Volume 50 (2013)

Volume 50 (2013) / Issue 1/2

Gerhard Wagner, 'Termination and cure under the Common European Sales Law: Consumer protection misunderstood' (2013) 50 Common Market Law Review, Issue 1/2, pp. 147–167

Abstract

The CESL'sscheme of remedies for defective performance by the seller is different for commercial sales and for consumer sales. In case of a commercial transaction (B2B), the seller has a right to cure defective performance either by repair or by replacement, before the merchant-buyer is entitled toterminate the contract. The priority of cure over rescission offers an efficient solution as it keeps buyer opportunism at bay, while preserving the incentives of the seller to deliver conforming goods. The scheme of remedies for transactions involving consumer-buyers(B2C)deviates from this reasonable solution as the buyer, in the case of defective tender, is entitled to immediate rescission. The right to immediate cancellation is meant to privilege consumer-buyers but, in truth,this backfires as it increases the costs of sellers without benefitting buyers in the same or a higher measure. The right to immediate rescission allows buyers to call off the contract for opportunistic reasons, such as a drop in market price or, more importantly, a revision of personal preferences. The resulting increase in the costs of sellers will be passed on to the class of buyers through price increases. In this way,opportunistic buyers will be able to shift the costs associated with their behaviour to faithful buyers who will be forced to cross-subsidize their opportunistic brethren. It seems that this rather sad outcome is not what the framers of the CESL had in mind when they tried to enhance the remedies of consumer-buyers.

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ISSN: 0165-0750
ID: COLA2013041