PELSC Construction v Consumer Law IUS COMMUNE

PELSC Construction v. Consumer Law IUS COMMUNE – Workshop Contract Law – 29/11/2007 Benoît KOHL LL. M. Cambridge Lecturer University of Liège Solicitor (Stibbe Brussels) 29/11/2007 1

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) 29/11/2007 2

Emergence of the ideology of home ownership (cfr Lord Diplock : “(…) the emergence of a propertyowning, particularly a real-property-mortgaged-to-a -building-society-owning, democracy”) (Pettitt v Pettitt [1970] AC 777 at 824) 29/11/2007 3

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) 29/11/2007 4

Why focus on consumer construction law ? 29/11/2007 5

Compare with Harmonisation of « classical » construction law : Examples : C. E. C. Jansen’s Thesis PELCS Works of the GAIPEC Mathurin Report 29/11/2007 6

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 precontractual duty to inform; the reconciliation of the liability in Tort and in Contract; the damages for breach of contract…) 29/11/2007 7

→ 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. 29/11/2007 8

See the Commission’s opinion (Action Plan 2003): “Further reflection theopportuneness on of non-sector specific measures such as an optional instrument in the area of European contract law » Current work: C. F. R. 29/11/2007 9

→ Postponement sine die of the adoption of a European Civil Code (cfr. M. B. M. Loos, Spontane harmonisatie in het contractenen consumentenrecht, Den Haag, Boom, 2006, p. 31) 29/11/2007 10

Then : Let’s focus on consumer law. Arguments : 1. 2. Emergence of cross-border transactions in this field Development of national protections in the house construction sector : Coherent or not ? 29/11/2007 11

3. Dissociation between consumer construction law and classical construction law is possible. >< PELSC’s approach → Long-term approach : “Trajan Horse” method (cfr B. Tilleman) 29/11/2007 12

→ 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) 29/11/2007 13

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) 29/11/2007 14

See G. Howells : detailed rules « can bevaluable targeting in particular practices providing clear guidance and 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) 29/11/2007 15

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”), …. . 29/11/2007 16

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 ? ) 29/11/2007 17

Consumer’s rights. Short overview 29/11/2007 18

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 ? 29/11/2007 19

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? ) 29/11/2007 20

Guarantee against defects See French Law: mandatory “assurance dommages-ouvrage” UK – Neth. : NHBC and GIW’s guarantees Duration ? Link with builder/promoter’s liability ? 29/11/2007 21

CONCLUSION 29/11/2007 22

- 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) 29/11/2007 23

THANK YOU Benoît KOHL LL. M. Cambridge University of Liège Solicitor (Stibbe Brussels) 29/11/2007 24