Category Archives: EU Law & Policy

Pre-Contractual Duties of Information: EU Private Law and the Consumer Rights Directive (4/5)

This is Part IV of my ongoing series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

“In hardly any other area of the law have European legal acts given such a long lasting impetus to the laws of many Member States”1

A) Pre-contractual information duties under EU law

The European Union is now the main driver in the field of information obligations2. As Rott shows, this is due to the EU’s goal of reducing legal barriers to inter-state trade and to foster competition in the internal market.

EU law has tended to impose very specific information duties, as opposed to more general duties. Such duties are to be found in a number of directives including: the Doorstep Selling Directive (85/577), the Package Travel Directive (90/143), the Unfair Terms Directive (93/13), the Timeshare Directive (94/47), the Distance Selling Directive (97/7), the Price Indications Directive (98/6), and the Consumer Sales Directive (99/44).

B) The Consumer Rights Directive: end-of-the line for maximum harmonisation?

“This Directive establishes rules on information to be provided for distance contracts, off-premises contracts and contracts other than distance and off-premises contracts.“3

The Directive on Consumer Rights (CRD) was adopted by the Council on 25 October 2011. This new directive replaces the directives on distance contracts and on contracts away from business premises, modifies those on consumer sales and unfair contract terms, and of particular interest to this discussion, introduces general information duties for consumer contracts, regardless of the object or situation in which they are concluded.

1) Maximum harmonisation for distance and off-premises contracts

Article 6 of the Directive, introduces information requirements for distance and off-premises contracts. It should be noted that in both instances these contracts must be between a trader and a consumer4). The CRD introduces common information requirements for both types of contracts5, as well as requirements as to the form of the information to be provided6.

The information which must be given in a “clear and comprehensible manner”, is mainly derived from existing directives such as the Distance Selling Directive and includes: the main characteristics of the product, the geographical location and identity of the trader, conditions for delivery, payment information, information about contract termination and rights of withdrawal. Notably, Member States may maintain or introduce language requirements in order to ensure that information is clearly understood by the consumer7.

* Side effects of this harmonisation on general contract law

As this article is aiming for maximum harmonisation, Member States may not impose any further requirements for the fulfilment of the information obligations set out for these kind of contracts. Article 3(5), does, however, state that the Directive shall not affect national general rules of contract law, such as those governing the validity or the formation of the contract, insofar as they are not regulated in the Directive.

As Busch and Domröse observe, this brings up an interesting question as to whether general contract law concepts, such as good faith, may be used to introduce additional information requirements8. To escape these murky waters, Caufmann suggests the question may be construed as to whether the non-disclosure of certain information (beyond the directive’s requirements) would have caused the consumer to enter into the contract and that these principles may, accordingly, be applied9. Concepts such as réticence dolosive would, therefore, be able to live on. This cannot be said of the general obligation de renseignement which has developed through case law, which would have to see its scope restricted, as not all the resulting information duties can be said to relate to the ‘main characteristics of the goods or services’10.

Bearing in mind the above, a report prepared for the Directorate General for Internal Policies, on the potential effects of the Directive on general contract law in Member States, may shed some light on these concerns. It gives the example of a number of duties which will only be able to be maintained for persons not acting as consumers, for the purpose of these contracts, such as: information about legal restrictions on the use of the products or information as to certain dangers associated with the product, which are not necessarily ‘main characteristics’11.

2) Minimum harmonisation for other business to consumer contracts

Article 5 of the Directive, introduces information requirements for all other consumer contracts which do not fall under article 6 and are not excluded from its scope by article 3 (such as, for example, contracts for the transfer of property, or for financial services). Furthermore, per article 5(3) Member States are not required to apply these requirements to contracts involving ‘day-to-day transactions’ which are ‘performed immediately at the time of their conclusion’.

As this particular article is not aiming for maximum harmonisation, Member States are free to introduce or maintain additional requirements per article 5(4).

