On 26 March, the European Plenary Sitting approved the trilogue agreement on the Contract Law for Sales of Goods directive. ESBA welcomes the tentative to harmonized contract law at European level. Harmonized contract law rules will strengthen the Single Market, and will help SMEs engage in cross-border trade.
However, ESBA worries for its members, as the rules have not been defined clearly and will be opened for interpretation by the ECJ. The rules fail to protect SMEs from unforeseen fallbacks from the Geo-blocking directive.
The Geo-blocking Directive came into force in December 2018, obligating traders to sell to all Members States, without delivering the goods. Unfortunately, B2C relationships do not finish at the reception of products. When a product becomes faulty, the trader, under the new rules, will be liable to bring it to conformity “free of charge” which includes transport costs. It becomes really tricky (and costly) when goods are located in Member States where traders had no intention to sell in the first place.
The Institutions only included a provision on the proportionality of costs in the recitals but failed to define “disproportionate or heavy costs”. By not giving a definition of disproportionate costs, the institutions decide to leave it open for a European Court of Justice Ruling. This leaves SMEs unprotected and open to future case law. Unfortunately, SMEs do not have the means nor the resources to engage in such tedious and expensive procedures and will be put at a disadvantage.
ESBA regrets such lawmaking which relies heavily on legal uncertainty and leaves SMEs and consumers evolving in an uncertain environment.