A proposed new system of contract law that will apply to all 28 member states of the European Union risks adding ‘cost and confusion’ for legislators and businesses, the Law Society has warned.

The European Commission (EC) is to push ahead with legislative proposals for an EU-wide contract law, after a feasibility study ended earlier this month.

The EC believes that the present situation, where businesses and consumers deal with different national contract laws for every member state, is complex and expensive, and leads to legal uncertainty.

It has suggested creating a ‘common frame of reference’, bringing together legal concepts, definitions and principles based on the laws of all member states.

A plenary meeting of the European Parliament is to vote on the proposals in early July.

The feasibility study looked at existing contract law in the various member states and identified four possible models for an EU-wide contract law.

The EC appears to favour the fourth model, the ‘optional instrument’.

Some Members of the European Parliament (MEPs) also favoured it, saying that it would give states more choice and flexibility, while other MEPs disagreed, saying that by allowing states to choose options, the instrument would lack legal certainty and be unpredictable in its application.

The Law Society said the EC was rushing its proposals through without giving member states and their lawyers enough time to scrutinise them.

The Society said some of the terminology, such as the requirement to act with ‘good faith and fair dealing’, was too vague, while the proposals appear to ‘confuse contract law and consumer protection’, it said.

Law Society President Linda Lee said: ‘We are keen to work with policymakers to improve the functioning of the single market, but our practitioners view the key barriers to cross-border trade as practical and procedural.

'Introducing a (new) regime of European contract law risks adding cost and confusion for both legislators and market participants.’