3) Much ado about nothing?

The Draft Common Frame of Reference, a merger of the acquis and the PECL12,  represents a useful benchmark against which to evaluate the CRD13. The contrast between the DCFR and the CRD is stark, whereas article II-3:101 DCFR provides for a general duty of disclosure and article II-3:103 recognises a duty “to provide information when concluding a contract with a consumer who is at a particular disadvantage”, the CRD’s maximum harmonisation only affects “information requirements for distance and off-premises contracts”.

Similarly, the DCFR in article II-3:107 expressly sets out remedies (which include damages under art II-3:501) for the breach of pre-contractual information duties, whereas in the CRD, with the exception of “additional charges”, remedies are largely left to the applicable law14.

On the whole, it is clear that the directive bears little resemblance to the Commission’s original plan of a broad regime of maximum harmonisation in the consumer sphere15. This approach does have the advantage of allowing Member States to retain or adopt higher levels of consumer protection, which would not be possible in the case of undifferentiated full harmonisation16.

As Busch and Domröse convincingly argue, the fate of the Directive mirrors the change in European Consumer policy, which now favours a move from ‘harmonisation’ to ‘complementation’17.

  1. Reiner Schulze, ‘Precontractual Duties and Conclusion of Contract in European Law’ [2005] 6 European Review of Private Law at 847 [↩]
  2. Christian Twigg-Flesner, ‘Information duties’ in Hans Schulte-Nölke, Christian Twigg-Flesner and Martin Ebers (eds.), EU Consumer Law Compendium (Sellier European Law Publishers 2008) 758-789 [↩]
  3. “Consumer Rights Directive” – Recital 9 of Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights [↩]
  4. Consumer Rights Directive, articles 2(7) and 2(8 [↩]
  5. Consumer Rights Directive, article 6 [↩]
  6.  Consumer Rights Directive, articles 6 and 7 [↩]
  7. Consumer Rights Directive, article 6(7) [↩]
  8. Christoph Busch and Ronny Domröse, ‘From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011’ [2012] 1 Journal of European Consumer and Market Law  49 [↩]
  9. Caroline Cauffman, ‘The Consumer Rights Directive Adopted’ [2012] at 3 [↩]
  10. Frank Alleweldt, Peter Rott, Christian Twigg-Flesner and Senda Kara, ‘Information Requirements in the Consumer Rights Directive Proposal and in Other Directives’ [2010] at 16-17 [↩]
  11. Ibid. at 17 [↩]
  12. Castronovo C, ‘Information Duties and Precontractual Good Faith’ [2009] 4 European Review of Private Law at 562 [↩]
  13. Communication from the Commission, COM [2004] 651; but see: Green Paper from the Commission on policy options for progress towards a European Contract Law for consumers and businesses, COM [2010] 348 [↩]
  14. Ibid.; Horst Eidenmüller, Florian Faust, Hans Christoph Grigoleit, Nils Jansen, Gerhard Wagner and Reinhard Zimmermann, ‘Towards a Revision of the Consumer-acquis’ [2011] Common Market Law Review at 15; Christoph Busch and Ronny Domröse, ‘From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011’ [2012] 1 Journal of European Consumer and Market Law at 50 [↩]
  15. Ewoud Hondius, ‘The Proposal for a Directive on Consumer Rights: The Emperor’s New Clothes’, [2011] 2 European Review of Private Law at 163 [↩]
  16. Cauffman C, ‘The Consumer Rights Directive Adopted’ [2012] at 6 [↩]
  17. Christoph Busch and Ronny Domröse, ‘From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011’ [2012] 1 Journal of European Consumer and Market Law at 50 [↩]

Pre-Contractual Duties of Information in English & French law and the Consumer Rights Directive – Introduction (1/5)

This is an introduction to my upcoming series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

“[an] investigation of the scope of the “duty to disclose” on a comparative law basis is most rewarding; it leads us straight to the heart of the philosophy underlying the law of contracts”1

The issue of pre-contractual information duties takes us to the very core of European private law, which must wrestle with competing conceptions of the negotiation process. How one views this stage, be it as an adversarial, or cooperative adventure, or even a hybrid thereof, will invariably inform the scope of these obligations. This is, arguably one of the areas where the divide between common and civil law is the most apparent. As such, a comparative study of the English and French approaches seems an opportune way to delve into this fascinating debate. This is even more so the case in light of the continuing pressure towards the development of common approaches at the European level.

