in the acquis which favour strict liability for damages, albeit with certain
grounds for exoneration.170
Neither the Digital Content Directive nor the Sale of Goods Directive contain any 108
provisions on damages. Although Art. 14 of the proposal for a Digital Content Directive
outlines that the supplier is liable for economic damage caused to the consumer’s ‘hard-
166 Lorenz, ‘Das Kaufrecht und die damit verbundenen Dienstverträge im Common European Sales
Rules in the Acquis communautaire, in the Acquis Principles and in the DCFR’ in Schulze (ed), Common
Frame of Reference and Existing EC Contract Law (2nd edn, Sellier 2009) 211; Remien (ed), Schadensersatz
im europäischen Privat- und Wirtschaftsrecht (Mohr Siebeck 2012); Wurmnest, Grundzüge eines europäi-
schen Haftungsrechts (Mohr Siebeck 2003).
168 See Heiderhoff, Europäsiches Vertragsrecht (5th edn, C.F. Müller 2020) mn. 297, referring to C–
295/04 Manfredi ECLI:EU:C:2006:461 and C–203/99 Veedfald ECLI:EU:C:2001:258, mn. 32 regarding the
enforcement of provisions in Member States which award punitive damages.
169 C–168/00 Leitner ECLI:EU:C:2002:163.
170 Contract II/Magnus, Art. 8:401 mn. 12.
277
Chapter 6 Breach and Remedies
ware, digital content and any network connection to the extent that they are within the
control of the user (the ‘digital environment’), even this attempt to include a very limited
rule on damages as a remedy in relation to the supply of digital content failed during the
legislative process. Nonetheless, Recital 73 DCD makes a notable contribution to the de-
velopment of principles concerning damages under European contract law.
However, on the assumption that such a claim for damages already exists in all Mem-
ber States, the European legislator seeks to justify the exclusion of rules on damages.
This is not entirely convincing due to the differences in national laws with regard to the
aims of the Directive.171 For example, the level of consumer protection would vary if
compensation for loss and consequential loss is fault-based and/or whether the con-
sumer bears the burden of proving loss. Different rules on damages in the Member
States present an obstacle to cross-border transactions as it becomes difficult or impossi-
ble for a trader to calculate the extent of damages in the event of non-performance or
non-conforming performance. The lack of harmonization on the law of damages thus
constitutes a considerable deficit for both consumer protection and for the smooth func-
tioning of the internal market.
b) CESL
109 aa) In contrast, Part VI CESL on ‘Damages and Interest’ represents the first entire le-
gislative draft at EU level for damages due to non-performance of contractual obliga-
tions. It is based mainly on Art. 9:501 et seq. PECL (as inspiration for Art. III.–3:701
DCFR). The CESL’s provisions on damages follow these models by opting against rules
tailored for individual types of contract and instead favouring an overarching approach
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
as a general contract law for the different types of contract covered by the CESL (and
thus allowing the possibility of application to other types of contract). Although the
CESL contains a ‘distinction’ due to separate provisions affording the right to damages in
sales contracts and service contracts, the content and limitation of damages are con-
tained in the general rules (Art. 159 et seq. CESL) rather than specifically for each type
of contract. These general rules concern, in particular, the general measure of damages,
the standards of excused non-performance and foreseeability, the limitations due to loss
attributable to the injured party, substitute transactions, and current market value.172
Furthermore, separate sections contain rules on interest for late payments in general and
278
III. Remedies
specifically for B–B transactions. These rules are based on the Late Payment Directive
and in part on the Acquis Principles173 (Art. 166 et seq. CESL)
bb) The claim to damages requires the non-performance of a contractual obligation 110
(Art. 159(1) CESL). Damages are therefore available for non-delivery, delivery of non-
conforming goods as well as every other form of non-performance. These are merely ex-
amples and therefore the breach of other obligations will entitle the injured party to
claim damages, for example due to the breach of good faith and fair dealing (Art. 2(2)
CESL), failure to give notice of the impediment (Art. 88(3) CESL) as well as the breach
of the pre-contractual information duties, though further clarification is required in re-
lation to the individual circumstances.174
The claim to damages is however excluded if the non-performance is excused 111
(Art. 106(4), 159(1) CESL) and is thus subject to the same limitation as the claim for
performance. The CESL therefore follows an approach outlined by Art. 9:501 PECL175
(following Art. 79 CISG) for European contract law. The traditional fault-based ap-
proach to liability in continental European laws is not merely modified by the concept of
a ‘presumed fault’176 but is rather replaced by the common law approach of objective
fault. This basis therefore allows for the possibility to exclude damages on the grounds of
excused non-performance.177 Although the doctrinal starting point differs, the approach
leads to a large extent to the same or similar results as ‘presumed fault’. The party in
breach must nonetheless prove excused non-performance within the boundaries of
Art. 159 CESL.178
cc) The damages cover the economic and non-economic losses that have arisen due to 112
the non-performance and are recoverable under Art. 2(c) CESL-Reg. The definition of
damages under Art. 2(g) CESL-Reg distinguishes between ‘loss’ and ‘injury or damage’.
In light of this distinction and the sole reference to ‘loss’ in Art. 159(1) CESL, one can
therefore infer that ‘injury or damage’ are not covered within this contractual claim as
they do not appear to fall under the term ‘loss’.179 Nominal damages (franc symbolique;
symbolischer Schadensersatz) are also excluded from the requirement of ‘loss’.180 The pro-
posed CESL does not contain more precise details on the notion of ‘economic loss’ cov-
ered by Art. 2(c) CESL-Reg. However, this term will cover all financial losses, such as
loss of income or profit, loss in value of property, loss of property, etc.181 Art. 159(2)
CESL expressly stipulates that damages will also include the future losses that the injured
party could expect to incur. This provision is linked to the concept of future loss in Eng-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
lish law and Art. 9:501(2)(b) PECL182. It refers to losses that are expected at the time
damages are calculated by the court but which have not yet occurred.183
Europäisches Kaufrecht für die EU? (C.H. Beck 2012) 180–181; Kieninger, ‘Allgemeines Leistungsstörungs-
recht im Vorschlag für ein Gemeinsames Europäisches Kaufrecht’ in Schulte-Nölke et al. (eds), Der Ent-
wurf für ein optionales europäisches Kaufrecht (Sellier 2012) 205, 210, 213–214; Lorenz, ‘Das Kaufrecht und
die damit verbundenen Dienstverträge im Common European Sales Law’ (2012) 212 AcP 702, 795.
178 Schulze CESL/Možina, Art. 159 CESL mn. 6.
179 The compensation for such loss thus remains within the scope of national tort law. This is not espe-
cially convincing as damages for ‘suffered loss’ as non-economic law are to be provided according to
Art. 2(c) CESL-Reg (see mn. 114).
180 Schulze CESL/Možina, Art. 159 CESL mn. 3.
181 See also Art. III.–3:701 DCFR.
279
Chapter 6 Breach and Remedies
113 Damages are also to be paid in respect of lost profits. Despite the distinction between
lost profits and loss suffered, Art. 159(2) CESL nonetheless includes the former in the
scope of recoverable damages. The CESL does not contain an explicit rule in relation to
when a profit is to be deemed as lost; the reference to the standard in Art. 159(2) CESL
offers an approach which will ease the burden of proof in this respect.184 The injured
party thus only needs to outline the circumstances and to prove that a profit would have
otherwise been likely under such circumstances.
114 European contract law recognized the recovery of non-economic loss long before the
work on the proposed CESL. The ECJ decision in Leitner185 awarded damages for loss of
enjoyment of a package holiday. The Acquis Principles developed this into a general rule
in which damages cover non-economic loss ‘only to the extent that the purpose of the
obligation includes the protection or satisfaction of such interests’ (Art. 8:402(4) ACQP).
