Further developments on European contract law reform

On 16 February we reported on the European Commission's Green Paper on policy options for progress towards a European Contract Law, which set out a number of options including its favoured proposal for the creation of an "optional instrument" of European contract law. As we explained, this would insert into the national laws of the 27 EU member states an alternative set of contract law rules which could be chosen by contracting parties as the governing law for their contract. Consultation on the Green Paper closed on 31 January 2011. Click here for more detail on the proposals.

Since then there have been two developments which suggest that there is significant momentum in Brussels for the development of an optional European contract law instrument, despite strong opposition from the UK government and legal community.

• On 12 April, the European Parliament's Legal Affairs Committee approved a report endorsing the Commission's proposal for an optional instrument. Their press release stated that the instrument could apply in cross-border contracts only, or in both cross-border and domestic contracts, and that it "would have to guarantee a high level of consumer protection and legal certainty throughout the life cycle of a contract".
• On 3 May the European Commission's Expert Group on European contract law published its 'feasibility study', which proposes 189 articles that could apply to a wide range of contractual scenarios in both business-to-business and business-to-consumer contracts. The Commission is seeking feedback on the draft text by 1 July 2011. Herbert Smith will be contributing comments to the Law Society's response.