It is submitted, in line with Sefton-Green’s reasoning2, that information duties not only imply positive duties to provide information but also providing accurate and non misleading information. This series of blog posts will, therefore, look at both types of information duties.

Accordingly, I shall show that English and French contract law, in light of their competing dogmatic underpinnings, have markedly different approaches to positive information duties, and, therefore, present significant obstacles to harmonisation. Taking this into account, I shall argue that the new Consumer Rights Directive represents a timid step towards harmonisation in this area.

To do so, I shall first consider how both legal systems deal with defective information at the pre-contractual stage (Part II), I shall then evaluate the extent to which they recognise a positive duty of information and the means used thereto (Part III). This will lead me to evaluate the acquis communautaire in this area and the new Consumer Rights Directive in light of the challenges of harmonisation (Part IV).

  1. Friedrich Kessler and Edith Fine, ‘Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study’ [1964] 77 Harvard Law Review at 438 [↩]
  2. Ruth Sefton-Green, ‘Duties to Inform versus Party Autonomy: Reversing the Paradigm (from Free Consent to Informed Consent)? – A Comparative Account of French and English Law’ in Geraint Howells, André Janssen and Reiner Schulze (eds.), Information Rights and Obligations (Ashgate 2005) at 174 [↩]

Navigating uncharted waters: The EU’s response to the financial crisis (2008-2010)

Note: The following paper was written in mid-2010. I will revisit this topic in an upcoming post for a more up-to-date perspective.

“In this paper, I shall look at the European Union’s response to the current financial crisis and evaluate both how the crisis was addressed and the effectiveness of it’s response. I shall mainly argue that, while successful overall, this response was unnecessarily handicapped by the lack of strong economic governance on the EU level in favour of often disappointing inter-governmental cooperation. I shall first focus on the EU’s immediate response to mitigate and resolve the crisis (I) before turning to its new regulatory and supervisory proposals (II).”

Read the full PDF version (includes bibliography)

Outline:

I) Mitigating and resolving the effects of the crisis

A) Supporting the financial sector
B) Macro-economic support/stimulus

II) Reform and prevention of future crisis

A) Regulatory initiatives
B) Supervisory initiatives

Concluding thoughts:

“The EU was institutionally ill-prepared to manage a financial crisis, especially with regards to the assignment of competences between the Union and Member States. The EU was largely successful in coordinating the stabilisation of the banking sector, where it was able to rely on its exclusive competition competences. On the other hand, the EU’s coordination and role in macro-economic policies, with the exception of the balance of payments assistance, can only be called lackluster. A similar pattern emerges when one looks at the EU’s supervisory proposals which, as a consequence of financial stability being a national competence, represent a fragile balancing act between national and EU interests. More progress has been achieved in the regulatory arena, where the EU has a shared competence, under the purview of the common market. Soft-law instruments have shown their value in areas where the EU lacks competence or is faced with stiff resistance, these are, however, not a solution to the institutional problems facing the EU. Looking back at the EU’s response, the limitations of inter-governmental cooperation are clear. As several economists and MEPs have suggested, and I would argue, this situation would be best solved by the creation of a European economic government with control over economic and fiscal policy. Ineffective agreements such as the Stability and Growth Pact, are no substitute for real governance. Article 136 might be a good starting point for this, but a treaty change in this direction appears to be inevitable in the long term. This argument is now even stronger given the current debt crisis in Greece and its impact on all Eurozone countries.”