29/11/2007 p1

PELSC Construction v. Consumer

Law

IUS COMMUNE – Workshop Contract Law – 29/11/2007

Benoît KOHLLL.M. Cambridge

Lecturer University of LiègeSolicitor (Stibbe Brussels)

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Background

“Recent” development of a specific need to protect the owner against the contractor when the building has to be erected for the occupation of the owner

(presumed not be able to protect his own interests)

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Emergence of the ideology of home ownership

(cfr Lord Diplock : “(…) the emergence of a property-owning, particularly a real-property-mortgaged-to-a-building-society-owning, democracy”) (Pettitt v

Pettitt [1970] AC 777 at 824)

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Some countries of the EU have developed specific rules : ex.: Belgium : Loi Breyne (1971)

France : The « Code de la Construction et de l’Habitation” : contains specific protection to the individuals in the house building industry

Netherlands: “Nieuw Burgerlijk Wetboek” has been completed by a Statute dated June 5, 2003 (Title 7:12)

Italy « Disposizioni per la tutela dei diritti patrimoniali degli acquirenti di immobili da costruire » (20 June 2005)

Germany: « Makler- und Bauträgerverordnung » (1974)

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Why focus on consumer construction law ?

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Compare with Harmonisation of « classical » construction law :

Examples :- C.E.C. Jansen’s Thesis- PELCS - Works of the GAIPEC- Mathurin Report

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Problems :

A complete harmonisation of “classical” Construction law would suppose that the Member States reach compromises on several points of law that go to the roots of the Private Law of each legal system

(ex: binding character of the offer; the need for consideration; the pre-contractual duty to inform; the reconciliation of the liability in Tort and in Contract; the damages for breach of contract…)

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→ Such works are welcomed BUT it seems unlikely that the works currently undertaken could lead in the short or medium term to practicable or concrete results.

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See the Commission’s opinion (Action Plan 2003):

“Further reflection on the opportuneness of non-sector specific measures such as an optional instrument in the area of European contract law »

Current work: C.F.R.

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→ Postponement sine die of the adoption of a European Civil Code

(cfr. M.B.M. Loos, Spontane harmonisatie in het contracten- en consumentenrecht, Den Haag, Boom, 2006, p. 31)

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Then : Let’s focus on consumer law. Arguments :

1. Emergence of cross-border transactions in this field

2. Development of national protections in the house construction sector : Coherent or not ?

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3. Dissociation between consumer construction law and classical construction law is possible.

>< PELSC’s approach→ Long-term approach : “Trajan

Horse” method (cfr B. Tilleman)

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→ preliminary focus on consumer protection : already been suggested by the EU: See a.o. - Mathurin report (construction)- Mc. Millan Scott report (crossborder real estate transactions)

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Does such an approach comply with the provisions of the Green Book on the Review consumer acquis ?

EU Commission suggests horizontal measures rather than vertical ones.

BUT several issues regarding the consumer protection in the construction sector are too specific to be caught by a general measure (such as the Unfair Commercial Practices Directive)

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See G. Howells : detailed rules «  can be valuable in targeting particular practices and providing clear guidance on what is acceptable »

(G. Howells, « The Rise of European Consumer Law. Whither National Consumer Law ? », Syndey L.R., 2006, pp. 63

ff., at p. 80)

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EU Consumer law : content de lege ferenda

Scope of the harmonisation : “Consumer” : private individual who wishes to

become the owner of a new home (house or flat) constructed by a professional, regardless of the type of contract, institution or other legal method which may be used to achieve this result.

I.e. : Construction contract, sale “off plan” (or “sleutel op deur”, or “VEFA”, koopaannemingsovereenkomst, “contrat de promotion immobilière”),…..

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Need to take in account, not only Member States’ legislative Acts, but also standard contracts

Importance of Self Regulation in some countries

England : NHBC (+ JCT Forms ?)Netherlands : GIW (+ UAV ?)

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Consumer’s rights. Short overview

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Formation of the contract

- Advertisement : Acquis communautaire

- Distance Selling + Door to door : idem

(note : need of an extension to the transfer of immovable property)

- Contract in writing- Compulsory clauses - Cooling off period ?

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Perfomance of the contract- Stage payments- Guarantee against insolvency- Inspection and Acceptance :

assistance by a professional (architect/surveyor/inspector/…)

- Exceptio non adimpleti contractus (see art 2:109(6) PELSC : automatic in consumer contracts? )

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Guarantee against defectsSee French Law: mandatory

“assurance dommages-ouvrage” UK – Neth. : NHBC and GIW’s

guaranteesDuration ?Link with builder/promoter’s

liability ?

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CONCLUSION

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- Specific harmonisation (consumer construction law) is possible and desirable

- European principles do exist in this field

- Hard law v. Soft law : try out the coregulation method (see White Book on Governance)

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THANK YOU

Benoît KOHLLL.M. CambridgeUniversity of LiègeSolicitor (Stibbe Brussels)