B2C Contracts Research Articles

Correction: A support system for the detection of abusive clauses in B2C contracts

Correction: A support system for the detection of abusive clauses in B2C contracts

A support system for the detection of abusive clauses in B2C contracts

AbstractMany countries employ systemic methods of protecting consumers from unfair business practices. One such practice is the use of abusive clauses in business-to-consumer (B2C) contracts, which unfairly impose additional obligations on the consumer or deprive them of their due rights. This article presents an information system that utilizes artificial intelligence methods to automate contract analysis and to detect abusive clauses. The goal of the system is to support the entire administrative process, from contract acquisition, through text extraction and the recommendation of potentially abusive clauses, to the generation of official administrative documents that can be sent to court or to the owners of firms. This article focuses on on the components that use machine learning methods. The first is an intelligent crawler that is responsible for automatically detecting contract templates on websites and retrieving them into the system. The second is a document analysis module that implements a clause recommendation algorithm. The algorithm employs transformer-based language models and information retrieval methods to identify abusive passages in text. Our solution achieved first place in a competition on the automatic analysis of B2C contracts organized by the Polish Office of Competition and Consumer Protection (UOKiK), and has since been implemented as an official tool to support the contract analysis process in Poland.

Sustainability of AI: The Case of Provision of Information to Consumers

The potential of artificial intelligence (AI) and its manifold applications have fueled the discussion around how AI can be used to facilitate sustainable objectives. However, the technical, ethical, and legal literature on how AI, including its design, training, implementation, and use can be sustainable, is rather limited. At the same time, consumers incrementally pay more attention to sustainability information, whereas businesses are increasingly engaging in greenwashing practices, especially in relation to digital products and services, raising concerns about the efficiency of the existing consumer protection framework in this regard. The objective of this paper is to contribute to the discussion toward sustainable AI from a legal and consumer protection standpoint while focusing on the environmental and societal pillar of sustainability. After analyzing the multidisciplinary literature available on the topic of the environmentally sustainable AI lifecycle, as well as the latest EU policies and initiatives regarding consumer protection and sustainability, we will examine whether the current consumer protection framework is sufficient to promote sharing and substantiation of sustainability information in B2C contracts involving AI products and services. Moreover, we will assess whether AI-related AI initiatives can promote a sustainable AI development. Finally, we will propose a set of recommendations capable of encouraging a sustainable and environmentally-conscious AI lifecycle while enhancing information transparency among stakeholders, aligning the various EU policies and initiatives, and ultimately empowering consumers.

Cross-Border Remote B2C Contracts in the Practice of the Court of Justice of the European Union: Is the Consumer always Right?

The paper analyzes the legal positions of the Court of the European Union, developed when considering disputes arising from cross-border remote B2C (business to consumer) contracts. In particular, the criteria proposed by the Court of the European Union for determining the “orientation” of the professional party’s activity to the country of the consumer’s place of residence are being investigated. Based on the study of the practice of the Court of Justice of the European Union, it is concluded that consumers in the European Union are provided with increased legal protection as an economically weak party.The author summarizes that the Court of the European Union has developed a number of legal positions. In particular, the Court proposed an open list of criteria for determining the “direction” of the professional party’s activities to the country of the consumer’s place of residence. In addition, it was noted that the “direction of the professional party’s activities when concluding remote contracts is evidenced by the website that reads that the professional party implied the implementation of transactions with consumers residing in one or more member States, including the member State of the consumer’s place of residence. However, the mere fact of having access to the website of an intermediary or entrepreneur in the member state in which the consumer resides is not enough. The same applies to the indication of an e-mail address or other contact information, or the use of a language or currency that is usually used in the Member State of the place of establishment of an economic entity, which corresponds to paragraph 24 of the preamble to the Rome I Regulation.