The proposed CESL does not however adopt the same approach as the Acquis Principles
in generalising the decision in Leitner. The non-economic loss recoverable under the
CESL indeed comprises pain and suffering, but Art. 2(c) CESL-Reg excludes other non-
economic loss such as impairment of quality of life and loss of enjoyment.186 This dis-
tinction may therefore result in, for example, psychological afflictions due to disappoint-
ment related to a defective product being classified as non-recoverable loss – ‘pain’ and
‘suffering’ are to be understood as physical pain or exceptionally extensive psychological
harm.187 Damages may be available for the suffering caused in respect of the death of a
relative (e.g. spouse or child) caused by the defective product.188 The general standards
for the compensation of non-economic losses under Art. 159 CESL in conjunction with
Art. 2(c) CESL-Reg require adjustments in order to be applicable to other types of con-
tract falling outside the scope of the CESL that are specifically concerned with ensuring
specific forms of ‘enjoyment’ (such as package travel contracts and their aim of holiday
enjoyment). As long as these are regulated in European contract law (such as in the
Package Travel Directive), the non-economic loss is rather to be considered as recover-
able in relation to the purpose of the rules; this also applies in cases that would not fall
under Art. 2(c) CESL-Reg.189
115 dd) The claim for damages due to economic or non-economic loss is only justified if
such loss results from the non-performance of a contractual obligation by the other par-
ty (Art. 159(1) CESL). In accordance with the development of the acquis communau-
taire190 it is necessary for there to be a causal link between the non-performance and the
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
loss for which damages are claimed. The Package Travel Directive therefore provides for
Europäisches Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches
Kaufrecht (Sellier 2012) 205, 215–216; Remien, ‘Schadensersatz und Zinsen nach EU-Kaufrecht’ in
Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht? (Sellier 2012) 503, 507–508; on the questions
concerning differentiation Schulze CESL/Wendehorst, Art. 2 CESL-Reg mn. 7–8.
187 Kieninger, ibid. 217; Schulze CESL/Možina, Art. 160 CESL mn. 12.
188 Schulze CESL/Možina, Art. 160 CESL mn. 18; cf Kieninger, ibid.
189 For loss of enjoyment based on the Package Travel Directive see C–168/00 Leitner ECLI:EU:C:
2002:163.
190 See Magnus, ‘The Damages Rules in the Acquis communautaire, in the Acquis Principles and in the
DCFR’ in Schulze (ed), Common Frame of Reference and Existing EC Contract Law (2nd edn, Sellier
2009) 211, 220; Weitenberg, Der Begriff der Kausalität in der haftungsrechtlichen Rechtsprechung der Un-
ionsgerichte (Nomos 2014).
280
III. Remedies
compensation of damage sustained by the traveller ‘as a result of any lack of conformity’
(Art. 14(2) PTD). The proposal for a Digital Content Directive also provided compensa-
tion for damage ‘caused by a lack of conformity with the contract’.191 The causation aris-
es if the loss would not have occurred without the non-performance (conditio sine qua
non). With the exception of foreseeability of loss (Art. 161 CESL), the CESL does not in-
clude any additional restrictions (in particular the requirement of ‘adequate’ causation,
as is foreseen in several national laws)192 in relation to limiting the amount of recover-
able loss.
dd) Due to the general rule under Art. 2(g) CESL-Reg, damages under Art. 159 CESL 116
are to be paid in money. The CESL does not acknowledge a claim to restitution-in-kind
– in this respect its remedy of performance takes on a function similar to other laws
concerning damages as a form of restitution-in-kind. The CESL therefore follows an ap-
proach outlined by the CISG.193 However, this does not contain an indication whether
the damages for economic loss can be based on the cost of creating the circumstances
that would have arisen without the harmful event (cost of restitutio in integrum) or is
solely based on compensating the loss in value. With respect to the former type of dam-
ages, it would appear that Art. 2(g) CESL-Reg does not state anything to the contrary
and, in addition, the recovery of such costs for substitute transactions (actual or ficti-
tious) is expressly outlined in Art. 164, 165 CESL as a means of calculating the concrete
damages. It is of course lacking a correspondingly clear rule for, in particular, costs of
repair and for resolving non-economic losses.194 However, a uniform approach on the
concept of damages may require that the recovery of the costs for restoring the status
quo ante can also not generally be excluded. If such a rule were adopted, legislative clari-
fication of such an important question would be desirable in relation to whether, for ex-
ample, the principle of proportionality (which also applies to subsequent perfor-
mance195) can also be applied (such as in the case of ‘total constructive loss’ in which the
costs of restoring the status quo ante would greatly exceed the value of the goods).
The extent of the compensation for the loss suffered by the non-performance is mea- 117
sured in accordance with the principle of total reparation (and the so-called ‘differential
method’) whereby the injured party is put into the situation it would have been in if the
obligation had been performed in accordance with the contract.196 The injured party is
to be put as close as possible into this position if the total reparation cannot be achieved
(Art. 160 CESL). The proposed CESL adopts the approach from Art. 9:502 PECL,
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Art. 8:402(1) ACQP and Art. III.–3:702 DCFR; moreover it also serves as a model for
recent European legislation. The proposal for a Digital Content Directive provided that
the ‘damages shall put the consumer as nearly as possible into the position in which the
consumer would have been if the digital content had been duly supplied and been in
conformity with the contract.’197 According to these principles the injured party can
claim the entire difference between the amount to be paid under the contract and the
Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer 1999) 438–439. Art. 74 CISG. On
the CISG approach see Huber/Mullis, The CISG (Sellier 2007) 269–270; Schlechtriem & Schwenzer CISG/
Schwenzer, Art. 74 CISG mn. 17.
194 Schmidt-Kessel CESL/Schmidt-Kessel, Art. 2 CESL-Reg mn. 23.
195 See mn. 61.
196 Schmidt-Kessel CESL/Remien, Art. 160 CESL-Reg mn. 1; Schulze CESL/Možina, Art. 160 CESL
mn. 1.
197 Art. 14(1) COM(2015) 634 final; see also Art. 2(2) COM(2013) 404 final.
281
Chapter 6 Breach and Remedies
expenditure resulting from the non-conformity to the extent that this is necessary to sat-
isfy the expectation interest (e.g. as is outlined by Art. 164 CESL for substitute transac-
tions and Art. 165 CESL for fictitious substitute transactions concluded after termina-
tion). The injured party can also demand damages for further loss (see Art. 164–165
CESL) if these restorative damages do not cover the entire loss recoverable under
Art. 2(c), (g) CESL-Reg.
118 Art. 161 CESL limits the extent of the recoverable loss to the foreseeable loss, which
therefore serves as an additional requirement (alongside non-excused non-performance)
for a claim to damages.198 The rule in Art. 161 CESL is not based on approaches from
the acquis communautaire199 but rather follows Art. 9:503 PECL and Art. III.–3:703
DCFR, which can each be traced back to the second sentence of Art. 74 CISG.200 How-
ever, the CESL does differ from these European sets of rules (and also national laws201)
as it does not provide an exception for either intentional non-performance or for gross
negligence.202 Similarities can be observed in the CESL’s application of subjective (i.e. the
loss the debtor foresaw) and objective (i.e. the loss the debtor could be expected to have
foreseen) criteria. One will observe that the CESL has refrained from applying ‘reason-
ably’203 to the objective arm of the foreseeability standard thereby avoiding the unneces-
sary use of this undefined term without expressing a difference in function.204
119 The party in breach will not be liable if the injured party has contributed to the non-
performance (or its consequences) or has not taken appropriate steps to mitigate the loss
even though such steps were possible. The acquis communautaire only contains limited
instances of this approach.205 Nevertheless, the Acquis Principles have derived the prin-
ciple that ‘damages are reduced or excluded to the extent that the creditor wilfully or
negligently contributed to the effects of the non-performance or could have reduced the
loss by taking reasonable steps’ (Art. 8:403 ACQP). The general rules in Art. 162–163
CESL are based on the PECL and DCFR.206 Art. 162 CESL determines that the extent of
the damages will be reduced in relation to the extent of the injured party’s contribution
to the non-performance or consequences. However, the CESL’s system affords the in-
jured party with the possibility to excuse her actions through analogous application of
Art. 88 CESL.207 In addition, the recoverable loss will also be reduced if the injured party
200 On the development see Kieninger, ‘Allgemeines Leistungsstörungsrecht im Vorschlag für ein
Gemeinsames Europäisches Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales euro-
päisches Kaufrecht (Sellier 2012) 205, 214.
201 Art. 1150 Code Civil.
202 On the discussion concerning the exceptions in drafting the Feasibility Study see Expert Group on a
Common Frame of Reference in European Contract Law, ‘Synthesis of the Tenth Meeting, 17–18 February
2011’.
203 Cf Art. III.–3:703 DCFR.
204 Under Art. 161 CESL the loss had to have been foreseen at the time the contract was concluded. This
standard does however cause a problem in relation to the lack of an exception for intentional non-perfor-
mance: price increases may make it easier for the seller to enter into a more profitable contract with an-
other party if the foreseeability requirement also applies when damages are calculated with the aid of a
substitute transaction according to Art. 164–165 CESL (for a contrasting view see Schmidt-Kessel CESL/
Remien, Art. 164 CESL mn. 2). Legislative clarification of this point would be desirable.
