European Contract Law and Regulation

2.1.1 Contract Law and Company Law as Paradigms of Private Autonomy and Public Good Regulation

This contribution starts from the assessment that contract law and company law form the two most paradigmatic areas for the overall topic discussed, because they excel in party autonomy and therefore had to excel as well in public good regulation.^[9] As party autonomy and (hence) as well public good regulation are most developed in contract law and in company law, they also form the core of a private law and its unity if indeed it is party autonomy above all other features, which is distinctive and formative for private law.^[10] This is not in contradiction with the contention made in the next section (below Section 2.1.2) that it is contracts and torts which form the main instruments in case law practice when it comes to enforcing public good regulation with private law tools. Indeed while the dichotomy between contract law and company law deals mainly with the values and the primary standards and principles derived from them, the dichotomy between contract law and tort law is constitutive for the most important forms of claims derived from violations of such standards and principles. Both dichotomies thus unfold their effects primarily at different (successive, but also normatively differentiated) levels. Company and contract law give and shape party autonomy in designing the relationship (in their parts on creation and development of the organizational scheme), contained by public good regulation, while tort law and contract law (in its remedy parts) are providing private law instruments to private claimants when standards introduced by public good regulation are violated. Actually, company law and contract law do not even form a dichotomy primarily, but rather a common core and strong pillars of a whole system and continuum of organizational forms offered to and developed by13 private law parties for their shaping via private autonomy – in smaller and larger compounds of cooperation.^[11]

This picture strongly relies on the contention that indeed contract law and company law excel in the role given to party autonomy – and not so only in economic areas where they certainly constitute the dominant forms (‘market and firm’). The picture would indeed seem to be correct as well beyond that sphere. While the principle of numerus clausus in property law already shows that – contrary to contract law – the freedom of design forms the exception in property law, not the rule, other core areas of private law appear to be more nuanced. If one leaves out the law of succession – an exceptional case, at the end of life and somehow the prolongation of the freedom to dispose of one’s patrimonial matters in life (via contract) – tort law and family law come to mind primarily. While the latter has experienced a huge increase in party autonomy given to parties over the last decades,^[12] the starting point still was mandatory law. It remains in place to a considerable extent as well and forms the traditional and still existent background – the ‘shadow’ of party autonomy. In other words, party autonomy came later, is less prominent and not seen as the prime mode of regulating the relationships. Finally, whichever was the development, it evolved in private law lines as partial emancipation. Very importantly as well, family law does not adopt the character – typical for regulation – of a law for mass-transactions and phenomena that exercise their impact on masses. Family law remains genuine private law for the individual case. Conversely in tort law, there is an area of strong party autonomy, but this area is (quasi-)contractual in character. Should a relationship between tortfeasor and victim be close enough to bring such relationship close to a14 (quasi-)contractual one or should the two even run in parallel there are indeed possibilities to shape the relationship by mutual consensus. Conversely, without such a close relationship to the victim and consent by the victim, unilateral shaping of the relationship by party autonomy of the tortfeasor forms – and must remain – the exception.^[13]

The picture drawn at the outset of this section relies as well on a second contention and this is that company law and contract law constitute as well the prime objects of public good regulation or fields of law that are subjected to it. Both contentions (on the strength of party autonomy and of public good regulation in both areas of the law) even mutually reinforce each other. Public good regulation had to be built up in these areas once it became clear that party autonomy can not only distort the equilibrium between the parties exercising their party autonomy in individual cases (typically rather extreme ones), but also structurally, i.e. in masses of cases in a parallel way. Legislative development impressively confirms this abstract consideration – taking the EU law and the Member State law development as paradigms. In the first big wave of regulation, as of 1958, restrictions of competition formed the focus, of the highest legal policy importance at that time, therefore the one (sole) substantive law area for all markets, which found its way into the Treaty of Rome, into primary law, i.e. the ‘constitutional’ framework.^[14] Moreover, this area became the object of the most influential conceptualization, by the ordo-liberal school, of the role, scope and design (including effects) of public good regulation15 (see below Section 3.2.1). This area, a true protagonist for regulation both in rule setting (even at the ‘constitutional’ level) and in building of an analytical framework (theory) falls indeed into two categories mainly. These are control of cartelization, i.e. contracts with anticompetitive effect (then Article 85 Treaty of Rome, today Article 101 TFEU), and control of mergers and dominant positions, i.e. company law structural measures and the structures thereby created (then Article 86 Treaty of Rome, today Article 102 TFEU). This picture – of regulation targeting mainly contract and company law – re-emerges in the second big wave of regulation, now information related. Based on Akerlof’s seminal findings on asymmetric information that leads to suboptimal decision-making and thereby adverse selection and poorly functioning markets, including consensus in contracts (see below Sections 3.1.1 and 3.2.1), this second wave dominated EU legislation as of the 1980s. The areas most pervasively regulated by information rules, namely disclosure rules, were consumer law, mainly related to contracts in B2C relationships, and the regime of capital market law, for the trading of shares and bonds (of certain types of companies) and related financial (company law) instruments. In other words, also regulation of information / disclosure targets contract and company by the development of entire new fields of law, in a particularly strong way.