Developing Internet Jurisdiction in B2B and B2C Contracts: Focusing on Iranian Legal System with Comparative Study of American, English and eu Laws

Abstract In the modern world, electronic communications play a significant role in areas of national and international law such as Internet jurisdiction. Private international law provides that the competent court is the court within which jurisdiction the contract is performed, so it is important to know the place of performance of the contract in the case of contracts for digital goods such as e-books or computer software delivered online. It is equally important in the case of electronic services such as e-teaching. Furthermore, as consumer protection in B2C contracts is important in developing global e-commerce, it is important to consider whether the consumer party is able to bring an action against the business party in his own place of domicile or habitual residence. The article analyses these questions and proposes ways in which the Iranian legal system might be developed to address issues of Internet jurisdiction in B2B and B2C contracts.

Fair Allocation of International Jurisdiction over Consumer Contracts

The Brussels Ia Regulation leaves businesses no feasible option for a choice of jurisdiction in cross-border B2C contracts. The recent judgment by the European Court of Justice in the Ryanair case confirms that the Court will not tolerate any attempts to circumvent the regulatory aim of effective consumer protection detailed in the Regulation. However, this consumer-friendly approach comes with some notable disadvantages that affect not only companies engaged in cross-border commerce, but the European Single Market as well. Innovations in procedural technology offer ways to cushion such drawbacks and relieve the pressure of assigning international jurisdiction to the domicile of one or the other contractual party.

Just how free is a free choice of law in contract in the EU?

Free choice of law appears to be the pivot and the unchallenged champion of the private international law of contracts. Yet to stop at this would be a fallacy and would disregard the challenges it has to face. Those challenges come from different quarters. In B2C contracts in the EU not only the more favourable law principles as enshrined in Article 6(2) of the Rome I Regulation must be observed, but also any requirements which the Unfair Contract Terms Directive imposes. Transparency in particular ranks high. In Verein für Konsumenteninformation v Amazon the Court of Justice of the European Union has imposed duties on businesses and professionals to inform their consumer customers about at least the existence and the basic structure of the more favourable law principle. This landmark decision might not stand on ground as firm as it implies at first sight. Its fundament might be shaken by inconsistency. But practice has to comply with it and has to observe its consequences. On a more abstract level, it raises ample necessity to reflect about the modern-day structure of “free” choice of law. In this context, it is argued that the system established for parties’ choice of law in the Rome I Regulation does not allow for a content review of choice of law agreements.

Buttons, Boxes, Ticks, and Trust: On the Narrow Limits of Consumer Choice

Consumers shall be considerate and responsible, have the necessary information available and choose from a vast array of goods whatever best satisfies their needs. The ideal understanding of the European consumer relies on splendid supply and sound choice. Whereas the supply of goods and services in the Union as well as in most Member States is impressive, consumer choice in form of B2C contracts is a weak point. Sure enough, choosing contractual options and agreeing to proposed conditions has definitely become fancier in the digital age. Customers tick appealing boxes with green checkmarks and hit stylish buttons to plot a way through the conclusion of a contract. At the same time, choices have not become easier at all as traders and legislators come to know how to expertly strike the keys of choice architecture. Thus, how much of contemporary consumer choice does in fact match the ideal of considerate and responsible decisions? Examining three examples of how relevant information is presented to consumers in order to contribute to their “empowerment”, we come to the conclusion that the current EU consumer policies fail, at least occasionally, to take into account key lessons that cognitive psychology and behavioural law and economics have taught us over the past decades. We conclude by giving an outline of how the current strategies could be amended so as to make them more effective towards the overall goals of consumer empowerment and consumer confidence.

Termination as a Remedy in the Common European Sales Law: A Law and Economics Approach

The aim of this paper is to contribute to the understanding of the implications of CESL for European Contract Law by looking into the remedies available to the parties for the breach of a sales contract, and in particular to examine the legal regime of termination for breach of contract. Our approach emphasizes the strategic and economic dimensions induced by the legal solutions in CESL as this is a particularly promising way to evaluate the likely impact of proposed legal solutions. We focus on the heterogeneity of the effects that termination may induce both in terms of incentives and overall social costs. Our findings lend some support to the policy option in CESL of a more liberal termination regime for consumers in B2C contracts than for commercial parties.