205 Contract II/Magnus, Art. 8:403 mn. 1; DCFR Full Edition 934; Magnus, ‘The Damages Rules in the
Acquis communautaire, in the Acquis Principles and in the DCFR’ in Schulze (ed), Common Frame of
Reference and Existing EC Contract Law (2nd edn, Sellier 2009) 211, 223–224.
206 Art. 9:504 PECL and Art. III.–3:704 DCFR for Art. 162 CESL, which, within the CESL, generally ac-
cords with Art. 106(5), 131(3) CESL; Art. 9:505 PECL and Art. III.–3:705 DCFR for Art. 163 CESL.
207 Schmidt-Kessel CESL/Remien, Art. 162 CESL mn. 2; cf Koch, ‘Schadensersatz und Rückabwicklung’
282
III. Remedies
has not, contrary to the requirement of good faith and fair dealing (Art. 2 CESL), taken
steps to mitigate her loss (Art. 163(1) CESL);208 such steps can include, for example,
making repairs, taking measures to secure safety, or concluding contracts (for instance a
hire contract or sales contract for a substitute). The steps are to be ‘reasonable’ thus al-
lowing for distinctions to be made between the experience and financial capability of
both different types of parties (in particular businesses and consumers).209 Taking such
reasonable steps to mitigate the loss may result in additional costs for the injured party
and therefore not necessarily serve as incentive for mitigation. Consequently, Art. 163(2)
CESL provides that the injured party is entitled to recover the costs reasonably incurred
in taking mitigating steps, which need not be successful. This provision extends the no-
tion of co-operation between the parties (Art. 3 CESL) with respect to the financial bur-
den for acts undertaken by one party to support the performance of the other party’s
contractual obligations.
c) Interest
aa) Current EU contract law does not contain an overarching rule on interest on late 120
payments. The European legislator has instead focused on several specific areas of con-
siderable economic importance for the internal market: payment services and late pay-
ment in commercial transactions. The Late Payment Directive seeks to combat late pay-
ment in commercial transactions because of the negative effects on solvency of the
debtor (particularly if the business is an SME), especially in times of economic crisis.210
The Directive states that low interest rates and slow redress procedures in many Member
States do not provide a sufficient basis for discouraging breach by late payment.211 It
therefore seeks to promote a ‘culture of prompt payment’212 by linking periods for pay-
ment with claims to interest and compensation for costs incurred.213
Art. 3 and 4 Late Payment Directive set out the conditions for an interest claim in B– 121
B transactions and in transactions between businesses and public authorities. The
amount of interest rate is calculated on the basis of a reference rate determined in accor-
dance with Art. 3(2) Late Payment Directive. In order to make a claim the creditor must
have performed its own contractual obligations (Art. 3(1)(a); Art. 4(1)(a) Late Payment
Directive) and has not received the payment on time: the timely nature of the successful
performance by the debtor is therefore key.214 In B–B contracts, the date or period for
payment is determined by reference to the contract between the parties. Art. 3(3)(b)
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Late Payment Directive contains the rules where the date or period for payment is not
fixed in the contract.
208 On the question whether preventable loss should be deducted from the damages claim (see Art. 77
enforceable title can be obtained within 90 calendar days if the debt or aspects of the procedure are undis-
puted.
214 C–306/06 01051 Telekom ECLI:EU:C:2008:187.
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Chapter 6 Breach and Remedies
(a) the creditor has fulfilled its contractual and legal obligations; and
(b) the creditor has not received the amount due on time, unless the debtor is not responsible
for the delay.
(2) Member States shall ensure that the applicable reference rate:
(a) for the first semester of the year concerned shall be the rate in force on 1 January of that
year;
(b) for the second semester of the year concerned shall be the rate in force on 1 July of that
year.
(3) Where the conditions set out in paragraph 1 are satisfied, Member States shall ensure the fol-
lowing:
(a) that the creditor is entitled to interest for late payment from the day following the date or
the end of the period for payment fixed in the contract;
(b) where the date or period for payment is not fixed in the contract, that the creditor is enti-
tled to interest for late payment upon the expiry of any of the following time limits:
(i) 30 calendar days following the date of receipt by the debtor of the invoice or an
equivalent request for payment;
(ii) where the date of the receipt of the invoice or the equivalent request for payment is
uncertain, 30 calendar days after the date of receipt of the goods or services;
(iii) where the debtor receives the invoice or the equivalent request for payment earlier
than the goods or the services, 30 calendar days after the date of the receipt of the
goods or services;
(iv) where a procedure of acceptance or verification, by which the conformity of the
goods or services with the contract is to be ascertained, is provided for by statute
or in the contract and if the debtor receives the invoice or the equivalent request
for payment earlier or on the date on which such acceptance or verification takes
place, 30 calendar days after that date.
Where interest for late payment becomes payable in commercial transactions in ac-
cordance with Art. 3 or 4 Late Payment Directive, Art. 6 Late Payment Directive pro-
vides a minimum fixed sum payment of 40 euro as compensation for recovery costs; the
debtor may also be entitled to claim reasonable compensation for any recovery costs ex-
ceeding the fixed sum (e.g. legal expenses).215 Moreover, contract terms that are grossly
unfair to the creditor will be unenforceable or will form the basis of a damages claim
(Art. 7(1) Late Payment Directive). Such an approach shall protect the creditor against
unfair contract terms216, which includes standard as well as negotiated terms.217
122 bb) The Acquis Principles have used the Late Payment Directive as a basis for its own
provisions (Art. 8:405 et seq. ACQP) but have also determined that the acquis commu-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
nautaire does not contain a sufficient basis for a general rule for interest on late pay-
ments. A reference is instead made to the corresponding rule in the DCFR, which was
drafted on the basis of comparisons of national laws.218
215 On the relationship between the fixed sum and claims for additional compensation see C–287/17
284
III. Remedies
cc) The CESL has followed the approach in the DCFR by including, for the first time, 123
general rules for interest on late payments, which extend beyond the scope of the Late
Payment Directive (Art. 166–167 CESL). These rules extend the preceding CESL section
on damages and are also supplemented by a further section containing specific rules for
late payments in B–B contracts. According to Art. 166(1) CESL, the creditor will gener-
ally have a claim to interest when the payment is delayed; notice need not be given. The
amount of interest is generally calculated on the basis of the interest rate set by the Euro-
pean Central Bank (in Member States whose currency is the euro) plus two percentage
points (Art. 166(1), (2) CESL). The creditor is thus afforded a form of abstract damages
which will not only typically compensate for the losses suffered (though without the
need to provide evidence thereof), but will also skim-off the advantages the debtor may
have obtained through the late payment, and have a deterring effect.219 The creditor may
recover any damages for further loss through application of the provisions on damages
(Art. 166(3) CESL). However, these strict rules only apply to late payments by con-
sumers if the performance is not excused. The interest does not begin to accrue until 30
days after notice issued by the creditor that specifies the obligation to pay interest, and
the interest rate. The interest on late payment may not be added to the capital to produce
more interest. Moreover, contract terms on higher interest rates or on earlier accrual will
not be binding on the consumer if the terms would be unfair under Art. 83 CESL
(Art. 167(1)–(4) CESL).
The CESL’s specific rules on late payments by businesses (Art. 168–171 CESL) are 124
closely based on the Late Payment Directive as well as on Art. 8:406 ACQP and Art. III.–
3:710 DCFR. A claim to interest will arise under Art. 168(1) CESL if the business220 de-
lays the payment of a price due under a contract for the delivery of goods, supply of digi-
tal content or provision of related services, unless the late payment is excused under
Art. 88 CESL. The scope of the rules therefore covers payments due under the contract,
but not claims to damages or reimbursements; interest claims under these latter circum-
stances are subject to Art. 166 CESL.221 The interest rate is stipulated in Art. 168(5)
CESL and adopts the approach under Art. 166(2) CESL, but with the application of eight
(as opposed to two) percentage points. In general, the time for performance is subject to
the contract; Art. 168(2) and (3) CESL will apply if there is no contract term on the time
for payment. The maximum time for payment will generally be 60 days (Art. 168(4)
CESL) though it is possible to exceed this statutory time limit if the parties have express-
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
ly agreed otherwise and the agreement is not unfair according to Art. 170 CESL. There is
therefore a rebuttable presumption that a longer period for payment is unfair under
Art. 170 CESL. Unfair contract terms on payment dates, time periods, and interest rates
will not be binding.222 Moreover, the rules on late payment by businesses are mandatory
and can therefore neither be excluded nor varied (Art. 171 CESL).223
time or period for payment or a rate of interest that is less favourable to the creditor than regulated by the
CESL. Art. 170(3) CESL stipulates that terms will always be unfair if they exclude interest for late payment
or compensation for recovery costs.
