From a status to a transaction-based approach? Institutional design in European contract law

This essay proposes a shift in relation to the European approach, moving from a status to a transaction-based approach. What justifies legal differentiation is the technology of the transaction and the bargaining power of the parties, determined by the market structure rather than the status itself. The status may operate as a second-order variable within the architecture built upon transactions. The proposal is therefore to distinguish between standardized and customized transactions and build the sales architecture accordingly. The proposal, articulated in relation to sales law and the CESL, has a broader scope and invites rethinking about the overall architecture of European contract law. The traditional partition of ECL, which regulates separately consumer and business transactions, has become problematic for several reasons. The CESL poses additional challenges to the extent that it tries to define an integrated regime that should regulate cross-border sales by multiplying rather than reducing statuses. The unit of analysis itself should not be determined on the basis of whether a consumer or an SME is part of the contract. Rather, whether the prospective transaction will be carried out via a standardized or a customized contract is the first-order variable within which status may play a role as a second-order variable. A second relevant shift reflects the notion that, even within a transaction-based approach, the unit of analysis should often be the supply chain rather than the individual transaction. Transactions between suppliers along the chain can be fully understood only by looking at the influence that the leading enterprise plays in the definition of contract terms and contractual practices, including payment systems and dispute resolution mechanisms. The proposal to move from status to transaction implies a radical transformation of the culture of consumer protection and the facilitation of an internal marketwell beyond sales. It calls for a deeper and wider scrutiny of its theoretical foundations and practical implications. The agenda for future research leads towards a better and more sophisticated differentiation between transactions, and the testing of the distinction in other fields, for example, that of remedies.