Private Standards of Fairness in European Contract Law

The Unfair Terms in Consumer Contracts Directive contains a general clause according to which ‘a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’ (Article 3(1)). The open-textured nature of this clause requires further guidance as to what constitutes a significant imbalance contravening the principle of good faith. The question is whether self- and co-regulation of B2C contracts give rise to such guidance. This paper ascertains to what extent private or mixed standards are taken into consideration in the assessment of contract terms by civil judges. It depicts how private regulation flows into the judicial interpretation of the open fairness norm, especially in France (recommendations of the Commission des clauses abusives) and in the Netherlands (GTC agreed upon by both trade and consumer organisations). By taking this regulation into account while assessing the fairness of a contract term on the basis of a legal norm, civil courts confer legitimacy on it. It appears that private standards are deemed fair or viewed as a benchmark of fairness in view of their co-regulatory nature. Co-regulation however does not always vouch for in concreto and even in abstracto fair standards. It should therefore not exempt private standards from being put to a broader fairness review.

The Regulation of Digital Content B2C Contracts in CESL

This paper examines whether the provisions of the Common European Sales Law, as published by the European Commission, are fit to be applied to distance contracts for the supply of digital content to consumers. Both the original proposal and the amendments suggested by the European Parliament are discussed.

A Critical Investigation of the 'Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law'

The paper examines the CESL proposal as an act constituting an optional CL regime with the objective to improve the establishment and the functioning of the internal market by facilitating the expansion of cross-border trade for business and cross-border purchase for consumers. The paper is carried out on legal research and different opinions and reports on the CESL from a range of sources. Thus, it highlights the advantages and disadvantages of the act and if such attempt is really worth it.The main characteristic of CESL proposal is its optional nature. CESL may not apply autonomously, but only if chosen by the contractual parties. CESL proposal does not replace the national CL in the MSs; however, it intends to be a second CL regime for each MS. Principally, contracts will be still governed by the applicable national law, unless the parties have explicitly agreed to use the CESL. Despite its aim, CESL does not fit to any of EU legal acts as foreseen by art. 288 of the TFEU. This paper consists of five chapters. The subject of the first chapter is a brief description of the CESL objectives and the crucial factors to this proposal. The second chapter analyses the legal nature of the CESL in accordance with the TFEU provisions. Differently from the EU legal acts, CESL does not aim the approximation of MSs laws. In the third chapter, there are given the differences between the choice of B2B contracts and B2C contracts. The fourth chapter gives a comparison between the CESL and the CISG, as well as between the CESL and other international acts regulating the field of CL.Consequently, the fifth chapter is focused on recognising the need or non-need for an optional regime of sales law within the EU. Although the positive characteristics of CESL, this chapter intends to find out the gaps related to the parties’ interest.The interpretation is mainly based on the proposal text and EU primary and secondary law. The conclusion summarizes the legal and economic concerns about CESL; it is a short review of positive effects proposed by CESL and the contradictions it may raise if entered in force.

Die Vertragsaufhebung im Vorschlag eines Gemeinsamen Europäischen Kaufrechts

Termination of contract in the CESL requires a fundamental non-performance of one of the parties. In the case of malperformance Art 114 Para 2 CESL provides for an exemption in B2C contracts, as the consumer also has a right to terminate, if the goods do not conform to the contract, unless the lack of conformity is insignificant. The article tries to offer ways to interpret the new terms: It argues that the case law developed for "fundamental breach" of Art 25, 49 CISG may serve as a source of interpretation for B2B contracts, whereas Art 3 Para 6 Directive 1999/44/EC ("minor lack of conformity") seems to be the proper point of reference for B2C contracts. The article further criticises that in B2C contracts the CESL do not adhere to the hierarchy of remedies. Priority of repair should also be a principle in the CESL and could easily be realised by granting the seller a right to cure the lack of conformity like in the B2B relationship.