223 For more detail see Kieninger, ‘Allgemeines Leistungsstörungsrecht im Vorschlag für ein Gemein-
sames Europäisches Kaufrecht’ in Schulte-Nölke et al. (eds), Der Entwurf für ein optionales europäisches
Kaufrecht (Sellier 2012) 205, 222–223.
285
Chapter 6 Breach and Remedies
IV. Restitution
1. Overview
a) Regulated aspects
125 The unravelling of contracts may be necessary in various legal contexts. With regard
to the acquis communautaire, this concerns in particular the termination of a contract
due to non-performance,224 non-conforming performance,225 or modification of the
contract.226 Other matters included in the CESL and in the academic drafts for European
contract law, are, inter alia, others the rescission due to mistake, threat, fraud or unfair
advantage227 and the termination of a contract due to an extraordinary change of cir-
cumstances. Although such circumstances may bring the contract to an end, the parties
may have nevertheless already performed their contractual obligations. Rules are thus
needed to determines the requirements, extent, and manner in which the recipient is to
return the performance received, to compensate for any benefits obtained, and whether
it can claim reimbursement for expenditures in relation to the performance (e.g. for
placing the good in storage). Digitalization also presents new challenges, particularly as
new rules are necessary in order to tackle new questions such as the effect on any data
provided by one party to the other.
provisions concerning the obligations of both parties in the event the contract is termi-
nated. In this respect, both Directives place greater emphasis on the mutual obligations
in the event of termination rather than the performance of the contract.
restitution following the exercise of the right of withdrawal and of the right to reject, Watson, Das Right to
Reject im Consumer Rights Act 2015 (Nomos 2018) 224.
286
IV. Restitution
expressed in the fact that the obligation to refund the purchase price presupposes that
the buyer has returned the goods. Although in principle it is for the Member States to
determine the modalities of reimbursement and return, the Directive expressly lays
down one modality: the seller is to bear the costs of return. This is to avoid the con-
sumer, as the buyer, from being deterred from exercising her right to terminate the con-
tract due to the risk of incurring costs.
b) Price reimbursement
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
Art. 16(1) DCD anchors the principle that the performances received must be re- 129
turned after termination of the contract: the supplier of the digital content or digital ser-
vices is obliged to reimburse all sums paid under the contract. In the case of the supply
of goods with digital elements, there is a corresponding obligation to refund the price as
in the case of the purchase of goods in accordance with Art. 16(3) SGD. However, in
contrast to the Sale of Goods Directive, the Digital Content Directive contains detailed
provisions on the modalities of this reimbursement (which also apply to the reimburse-
ment in the event of a price reduction). According to these provisions, the trader shall
refund the amount paid free of charge and without delay, but in any case within 14 days
from when he is informed of the consumer’s decision to terminate the contract
(Art. 18(1) and (3) DCD). In doing so, the trader shall use the same means of payment
that the consumer used to pay the price (unless expressly agreed otherwise, but without
charging the consumer any fees for the refund; Art. 18(2) DCD).
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Chapter 6 Breach and Remedies
c) Proportional reimbursement
130 However, the obligation to reimburse the price is subject to particular rules where, in
contracts for supply over a period of time, the digital content or digital service was in
conformity for a period of time. In such instances, Art. 16(1) DCD provides that the the
trader shall reimburse the consumer only for the proportionate part of the price paid
corresponding to the period of time during which the digital content or digital service
was not in conformity.229 The termination of contracts for continuous performance is
therefore based on considerations similar to those for price reduction.230 The consumer
is therefore not liable to pay for any use made of the digital content or digital service in
the period, prior to the termination of the contract, during which the digital content or
the digital service was not in conformity (Art. 17(3) DCD). Where the trader has re-
ceived advance payment, he must not only reimburse the amount corresponding to the
period of non-conformity but also any part that would have remained had the contract
not been terminated.
The consumer may therefore no longer continue to use, for example, editing software
if she has terminated the contract in accordance with Art. 14(4) and 15 DCD. Although
the word ‘refrain’ suggests an omission, the consumer must also not act to make the digi-
tal content or digital service available to third parties (e.g. deleting the digital content, or
rendering the digital content or digital service inaccessible232). However, the consumer
229 This applies only in cases in which the consumer has paid a price (i.e. not only supplied personal
data).
230 See also Art. 14(1) PTD.
231 On the general question of the availability of data after termination and the tensions with data pro-
tection see Cámara Lapuente, ‘Termination of the Contract for the Supply of Digital Content and Services,
and Availability of Data: Rights of Retrieval, Portability and Erasure in EU Law and Practice’ in Lohsse/
Schulze/Staudenmayer (eds), Data as Counter-Performance – Contract Law 2.0? (Nomos 2020) 161.
288
IV. Restitution
should also refrain from using the digital content or digital service and from making it
available to third parties, for instance by deleting the digital content or any usable copy
or rendering the digital content or digital service otherwise inaccessible.
Art. 16(5) DCD strives to counter the clear problem that it is difficult for the trader to 133
verify the consumer’s compliance with Art. 17(1) DCD. Accordingly, the trader is per-
mitted to take measures that prevent the further use of the digital content or digital ser-
vice (e.g. by disabling the user account).
bb) The Digital Content Directive applies the instrument of the prohibition of use not 134
only to the consumer but also, in particular circumstances, to the trader. If the consumer
has provided digital content (such as images, video files or files created on mobile de-
vices233) to the trader, Art. 16(3) DCD states that the trader shall, in principle, refrain
from using such content after termination of the contract; however this only applies to
non-personal data. With regard to personal data, Art. 16(2) DCD refers to the GDPR,
which applies to any personal data processed in connection with contracts covered by
the Digital Content Directive and which prevails in the event of conflicts between the
Directive and the GDPR (Art. 3(8) DCD). Art. 16(3) DCD lists various exceptions to the
prohibition on the use of non-personal data in order to avoid unnecessary expense for
both parties and to take account of the principle of proportionality.
(c) has been aggregated with other data by the trader and cannot be disaggregated or only with dis-
proportionate efforts; or
(d) has been generated jointly by the consumer and others, and other consumers are able to contin-
ue to make use of the content.
f) Restitution of data
In addition to the obligation to refrain from using any content other that personal da- 135
ta, Art. 16(4) DCD obliges the trader, at the request of the consumer, to make available
to the consumer any such content which was provided or created by the consumer when
using the digital content or digital service.234 For example, the trader must make avail-
able any text data provided by the consumer when using a translation program. Failing
DCD provides that the obligation should be without prejudice to the trader’s right not to disclose certain
content in accordance with applicable law.
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Chapter 6 Breach and Remedies
to ensure access to data could deter the consumer from exercising the right to terminate
the contract in the event of a lack of conformity. In this respect, the right to recover data
serves to safeguard the right to terminate the contract.235
136 Art. 16(4) DCD also specifies the modalities for retrieval of the digital content and
thereby ensure the effectiveness of the right.
‘Free of charge’ refers to all costs specifically related to the retrieval of the content.
However, it does not extend to costs that are caused by the consumer’s digital environ-
ment; the trader therefore does not have to bear the costs of the consumer’s internet con-
nection, for example.236
138 The CESL proposed a comprehensive set of rules for restitution, which extend far be-
yond the approaches in the acquis, but without consideration of the particular needs in
the supply of digital content and digital services. When compared to the DCFR237 and
many national laws one can, however, observe a different approach under the CESL:
Part VII is overarching in its application as it regulates not only restitution following ter-
mination but also restitution after avoidance due to defects in consent. A uniform set of
rules shall thus cover two different legal matters. On the one hand it concerns the legal
relationship that arises between the parties after their contractual relationship has been
terminated (Art. 8 CESL). On the other hand it extends to cover the contract’s retrospec-
on restitution in the event of void or avoided contracts; for criticism see Wendehorst, ‘Bereicherungsrecht’
in Schulze/von Bar/Schulte-Nölke (eds) Der akademische Entwurf für einen gemeinsamen Referenzrahmen
(Mohr Siebeck 2008) 215, 237; on the status of the discussions relating to the CESL see Bargelli, Il sinallag-
ma rovesciato (Guiffrè 2010).
