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The European Commission will overhaul European contract law to make internet selling easier, more reliable and more efficient.

The commission has opened consultation on proposed changes that will affect eight EU Directives.

Recognising that e-commerce is hampered by a mass of conflicting national laws, the commission has proposed changes to Directives which it hopes will, when transferred into national laws, bring the law into line with technological developments.

"There is an urgent need for action, the world is moving so fast and Europe risks lagging behind", said Meglena Kuneva, the new EU Commissioner for Consumer Affairs, in her first press conference in Brussels. "We need a root and branch review of consumer rules. At the moment, consumers are not getting a fair deal online, and complex rules are holding back the next generation of bright business ideas. We must find new solutions to new challenges."

The commission believes that online businesses would benefit significantly if doubts about the legal implications of cross-border trading were removed.

"Consumer confidence is a key factor determining how and when consumers spend their money in different sectors of the economy," said a Commission statement. "All the evidence is that consumers are not yet comfortable enough in the digital and online world to seize its full potential. Only a tiny fraction – six per cent of EU consumers – are currently shopping online cross border."

The commission will review all consumer contract law, which will involve a review of eight directives. They are: the Unfair Contract Terms Directive and the Directive on Sale of Consumer Goods and Guarantees; the Distance Selling Directive; the Doorstep Selling Directive; the Package Travel Directive; the Timeshare Directive; the Directive on Injunctions; and the Price Indication Directive.

The commission has found that the most common problem consumers have is with delivery of items involved in cross-border commerce. Non-delivery, late or partial delivery accounted for 46 per cent of complaints in a 2005 EU study of the online marketplace. The second biggest complaint, at 25 per cent of all complaints, was that the goods had defects or were not what the consumer thought they were buying.

A major issue the commission will address will be the issue of returns. National laws currently differ on who should pay for returned items and what the procedure is, meaning that cross-border traders and consumers have to have a knowledge of the laws of a number of countries in order to operate in Europe.

Similarly, the commission will attempt to create one law on the issue of refunds and price reductions in case of faults, and will try to clarify what cooling off period should apply across the EU.

The commission said the results of its recent consultation on the Distance Selling Directive would be added to the results of the current consultation, because that directive is so central to the regulation of cross border e-commerce.

"We must find new solutions to new challenges," said Kuneva. "The question is can we afford to have 27 mini-online markets in Europe, denying consumers choice, opportunity and competitive prices? We need to inject a new sense of consumer confidence into the e-shopping world so it becomes a trusted market space. The rules of the game have changed, it's time for consumer policy to respond."

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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