Hence, not only the context of this inquiry justifies restriction to European contract law, but the key position, which (European) contract law occupies in the interplay between party autonomy and public good regulation, would as well recommend such focus.^[15] The position becomes even more central, when one considers as well the instruments for private enforcement of public good regulation – where again contract law forms one core instrument, again one of two, now with tort law as its counterpart.

2.1.2 Contract and Tort Law as Instruments for Private Enforcement of Public Good Regulation

Contract law – contractual remedies – and tort law constitute the two forms that are primarily at stake when the enforcement of standards established in public good regulation by private law subjects is at stake. This does not come as a surprise, as these are the two prime fields of law, which regulate general, not segment specific claims for damages. Damages indeed form the core claim or one of two or three core claims of these areas – of which one deals with bilateral or individually chosen relationships (contract law), the other one with any relationship and even primarily erga omnes relationships (tort law). Conversely, tort law, because of this focus on erga omnes relationships, does not figure among the main areas of party autonomy. With respect to erga omnes duties, decisions based on party autonomy16 form the exception, certainly on the side of the victim and often even on that of the tortfeasor. Therefore, tort law is not a paradigmatic area for party autonomy in its relationship to public good regulation, but constitutes an instrument in the hands of private law subjects for enforcing the latter.

For European contract (and also tort) law, this consideration – theoretical and doctrinal – can consistently be illustrated and confirmed by the case law on enforcement of public good regulation standards at the European level, hence primarily by the CJEU. A short summary sketches out the main lines of the picture – occasionally also supplemented by complementary developments or structural arrangements in the Member States.

The final step – today – is the Diesel case (above Section 1), while the Courage case had formed the starting point.^[16] In this case, of some 20 years ago, the Court pronounced in essence the same two holdings as in the Diesel case in spring 2023. This is that the EU regulatory standard (in that case the one contained in Article 101 TFEU) aimed as well at the protection of private law party affected and that national law had to provide for a private law remedy, typically damages in the amount of the losses incurred by the plaintiff (private law party). Of course, Article 101 and 102 TFEU form part of primary EU Law and therefore – in a consistent line of CJEU case law – are directly applicable as well internally in Member States, without any act of transformation needed, directly granting rights to individuals before national courts. Conversely, the majority of European contract law is based on directives, which are not directly applicable (Article 288 (3) TFEU), at least not in principle. In case of directives, however, rules contained in such directives that are sufficiently precise nevertheless strongly impact on national law rules transposing it, because in this case the latter has to be interpreted strictly in conformity with the directive – thus the consistent case law of the CJEU, i.e. throughout all cases, accepted also in Member State case law. By this methodological instrument, the national court is obliged (as an EU law order) to construe national law that transposes the directive according to the goals and according to the content of the rules fixed in the directive – as interpreted by the European Court of Justice (so-called ‘indirect effect’).^[17] Case Courage in its17 essence was soon confirmed by case Manfredi.^[18] These two competition law cases would typically lead to claims in tort. While the CJEU did not specify the precise remedy in national law – only that there had to be a non-illusory claim in the hands of private law subjects / victims –, typically the claim should be in tort. Because of distribution chains, the ultimate victim, the final recipient of the service or good, will typically not be in direct contractual relationship to the producer if the disadvantageous consequences of cartelization (for instance, price fixing) or of abuse of dominant positions are passed on (down the distribution chain to them). This might be so as well if national law, such as French law, puts at the disposal of the clients a direct claim against producers in distribution chains, the so-called action directe.^[19] Such a claim may, however, as well be characterised by national law as being contractual or quasi-contractual in character, which is certainly the case when the producer gives direct guarantees to the customer.^[20]