290
IV. Restitution
tive invalidity resulting from avoidance (Art. 54(1) CESL) due to mistake, fraud, threat,
and unfair exploitation (Art. 48 et seq. CESL).238 Contrastingly, the DCFR’s rules on
restitution following termination are contained in the section on termination (Art. III.–
3:510 et seq. DCFR) whereas the effects of avoidance are regulated by its rules on unjust
enrichment (Art. II.–7:212, VII.–5:101 et seq. DCFR). A similar ‘double track approach’
is also present in some national laws, for example in the German Civil Code: the restitu-
tion following revocation (which corresponds to termination under the CESL) is subject
to specific rules under §§ 346 et seq. BGB, whereas the rules on unjust enrichment
(§§ 812 et seq. BGB) are important for the restitutionary consequences of avoidance.239
The CESL’s innovative ‘single track’ approach for both areas will require further consid-
eration with regard to the future development.240
The proposed CESL’s core provision on restitution comprises the general obligation 139
for each party (following termination or avoidance) to return what has been received
from the other party, including any natural or legal fruits that have been derived from
what was received (Art. 172(1), (2) CESL). The general rule therefore principally aims at
establishing the status quo ante.241 Art. 173 CESL provides for the payment of monetary
value where the received performance (including natural and/or legal fruits) cannot be
returned. The payment of the monetary value is also foreseen in relation to the use of the
goods (Art. 174(1) CESL) though only if the recipient has caused the basis for the avoid-
ance or termination, if it was aware of the ground for avoidance or termination before it
began to use the goods or it would be inequitable (under the listed circumstances) to
allow free use of the goods. Art. 174(2) CESL provides the counterpart to payment for
use, namely the payment of interest in respect of monies to be returned. However, it is
subject to whether the other party is obliged to pay for use or the recipient has given
cause for avoidance due to fraud, threat or unfair exploitation. The extent of the com-
pensation due to the recipient because of the expenditure incurred on the goods or digi-
tal content is generally measured on the basis of the benefit to the other party.242 The
performance of the repayment or restitution obligations under Part VII is however sub-
ject to equitable standards allowing these obligations to be modified in situations in
which the performance would be grossly inequitable (Art. 176 CESL). Such a possibility
has received widespread support because of its contribution to ensuring a just approach
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
238 See Chapter 3 mn. 113. However, restitution following withdrawal is regulated separately in Art. 44–
45 CESL; on the deficiencies in the relationship between these two regimes see Schulze CESL/Schulze,
Art. 44 CESL mn. 11; on a possible analogous application of Art. 172 et seq. CESL to other circumstances
in which restitution is concerned see Schmidt-Kessel CESL/Wendehorst, Art. 172 CESL mn. 2.
239 On these provisions, see the comments in German Civil Code.
240 One should also bear in mind the improvements to various individual aspects that European Parlia-
ment has suggested, which generally overlap with proposals from and the ELI Position Paper and other
academic comment, see European Parliament legislative resolution of 26 February 2014 on the proposal
for a regulation of the European Parliament and of the Council on a Common European Sales Law
(P7_TA-PROV(2014)0159) amendments 223–246; Schmidt-Kessel CESL/Wendehorst, Art. 172 CESL
mn. 4–5; Schulze CESL/Lehmann, Art. 172 CESL mn. 61–67; ELI, Statement on the Proposal for a Regu-
lation on Common European Sales Law, COM (2011) 635 final (2013) 29–30 107–108, The statement is
available online under http://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/S-2
-2012_Statement_on_the_Proposal_for_a_Regulation_on__a_Common_European_Sales_Law.pdf
(accessed 4 December 2020).
241 Schulze CESL/Lehmann, Art. 172 CESL mn. 2. An exception concerns performance in instalments or
parts as the parties do not have to return what was received if they have fully performed their contractual
obligations or the price remains payable under Art. 8(2) CESL (Art. 172(3) CESL); for criticism see
Schmidt-Kessel CESL/Wendehorst, Art. 172 CESL mn. 10–11.
242 This is excluded when the recipient knew or could be expected to have known of the grounds for
avoidance or termination at the time the expenditure was made (Art. 175 CESL).
291
Chapter 6 Breach and Remedies
in the individual case. 243 Nonetheless, the incredibly broad scope and vague terminology
of Art. 176 CESL cause problems in relation to legal certainty.244
5. Redress
140 The rules on liability in European consumer contract law primarily concern the rela-
tionship between the parties to a B–C contract, i.e. a consumer and the business (gener-
ally referred to in European contract law as the ‘trader’ or more specifically as ‘seller’ un-
der Sale of Goods Directive). Accordingly, the consequences of the liability for non-con-
forming performance burden this commercial partner, who must, for example, bear the
cost of a repair or replacement good. However, although the non-conformity is attribut-
ed to this party, an act or omission by an earlier link in the chain of contracts may have
caused the non-conformity. For example, a defective drain pump in the washing ma-
chine sold to the consumer may be due to a manufacturing defect and thus attributable
to manufacturer, or structural deformities are consequence of incorrect storage by the
wholesaler. Although the strict liability provisions of European consumer protection law
result in the liability of the final trader to the consumer, they must not result in the trad-
er bearing liability whereby earlier links in the chain of contracts are protected by milder
liability provisions under national civil or commercial law. EU legislation has therefore
included the redress of the trader who is liable under a consumer contract against the
previous links in the contractual chain.
Where the seller is liable to the consumer because of a lack of conformity resulting from an act or
omission, including omitting to provide updates to goods with digital elements in accordance with
Article 7(3), by a person in previous links of the chain of transactions, the seller shall be entitled to
pursue remedies against the person or persons liable in the chain of transactions. The person against
whom the seller may pursue remedies and the relevant actions and conditions of exercise, shall be
determined by national law.
141 The Digital Content Directive and the Sale of Goods Directive primarily serve the
purpose of consumer protection, yet their provisions on redress extend beyond con-
sumer contracts in order to protect the trader from unreasonable burdens brought about
in increasing the level of consumer protection. In this respect, however, the Directives
243 Schmidt-Kessel CESL/Wendehorst, Art. 176 CESL mn. 2; Schulze CESL/Lehmann, Art. 176 CESL
mn. 13–18.
244 Clarification is required with regard to important practical questions concerning the place of perfor-
mance and other aspects in relation to restitution, see Looschelders, ‘Das allgemeine Vertragsrecht des
Common European Sales Law’ (2012) 212 AcP 518, 674; Schmidt-Kessel CESL/Wendehorst, Art. 176 CESL
mn. 4; The analogous application of the provisions on primary contractual obligations could be of some
assistance in resolving this issue, see Schulze CESL/Zoll, Art. 93 CESL mn. 5.
292
IV. Restitution
are limited to maintaining the basis rule introduced by Art. 4 CSD that the trader is enti-
tled to seek redress against the person or persons liable in the chain of (commercial245)
transactions. The inclusion of updates (referred to expressly in Art. 18 SGD, but a re-
quirement for conformity under the Digital Content Directive246) clarifies that the ex-
tension of the requirements for conformity also apply to the redress of the last seller/
trader. The details of the right of redress are left to the Member States. In particular, the
Member States are free to determine the links in the (commercial) contractual chain
from whom the last seller/trader may seek redress. The Member States can therefore, for
example, provide for redress ‘along the contractual chain’ (so that each link in the con-
tractual chain is only entitled to claims against the respective preceding link). However,
the Member States may choose to allow direct claims against the party responsible (in
particular direct claims of the last seller against the manufacturer), thereby circumvent-
ing the principle of privity of contract.247 A combination of both approaches is also pos-
sible. However, all variants are claims within the contractual chain that leads from the
last trader back to the producer. A distinction must be made between claims by the con-
sumer against earlier links in the contractual chain. This concerns in particular direct
claims of the consumer against the manufacturer. Such an ‘action directe’, such as under
French law, does not fall within the scope of the Directives. It can therefore exist in addi-
tion to the liability regime under the Directives,248 but has not yet become a feature of
European contract law.
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245 According to Recital 78 DCD ‘it is important to ensure that the trader has appropriate rights vis-à-
vis different persons in the chain of transactions in order to be able to cover the liability towards the con-
sumer. Such rights should be limited to commercial transactions and they should therefore not cover situ-
ations where the trader is liable towards the consumer for the lack of conformity of digital content or a
digital service that is composed of or built upon software which was supplied without the payment of a
price under a free and open-source licence by a person in previous links of the chain of transactions.’.
246 See Chapter 5 mn. 47 et seq.
247 See Chapter 3 mn. 86.
248 See Recital 63 SGD.
293
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CHAPTER 7
PRECLUSION AND PRESCRIPTION
Literature: Jansen/Zimmermann (eds), Commentaries on European Contract Laws (OUP 2018); Martínez
Velencoso/O’Flynn, ‘The Rules on Prescription’ in Plaza Penadés/Martínez Velencoso (eds), European Per-
spectives on the Common European Sales Law (Springer 2015) 287; Philippe, ‘CESL: change of circum-
stances and prescription’ in Claeys/Feltkamps (eds), The Draft Common European Sales Law: Towards an
Alternative Sales Law (Intersentia 2013) 299; Schmidt-Kessel (ed), Ein einheitliches europäisches Kaufrecht?