How to Opt into the Common European Sales Law? Brief Comments on the Commission’s Proposal for a Regulation

Abstract: Unlike the actual text for the proposed Common European Sales Law (CESL), which is based on extensive preparatory work by academics, the regime for opting into the instrument, which is set out in the main text of the proposed regulation, is entirely of the European Commission's own making. The approach adopted by the Commission is innovative and generally convincing, although there is still room for improvement. Characterizing the optional instrument as a second national regime rather than as a 28th regime has the important advantage of neutralizing the effect of Article 6 Rome I in B2C contracts, which makes the instrument sufficiently self-standing to become an attractive alternative. At the same time, this choice is acceptable politically and constitutionally (Article 114(3) TFEU) as long as the level of consumer protection within the common sales law remains as high as it is in the current proposal. In business-to-business (B2B) contracts, it is misguided for the regulation to suggest, as it does in the proposal, that a choice for the CESL would imply ipso facto the opting out of the CISG, since the question of what amounts to an exclusion of the CISG is a matter of interpretation of the parties' intentions under the CISG alone. Having said that, in most cases, it will not be very difficult for a court to deduce an implicit opting out of the CISG from an explicit opting into the CESL. Nevertheless, especially in the case of a partial choice for the CESL, which the proposal allows for B2B, interpretative difficulties may arise. The duty for sellers in B2C contracts to draw the consumer's attention to the intended application of the CESL by providing the consumer with a Standard Information Notice (SIN) is not likely to bring consumers much extra protection while the proposed sanction will bring undue legal uncertainty and should, therefore, be reconsidered. It also sends the wrong message, as if this new European law were something dangerous that consumers have to be warned about. The terminological choices of the proposal are not always felicitous. For example, it is not clear what is meant by the expression that the parties 'may use' the law. Of course, the proposed CESL does not fit neatly with any of the received dichotomies of international versus national contracts, Member State versus Union law, direct versus indirect applicability, and substantive versus conflict-of-laws choice of law. In some respects, therefore, the CESL may have to be regarded as sui generis. This is not at all surprising in light of the fact that the European Union (EU) itself is a sui generis legal order. However, the European legislator should try to make it as clear and foreseeable as possible for contracting parties what exactly will be the consequences if they opt into the CESL.

Arbitrability limitation in consumer (B2C) disputes? : Consumers´ protection as legal and economic phenomenon

Protection of consumers became a phenomenon of many governmental politics. Retrieval of a balance between privat autonomy and protection of a weaker party is very sensitive. The particular degree of consumers protection through limitation of contractual autonomy (in B2C contracts) as well as procedural autonomy (regarding B2C dispute resolution mechanisms), as chosen by particular governments, has both legal and economic effects, in positive and negative sense. The European Court of Human Rights adjudicated repeatedly that traditional court litigation is not capable to grant effective protection to contractual claims in many countries. Arbitration is therefore one of possible tools for B2C dispute resolution, even if many countries and obviously the EU Commission followe rather an opposite strategy (keeping down arbitrability of B2C disputes in the opposite to US trends). Arbitration is not a cure-all and definitely not a method suitable for the resolution of any and all types of disputes. It has its proponents as well as opponents. Indeed, it is hard to claim that a particular type (class) of disputes is a priori fit to be resolved in arbitration, rather than litigation, or vice versa. This also applies to consumer disputes (disputes from consumer contracts). It is fairly undisputable that consumers deserve a certain degree of specific protection in cases in which they are forced to enter into a particular contract and have no other option than to accept the conditions stipulated by the other party (the professional). But we cannot principally claim that the resolution of these disputes in court would be more suitable than arbitration or any other, the so-called alternative, dispute resolution method (ADR). Despite the basically undisputed importance of and the need for special consumer protection (whether provided by special laws, typically in Europe, or on the basis of general legal principles and the application of general contract law, like in the USA), the degree of such protection can be considered as somewhat controversial. The weaker party does deserve special protection within the regime of the equal status of the contracting parties. But the intensification of this protection often results in the possibility of the consumer to abuse this standard; abuse of the consumer’s right should naturally no longer enjoy any protection. Typically, consumers have grown accustomed to the practice of exercising their right to rescind (cancel) the contract by the statutory deadline while, in the meantime, they actively use the goods and thereby fulfill the purpose of the purchase (this specifically applies to seasonal goods). Besides, even a consumer ought to be required to exhibit a reasonable and usual degree of responsibility for his or her legal (juridical) acts, including the conclusion of contracts and assumption of obligations.

