The government has told EU lawmakers that they should not legislate to harmonise European contract laws because there is a ‘paucity of evidence’ that a problem exists.

In its response to a European Commission consultation on the issue, the Ministry of Justice said that the commission should go no further than either publishing an ongoing study on the topic, or introducing an optional ‘toolbox’ for use by national legislators.

The MoJ said that these options would nevertheless create additional costs, and warned that any pan-European contract law, optional or compulsory, would harm the commercial strength of English law.

The Law Society and City lawyers have protested against the commission’s proposals in submissions to the MoJ.

Magic circle firm Allen & Overy warned last month that a pan-European contract law could create ‘confusion and uncertainty’ for business, and cited independent research which showed that consumers were far more concerned about website and payment security issues than they were about differences between foreign contract laws.

The MoJ said in its submission: ‘The commission appears to have made no secret, even during the consultation period, that it already favours a regulation for an optional instrument on European contract law.

'The UK notes this with some concern, since, if it is true, it suggests that important policy decisions have been taken in the absence of adequate evidence and before the views of consultees are known.’

The commission argues that differences between member states’ contract and private international laws hinder cross-border trade and increase transaction costs.