(Sellier 2012); Vaquer/Arroyo, ‘Prescription in the Proposal for a Common European Sales Law’ (2013)
ERCL 38; Wendehorst/Zöchling-Jud (eds), Am Vorabend eines Gemeinsamen Europäischen Kaufrechts
(Manz 2012).
I. Acquis communautaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Proposal for comprehensive European rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
III. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
I. Acquis communautaire
The acquis communautaire contains incomplete and limited rules concerning the 1
consequences of the expiration of time limits for exercising, limiting or enforcing rights.1
The European legislator only takes such measures when, in light of the area of law con-
cerned, it is considered necessary to do so. A decisive aspect is therefore not a compre-
hensive regulation of time limits, but rather the nature of the time-limited right.2
Searching the present acquis for extensive and generalizable provisions on such time
limits would as such be to no avail. Nonetheless, some aspects of the acquis communau-
taire contain near-complete regulation of time-limited rights, in particular the time lim-
its on withdrawal rights.
These provisions of the Consumer Rights Directive serve as a good example for such 2
a time limit for preclusion (corresponding rules are also to be found in other directives
in which a withdrawal right is provided). The right to withdraw ceases to remain avail-
able once the withdrawal period has expired. The business does not have to refer to the
Gewährleistungsfristen im Vorschlag für ein Gemeinsames Europäisches Kaufrecht' (2013) 213 AcP 538.
2 Müller, 'Die Verjährung im EU Kaufrecht' (2012) GPR 11.
295
Chapter 7 Preclusion and Prescription
expiration of the time limit, but the court is to consider this ex officio. Art. 10 CRD de-
fines the circumstances under which the withdrawal period can be extended. As these
provisions are fully harmonized there is thus no scope for the application of consumer-
friendlier national rules on the expiration of the time limit (e.g. in light of good faith and
fair dealing). 3 In contrast, a minimum harmonization directive would allow the applica-
tion of consumer-friendlier rules (e.g. as was possible before the Consumer Rights Di-
rective repealed the Distance Selling Directive).4
3 The Consumer Sales Directive contains similar fragmented regulation of time periods
restricting consumer rights:5
Whether the right expires at the end of the time period or is transformed into an obliga-
tio naturalis remains in the hands of the national legislator.10 However, this does not
mean that the European legislator has not used the Consumer Sales Directive to develop
a self-supporting concept to regulate limitation periods.
3 Recital 2 CRD.
4 Art. 14 Distance Selling Directive; see Micklitz in Grabitz/Hilf (eds), Das Recht der Europäischen
Union (70th edn, C.H. Beck 2020) Sekundärrecht Vor A.2, 85/577/EWG und 97/7/EG – Systematischer
Teil mn. 27.
5 See EU Sales Directive/Hondius, Art. 5.
6 Art. 8(2) CSD, see EU Sales Directive/Stijns/van Gerven, Art. 7 mn. 2–5; Micklitz in Grabitz/Hilf (eds),
Das Recht der Europäischen Union (70th edn, C.H.Beck 2020) Sekundärrecht A.15, 1999/44/EG, Art. 8
mn. 5.
7 Art. 5 CSD. On the function of this period as an allocation of the risk that the non-conformity is re-
vealed and the liability arises again see Kleinschmidt, 'Einheitliche Verjährungsregeln für Europa? Zu den
Gewährleistungsfristen im Vorschlag für ein Gemeinsames Europäisches Kaufrecht' (2013) 213 AcP 538,
544; Commentaries on European Contract Laws/Zimmermann, Art 14:501.
8 See Magnus in Grabitz/Hilf (eds), Das Recht der Europäischen Union (70th edn, C.H.Beck 2020)
Sekundärrecht A.15, 1999/44/EG, Art. 5 mn. 3–16; EU Sales Directive/Hondius Art. 5 mn. 3–9.
9 See Art. 5(2) CSD: ‘Member States may provide that…’.
296
I. Acquis communautaire
In contrast to the Consumer Sales Directive, the Online Sales Directive proposed full
harmonization, which – if the proposed rule had been adopted – would have resulted in
a mandatory two-year prescription period. The Member States could have also provided
further time limits in relation to the consumer’s remedies, yet these would have to take
the two-year period in Art. 14 into consideration (the time limit for claims may not end
before the time limit for the lack of conformity has expired). As the two-year time limit
is subject to full harmonization, the rule on time limits would have prevent an extension
of the time period in which to exercise the remedies.
The Sale of Goods Directive and the Digital Content Directive regulate the time peri- 6
ods which limit the exercise of the remedies:
Art. 10(1) SGD regulates the two-year period following the delivery of the goods, yet 7
does not determine the nature of this period. Art. 10(2) SGD, a new rule, solves the
problem of contracts for goods with digital elements in which there is an obligation to
continuously supply the digital content or digital service. The two year liability period
also applies to the digital content or digital service, unless the contract provides that the
digital content or digital service is to be supplied for a period longer than two years. In
this latter case, the seller is liable throughout the period of supply. The Sale of Goods
Directive allows the Member States to maintain or introduce longer limitation periods,
however with the exception that only the remedies under the Directive may be limited
by a limitation period. A combination of the period under Art. 10 SGD (e.g. the two-
year standard period) and a national limitation period may arise, but only under the
10 On the general tendency by national and European legislators to reject the obligatio naturalis, see
Commentaries on European Contract Laws/Zimmermann, Art 14:501 mn. 1. Recent Polish law has, how-
ever, developed in a different direction so that the court has to consider by its own motion the prescription
of the consumer’s claim (Art. 117(2)(1) ZGB).
297
Chapter 7 Preclusion and Prescription
condition that the national limitation period does not prevent the consumer from exer-
cising the remedies under the cases given in Art. 10(1) and (2) SGD. Although the Sale
of Goods Directive pursues full harmonization (Art. 4 SGD), the Member States may
nonetheless maintain or introduce longer periods than provided by the Directive.
8
Article 11 Digital Content Directive
Liability of the trader
(…)
(2) Where a contract provides for a single act of supply or a series of individual acts of supply, the
trader shall be liable for any lack of conformity under Articles 7, 8 and 9 which exists at the time
of supply, without prejudice to point (b) of Article 8(2).
If, under national law, the trader is only liable for a lack of conformity that becomes apparent
within a period of time after supply, that period shall not be less than two years from the time of
supply, without prejudice to point (b) of Article 8(2).
If, under national law, the rights laid down in Article 14 are also subject or only subject to a
limitation period, Member States shall ensure that such limitation period allows the consumer
to exercise the remedies laid down in Article 14 for any lack of conformity that exists at the time
indicated in the first subparagraph and becomes apparent within the period of time indicated in
the second subparagraph.
(3) Where the contract provides for continuous supply over a period of time, the trader shall be
liable for a lack of conformity under Articles 7, 8 and 9, that occurs or becomes apparent within
the period of time during which the digital content or digital service is to be supplied under the
contract.
If, under national law, the rights laid down in Article 14 are also subject or only subject to a
limitation period, Member States shall ensure that such limitation period allows the consumer
to exercise the remedies laid down in Article 14 for any lack of conformity that occurs or be-
comes apparent during the period of time referred to in the first subparagraph.
In principle, Art. 11 DCD uses a different approach to provide a similar solution. The
second sub-paragraph of Art. 11(3) DCD does not set any limitation period but rather
determines the minimum length of a national limitation period. In essence, there is no
difference in this regard between the Digital Content Directive and the Sale of Goods
Directive.
9 A further fragmented rule concerning an important aspect of prescription can also be
seen in the ADR Directive:
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10 This provision of the ADR Directive allows the Member States to select the means to
prevent prescription from denying access to justice. However, the ADR Directive does
not determine whether prevention should be in the form of renewal, suspension, post-
ponement or even a pure procedural solution. Further explanation of the meaning of
‘prescription’ in the context of the ADR Directive will therefore be necessary. Moreover,
the required autonomous interpretation in accordance with European law does not ex-
tend to clarification of whether national legislation allows the debtor to withhold perfor-
mance after the period has expired or whether the right at issue is extinguished. It is un-
298
II. Proposal for comprehensive European rules
certain whether this provision also applies to those time periods based on EU law and,
for example, limits a withdrawal right when ADR proceedings enquire into the validity
of the withdrawal. However, as these time periods are conclusively regulated for the
Consumer Rights Directive, Art. 12 ADR Directive does not apply in matters involving
consumers.