How to Opt into the Common European Sales Law? Brief Comments on the Commission’s Proposal for a Regulation

Unlike the actual text for the proposed Common European Sales Law (CESL), which is based on extensive preparatory work by academics, the regime for opting into the instrument, which is set out in the main text of the proposed regulation, is entirely of the European Commission's own making. The approach adopted by the Commission is innovative and generally convincing, although there is still room for improvement. Characterizing the optional instrument as a second national regime rather than as a 28th regime has the important advantage of neutralizing the effect of Article 6 Rome I in B2C contracts, which makes the instrument sufficiently self-standing to become an attractive alternative. At the same time, this choice is acceptable politically and constitutionally (Article 114(3) TFEU) as long as the level of consumer protection within the common sales law remains as high as it is in the current proposal. In business-to-business (B2B) contracts, it is misguided for the regulation to suggest, as it does in the proposal, that a choice for the CESL would imply ipso facto the opting out of the CISG, since the question of what amounts to an exclusion of the CISG is a matter of interpretation of the parties' intentions under the CISG alone. Having said that, in most cases, it will not be very difficult for a court to deduce an implicit opting out of the CISG from an explicit opting into the CESL. Nevertheless, especially in the case of a partial choice for the CESL, which the proposal allows for B2B, interpretative difficulties may arise. The duty for sellers in B2C contracts to draw the consumer's attention to the intended application of the CESL by providing the consumer with a Standard Information Notice (SIN) is not likely to bring consumers much extra protection while the proposed sanction will bring undue legal uncertainty and should, therefore, be reconsidered. It also sends the wrong message, as if this new European law were something dangerous that consumers have to be warned about. The terminological choices of the proposal are not always felicitous. For example, it is not clear what is meant by the expression that the parties 'may use' the law. Of course, the proposed CESL does not fit neatly with any of the received dichotomies of international versus national contracts, Member State versus Union law, direct versus indirect applicability, and substantive versus conflict-of-laws choice of law. In some respects, therefore, the CESL may have to be regarded as sui generis. This is not at all surprising in light of the fact that the European Union (EU) itself is a sui generis legal order. However, the European legislator should try to make it as clear and foreseeable as possible for contracting parties what exactly will be the consequences if they opt into the CESL.

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

In its position paper on the Commission’s Green Paper on policy options for a European contract law (COM (2010) 348 final, 1 July 2010), the Max Planck Working Group welcomes initiatives to overcome the fragmentary and inconsistent state of contract law in Europe. However, the Working Group criticizes that the Commission did not sufficiently consider the issue of the legislative competence of the EU. At present, an optional instrument (opt-in) drafted as a Regulation (option 4) and based on Art. 352 TFEU seems to be the preferable option. Such an instrument raises a number of questions regarding its choice and its area of application which have been addressed by the Working Group. An optional instrument should be granted a broad scope of application, including both B2B and B2C contracts, domestic contracts, intra-Union cross-border contracts as well as contracts with parties resident in third states. Its scope should neither be limited to cross-border contracts nor to contracts concluded online. However, the recommendation of the Institute is subject to an evaluation of the substantive quality of the instrument which is not yet available. In this regard, an important preparatory work for any future European contract law, i.e. the Draft Common Frame of Reference (DCFR), has already been criticized by some members of the Working Group. Also, any legislative initiative should be preceded by a proper review of the existing acquis and should be coordinated with the current work on a Consumer Rights Directive.This article is published in this Research Paper Series with the permission of the rights owner, Mohr Siebeck. Full-text Rabel Journal articles are available via pay-per-view or subscription at IngentaConnect, a provider of digital journals on the Internet.

Towards a Sharp Distinction between b2b and b2c? On Consumer, Commercial and General Contract Law after the Consumer Rights Directive

Abstract: The proposed directive fits very well with a sharp distinction between b2c and b2b contracts and comprises several features that – especially as a combination – provide an optimal basis for a future European consumer (contract) code. Still, nothing in the directive renders further distinction between b2c and b2b compulsory. This raises the question as to whether a rigid, categorical distinction between rules governing b2c and those governing b2b contracts is desirable. This paper argues that no substantive ground justifies such a categorical distinction. Non-consumers, especially small businesses, often encounter situations identical to those usually invoked to justify consumer protection. In such cases the equality principle would require that the legislator extend the protection prescribed for consumers to include this group. In this respect, greater transparency may be expected from the European Commission. How does the Commission view the future: does a European Code of Consumer Law lie ahead? The Council of the European Union and the European Parliament should ask the Commission for guidance here and should adopt a clear position themselves. This is important for two reasons. The first is that prior to transposition of this directive, Member States should know what to expect. The second is that if a European Code of Consumer Law ever materializes, it will need to be the outcome of a deliberate decision to this effect. Zusammenfassung: Der Richtlinienvorschlag passt sehr gut zu einer scharfen Abgrenzung zwischen b2c und b2b Verträgen. Darüber hinaus beinhaltet sie eine Anzahl wesentlicher Merkmale, die, insbesondere als Kombination, eine optimale Grundlage für ein zukünftiges Verbraucher(vertrags)gesetz darstellen. Allerdings enthält die Richtlinie keinerlei Bestimmungen, die zwingend eine Abgrenzung zwischen b2c und b2b Verträgen vorgeben. Hierdurch stellt sich die Frage, ob eine strenge, kategorische Abgrenzung zwischen den auf b2c und den auf b2b anwendbaren Bestimmungen überhaupt wünschenswert ist. In diesem Beitrag soll dargestellt werden, dass keine stichhaltige Gründe eine solche kategorische Abgrenzung rechtfertigen. Nicht-Verbraucher, insbesondere kleine Unternehmen, sind oft identischen Situationen ausgesetzt, die normalerweise zur Rechtfertigung der Verbraucherschutzes aufgeführt werden. In diesen Fällen würde der Gleichheitsgrundsatz den Gesetzgeber dazu verp. ichten, um den auf Verbraucher anwendbaren Schutz auch auf diese Gruppe auszuweiten. In diesem Zusammenhang wäre eine größere Transparenz von der Europäischen Kommission wünschenswert. Wie sieht die Europäische Kommission die Zukunft? Liegt ein Europäisches Verbrauchergesetz in der Zukunft? Der Rat und das Europäische Parlament sollten hierzu die Europäische Kommission um eine Anleitung fragen und ihrerseits eine klare Stellung beziehen. Das ist aus zwei Gründen sehr wichtig. Der erste Grund ist, dass vor der Umsetzung dieser Richtlinie, die Mitgliedstaaten wissen sollten, was sie erwartet. Der zweite Grund ist, dass im Falle der Einführung eines Europäischen Verbrauchergesetzes dieses das Resultat einer freien Entscheidung sein sollte.

SMEs in European Contract Law: Background Note for the European Parliament on the Position of Small and Medium-Sized Enterprises (SMEs) in a Future Common Frame of Reference (CFR) and in the Review of the Consumer Law Acquis

The aim of this paper is to identify what the position of SMEs should be in a draft Common Frame of Reference on EU contract law and in the review of the EU consumer acquis. In particular, this paper answers the following questions: How can the position of SMEs be defined in relation to the distinction between B2B and B2C contracts? Should consumer protection in the revised acquis and in the CFR be extended to SMEs? How can the European Union further facilitate cross-border transactions (B2B and B2C) by SMEs? Finally, it addresses the importance of normative coherence (treating like cases alike).