The provisions on prescription in the proposed CESL are contained in its Chapter 18. 11
The chapter was conceived to be at least as complete as the rules of prescription in na-
tional codifications influenced by pandectism11 (such as the German Civil Code12 or the
Polish Civil Code). It is based relatively closely on the model adopted by the DCFR
(Art. III.–7:101 et seq. DCFR).13
Art. 178 CESL determines the rights subject to prescription: 12
According to this provision, prescription affects the right to enforce performance and
the ‘ancillary’ rights. The latter are not defined14 and thus there was uncertainty as to the
individual rights to be included.15 In any event, ‘ancillary’ would comprise all other
claims that are not classified as performance,16 for example, damages, right to payment
of interest, etc. The article does not represent a complete rule as the prescription of other
rights may be extracted from Art. 185 CESL on the effects of prescription.
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11 See Stellungnahme des Deutschen Notarvereins vom 7.12.2011 at 28–31, in particular 30, available un-
der http://www.dnotv.de/_files/Dokumente/Stellungnahmen/STNDNotVGemeinsamesEuropischesKaufr
echtl.pdf (last accessed 11 December 2020).
12 On the pandectic notion of prescription in German law see Markesinis/Unberath/Johnston, The Ger-
man Law of Contract (2nd edn, Hart 2006) 436–489; Windscheid/Kipp, Lehrbuch des Pandektenrechts (Sci-
entia 1984) §§ 105–113.
13 Ernst, ‘Das Verjährungsrecht des (D)CFR’ in Remien (ed), Verjährungsrecht in Europa – zwischen Be-
währung und Reform (Mohr Siebeck 2011) 67; Schulze CESL/Møgelvang-Hansen, Art. 178 CESL mn. 5;
Zöchling-Jud, ‘Verjährungsrecht’ in Wendehorst/Zöchling-Jud (eds), Am Vorabend eines Gemeinsamen
Europäischen Kaufrechts (Manz 2012) 255. On prescription in the DCFR, see DCFR Full Edition 1139–
1206. For comparisons to national law, Martínez Velencoso/O’Flynn, ‘The Rules on Prescription’ in Plaza
Penadés/Martínez Velencoso (eds), European Perspectives on the Common European Sales Law (Springer
2015) 289 et seq.; Philippe, ‘CESL: change of circumstances and prescription’ in Claeys/Feltkamps (eds),
The Draft Common European Sales Law: Towards an Alternative Sales Law (Intersentia 2013) 299 et seq.
14 Schmidt-Kessel CESL/Müller, Art. 178 mn. 4–5; Schulze CESL/Møgelvang-Hansen, Art. 178 CESL
mn. 8.
15 Vaquer/Arroyo, ‘Prescription in the Proposal for a Common European Sales Law’ (2013) ERCL 38,
43–45.
16 Müller, ‘Die Verjährung im EU-Kaufrecht’ in Schmidt-Kessel (ed), Ein einheitliches europäisches
299
Chapter 7 Preclusion and Prescription
13
Article 185(1) CESL
Effects of prescription
After expiry of the relevant period of prescription the debtor is entitled to refuse performance of the
obligation in question and the creditor loses all remedies for non-performance except withholding
performance.
According to this provision, the remedies are lost if performance can be refused be-
cause the prescription period has expired. However, a problem exists in respect of the
unclear relationship to Art. 178 CESL,17 particularly the uncertainty surrounding the
scope of the ‘ancillary’ rights18 (especially formative rights such as termination19 and
price reduction20).
14 The CESL proposes two types of prescription periods – the so-called ‘short’ and ‘long’
period of prescription. The short period resembles the two-year period in the Consumer
Sales Directive.
15 The distinction between a short and long prescription period is also reflected in the
different points at which the respective periods should begin:
gation.
Under the CESL, the short period is to commence ad scientiae, with the subjective
knowledge being decisive (‘has become or could be expected to have become’). It is to be
assumed that this also includes the awareness of the debtor’s identity. In comparison, the
long period is to be subject to objective circumstances, thereby rendering irrelevant the
creditor’s actual (or expected) awareness of these circumstances.21 The long period is to
17 Vaquer/Arroyo, ‘Prescription in the Proposal for a Common European Sales Law’ (2013) ERCL
38, 56.
18 Schmidt-Kessel CESL/Müller, Art. 178 CESL mn. 4.
19 Zöchling-Jud, ‘Verjährungsrecht’ in Wendehorst/Zöchling-Jud (eds), Am Vorabend eines Gemein-
CESL mn. 1; Vaquer/Arroyo, ‘Prescription in the Proposal for a Common European Sales Law’ (2013) ER-
CL 38, 48.
300
II. Proposal for comprehensive European rules
begin from the time performance is due as this represents the starting point for potential
claims.
The CESL outlines various possibilities to modify the end of the prescription period. 16
It provides that the period can be suspended (i.e. it does not continue to run during this
time and will resume once the circumstances causing suspension cease to exist), post-
poned (i.e. the period will continue but will end at a later date) or renewed (i.e. the peri-
od starts again).
tions. The first is associated with the aforementioned group of dispute resolution meth-
ods24; it concerns the necessary25 extension of the prescription period due to the start26
of negotiations between the parties (i.e. the informal attempt to resolve the dispute):27
22 Schmidt-Kessel CESL/Müller, Art. 181 CESL mn. 2; Schulze CESL/Møgelvang-Hansen, Art. 181 CESL
mn. 1–2.
23 This is rejected by Müller, ‘Die Verjährung im EU-Kaufrecht’ in Schmidt-Kessel (ed), Ein einheitliches
CESL mn. 5.
26 On the starting point for negotiations see ibid. mn. 4.
27 Schulze CESL/Møgelvang-Hansen, Art. 182 CESL.
301
Chapter 7 Preclusion and Prescription
munication made in the negotiations or since one of the parties communicated to the other that it
does not wish to pursue the negotiations.
19 The second instance of postponement is founded on the need to protect persons lack-
ing legal capacity:28
20 Such rules can only function in conjunction with the Member States’ laws on capaci-
ty. However, it would be necessary to determine whether the notion of incapacity under
Art. 183 CESL also concerns a person who is of limited capacity according to national
law.29
21 Renewal was the final approach to modification of the prescription period under the
CESL. It applies in relation to the acknowledgement of debt:
The CESL does not contain any further definition of ‘acknowledgement’ as used in its
Art. 184.30 The provision indeed includes a list of actions that are to be viewed as ac-
knowledgement, though this has been subject to concerns. For instance, a part payment
does not necessarily have to be considered as an expression of the debtor’s acknowledge-
ment of the obligation to pay the remainder.31 Art. 184 CESL rather gives a basis for pre-
sumed acknowledgement if the debtor has performed one of the listed acts, though pre-
sumed acknowledgement is a notion that could have been expressed more clearly. The
renewal of the short period of prescription is a similar example of inappropriate word-
ing.
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III. Conclusions
38, 43.
30 Ibid. 54.
31 Müller, ‘Die Verjährung im EU-Kaufrecht’ in Schmidt-Kessel (ed), Ein einheitliches europäisches
302
CHAPTER 8
OUTLOOK
Almost all of the fields covered in this book show the innovative features of European 1
contract law. This can already be seen at an early stage in its development, in compari-
son to the concepts and principles which influenced national codifications and legal sys-
tems during the 19th and 20th centuries. Issues such as pre-contractual information du-
ties, withdrawal rights, structure of remedies for non-conforming performance as well as
the final seller’s right of redress show the influence of the new approaches in European
contract law on developments in the EU Member States. Beyond this, however, the re-
cent challenges emerging from digitalization have again resulted in innovations with
considerable importance both for legal practice and on a doctrinal level. The new ap-
proaches are mostly anchored in concepts that developed within earlier EU legislation.
However, their effect on contract law in light of the economic and technological impact
of the ‘digital revolution’ is certainly not minimal.
The role of data in the notion and process of formation of contract is a new aspect 2
which extends beyond the introduction of pre-contractual information duties and with-
drawal rights as an early response to the changes in the ‘digital age’. The Unfair Terms
Directive already acknowledged the importance of standardized contracts in contract
practice and the demand for control over contract terms in modern contract law, but on-
ly for consumer contracts. European legislation turns with the Platform Regulation to a
key form of contracting in a core area of the ‘digital economy’. At the same time, this
Regulation shows that the control of contract terms is not merely an instrument of con-
sumer protection, but may be appropriate in a commercial context.
The Consumer Sales Directive represented a milestone in the development of Euro- 3
pean sales law, especially the provisions on conformity and liability for non-conformity,
as well as the hierarchy of remedies. Recent legislation not only extends these early
concepts and structures to digital content but also to digital services. Moreover, the legis-
lative provisions reform the relationship between subjective and objective requirements
for conformity and take into account new performance features such as functionality
and compatibility. In particular, they introduce new concepts and principles, such as the
post-contractual ‘update’ obligations and the corresponding information duties, the dis-
tinction between single performance and continuous performance over a period of time,
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the liability for non-conforming integration into the digital environment, and the modi-
fication rights under the contract. Furthermore, the inclusion of durability as a criterion
for conformity reflects environmental concerns and thus a further challenges for 21st
century contract law.
Similar comments also apply to the exercise and consequences of termination, as an- 4
other example. The Digital Content Directive and the Sale of Goods Directive extend far
beyond the Consumer Sales Directive by expressly stating that the right to end the con-
tract is exercised by notice to the other party (thus removing the requirement for a court
decision, as was required in some Member States). Furthermore, the Digital Content Di-
rective covers the consequences of termination by determining the obligations for the
parties, including new concepts such as the right to retrieve content or the prohibition
on further use. These consequences are not limited to termination for cause (failure to
perform or for non-conforming performance) but are extended where the other party
exercises a right to terminate without cause.
The further development of European contract law over the past years (and indeed in 5
the years to come) give rise to new challenges and opportunities for the legal develop-
ment in the Member States. The Member States are faced with the task to use their legis-
303
Chapter 8 Outlook
lation and case law in line with the objectives of European legislation in order to con-
tribute to realizing the potential of the ‘digital single market’ for the benefit of consumers
and businesses. However, at the same time the European provisions can inspire modern-
ization of national laws. They can extend beyond their intended scope of application and
stimulate the further development and potentially also the further approximation of na-
tional laws. In light of the cross-border nature of the technological and economic devel-
opments, this is at least as clear as at the time of the modernization of the law of obliga-
tions in Germany and France, both of which were influenced by European develop-
ments.
6 The new features in European contract law do, however, require legal science to de-
velop the underlying concepts and approaches. This concerns the integration of Euro-
pean provisions into national laws and to allow them to blossom, but at the same time it
also concerns the academic discussions surrounding European contract law. Academic
drafts such as the PECL, the Acquis Principles, and the DCFR have many features that
were characteristic of contract law at the turn of the century. However, they do not pay
sufficient attention to the consequences of digitalization on contract law. For example,
they do not tackle the issues surrounding role of data, ‘update’ obligations, liability for
incorrect integration into the digital environment, modification rights, or compatibility
and durability as criteria for conformity. It is clear that these academic drafts lack the
themes and principles that have become central to European contract law and are, de-
spite their continued importance, thus an inadequate reflection of modern European
contract law. If these drafts are to continue to accompany the development of European
contract law, revisions and redrafts will be required as much as the changes to textbooks
and inclusion of new research topics.
7 The European legislator has certainly been productive over the past years, however
the legislation has not given satisfactory answers to all of the questions posed by the
technological and economic changes, for instance B–B contracts for digital content and
also the protection of SMEs in such contracts. Further examples include the absence of
rules which excuse performance, not to mention the lack of harmonization of the law of
damages, both of which result in considerable uncertainties for consumers and business-
es alike. The new rules on online intermediaries focus mainly on transparency for com-
mercial users, yet comparable protection and rules on liability are lacking for consumer
contracts. Further clarification is also needed for the relationship between licenses and
Copyright © 2021. Nomos Verlagsgesellschaft. All rights reserved.
contract law and the relationship between contractual rights and quasi-property rights
over data. The same also applies to the effects on the contract if the consent to process
data is withdrawn. ‘Machine-to-Machine’ contracting and the associated questions on
consent (and defects thereof) and agency also require approaches beyond the national
framework, especially in consideration of the numerous cross-border contracts in the
‘Internet of Things’. This also applies to self-executing contracts and their ambivalent
role as an instrument that may greatly benefit or hinder customer rights. And lastly, as a
final example, the variety of issues arising from the use of artificial intelligence, such as
the questions concerning contractual autonomy, as well as the relationship between con-
tractual and non-contractual liability.
8 Finding suitable solutions to these questions may become a crucial task for aca-
demics, legislators and judges in the coming years. European law therefore has an ad-
vantage over many national laws as the former is a ‘law in progress’ and has not become
encased in a long-established system and corresponding codification. It will therefore be
easier to integrate the answers into its step-by-step development and for its principles
and structure to reflect 21st century demands. This mostly concerns the various conse-
quences of digitalization on contract law, but may also cover further extensive changes
304
Chapter 8 Outlook
due to policy goals (e.g. durability of consumer goods as pursuing environmental goals).
As the three recent proposals for regulations concerning crypto-assets, on a single mar-
ket for digital services, and on digital markets show, the current legislative developments
a building a framework for modern digital law which will have implications for private
law beyond the scope of contract law.
The downside to this potential in the development of European contract law is indeed 9
the lack of comprehensive legislation with a uniform structure. The withdrawal of the
proposed Common European Sales Law resulted in the continuation of the piecemeal
approach to European contract law. The shift in the field of contract law from minimum
to full harmonization directives or the increased use of regulations does increase legis-
lative uniformity but does not solve the problems concerning the coherency of the har-
monized law. It is likely that this will not change in the near future. Under these circum-
stances it will – as in the past decades – remain a challenge for politicians, scholars and
judges to work towards the coherency of European rules. Academic drafts presenting the
principles and structure of European contract law will therefore have to focus not only
on the application of European rules and corresponding provisions of national law, as
well as the accompanying case law, but will also have to avoid the inconsistencies and
regulatory deficits via future legislation.
As the Digital Content Directive and Sale of Goods Directive have indicated, the new 10
stage in the development of European contract law can also – at least in the long term –
offer the chance to bring together the experiences and approaches with the requirements
of the ‘digital age’ to devise a contract law for the 21st century. What stood out at the end
of 20th century still applies in the ‘digital’ 21st century: it would be an anachronism if
one internal market and one Internet were available to businesses and consumers yet,
alongside various national laws, no one common contract law.
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305
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Index
Bold numbers refer to chapters, normal ones to margin numbers.
307
Index
308
Index
– tangible medium 6 131 – minimum 1 34 ff., 52, 2 122 f., 3 51, 4 12,
– termination 6 128 7 2 f.
– updates 5 47 ff., 59
Impossibility 6 40 f., 58 ff.
Digital service 1 62 ff.; see Digital products – initial 6 60
Directive 1 16 f., 27, 31 ff., 2 2 – legal 6 66
– gold plating 1 36 – subsequent 6 60
Disproportionality 6 58 ff. – termination 6 92
– absolute 6 61, 66, 76 Incapacity
– relative 6 61, 66 – prescription 7 19 f.
– termination 6 92 Inertia selling 2 35 ff., 3 51, 57, 92 ff.
Dispute resolution – mistake 3 95
– legislation 1 43 Information
Distance communication 3 74 – Acquis Principles 3 43 ff.
Duties of protection 6 12 – asymmetry 3 4 f., 32
– breach 3 45 ff., 140, 144
e-commerce 1 32, 57, 2 52, 3 76 – breach of duty 3 9 f., 75
– directives 1 39 – CESL 3 19 ff., 39 ff.
– information 3 7 – conclusion of contract 3 76 f.
effet utile 3 72, 91 – confidentiality 3 27
Estoppel 2 140, 3 22, 25 – DCFR 3 43 ff.
EULA 5 54 – distance communication 3 75
– duty 3 1 ff., 18
European Business Code 1 46
– e-commerce 3 7, 103 f.
Fair trading – exception 3 35
– information duties 3 36 ff. – fair trading 3 36 ff.
Fault 6 32 – financial transactions 3 13
– form 2 59 ff., 3 82
Force majeure 6 40 – function 3 33
Formative right 3 129, 6 2, 7 13 – good faith 3 24 ff.
Framework contract 2 82 – harmonization 3 34
Fraud – liability 3 14 ff.
– CESL 3 113 – obligations 3 6 ff.
– overload 3 12
Freedom of contract 1 30, 2 19, 108 ff., 3 63, 99,
– pre-contractual 3 32 ff., 36 ff., 43 ff.
5 1, 6 46
– right of withdrawal 3 45, 47, 139 f.
– contract terms 2 127 ff.
– services 3 34
– right of withdrawal 3 128
– standardized 3 38
Geo-blocking 1 61, 2 156 Installation 6 3
Good faith 2 130 ff., 3 1 ff., 12, 17 ff., 4 9, 28 f., Instructions 5 41, 46
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309
Index
310
Index
311
Index
312