At the same time as these two competition law cases, an additional turn in the CJEU case law took place in case Muñoz, now with respect to directives as well.^[21] The violation of duties of labelling (specifying origin of products correctly), which directives foresaw, was seen to give rise to private law claims (between competitors). In the particular case, the supervisory authority in the Member State of importation (UK) had not stepped in against (British) competitors, which violated such labelling standards that would have protected the importing Spanish competitor (Muñoz). English doctrine labelled the instrument ensuing from this CJEU case law – granting a national law remedy for damages – ‘tort of statutory breach of EU law’.^[22] In this case, more than in the two competition law cases, one can feel a certain preconception that private claimants may be the better enforcers of EU law than (national) public supervisory authorities.^[23] The case pattern is important insofar, as it was proven in this case that not even the standard of a sanction ‘sufficiently deterrent’ had been met, which according to EU primary law, but as well in most directives is18 asked for as an EU law duty and framework for national practice where EU law is to be carried through.^[24] Thus, the question was not decided whether the violation of an EU law standard (contained in directives) had to be sanctioned by national law by awarding a private law claim to the victim (private law subject) in any case or only in cases where national law was not yet ‘sufficiently deterrent’ with administrative fines or criminal sanctions.

Two cases stand out after Muñoz/Manfredi and before Diesel, case Genil 48/Bankinter of 2013^[25] and case TÜV Rheinland of 2017 (PIP breast implants).^[26] The former is the clearest contract law case of all those analysed here. It relates to a contract between an intermediary and an investor obliging the former to give investment advice in the sole interest of the investor and to take a specified number of due diligence measures with respect to the financial instruments recommended. The Court, rather astonishingly, did not pronounce itself in the sense that the directive at stake (MiFID I), with the duties named, also aimed at investors’ protection (not only more generally at integrity in markets). It did not pronounce itself either in the sense that therefore EU law (MiFID I) indeed mandated national law to foresee a claim of the contract partner for damages in case of violation of rules pertaining to this relationship. It is disputed, whether the Court ‘only’ wanted to leave this characterization to national courts or even wanted to state that such standards were enacted purely in the public interest (as per EU law). The second case was about a private law certification firm that had to audit the quality (and inoffensiveness) of medical products (in this case: breast implants), that then got implanted by a hospital (which in the case at hand could no longer successfully be sued). The claim against19 the certification firm would thus not clearly be a contractual one, in many jurisdictions rather one in tort. The Court judged that the supervision exercised by the certification firm was as well in the interests of private law clients and that, in principle, a private law claim had to exist. However, the question whether the national law gave sufficiently efficient claims and as well whether fault war required or whether there should be strict liability was left to national law. Thus, also this case can be seen as one where national law enjoys some leeway in the question whether a private law claim should be awarded.

The last case in line – a true bang – is the Diesel case referred to in the introduction. It is interesting in that it confirms both that the EU law regulatory standard at stake is designed as well to protect private interests and that there must be a national law remedy against the producer – leaving open which one. It is so interesting, because in distribution chains of motor-vehicles, there is no direct contractual link between the final user and the producer, and because in this case, the basic duty was contained in a directive, the concrete technical descriptions of which were then specified in a regulation (see above Section 1). Thus, the judgment would seem to imply as well that the position of Courage and Manfredi can be transposed as well to EU secondary law (clear) and even in contexts of a directive (that had been transposed, this transposition leading to ‘indirect effect’). Some of the criticism of the judgment points out that the Court does not first assess whether German law contained an efficient sanction already by imposing administrative fines and penal sanctions. Indeed, the directive at stake only contains this framework rule on sanctions (probably such statement could rather easily have been made in a summary assessment). In any case, the Court mandated a claim in damages to be provided by national law irrespective of such an additional intermediate step. It remains open – also in the absence of any explanation given by the Court – whether this case will lead to a more common approach to oblige national law to have a private law remedy whenever an EU law regulatory standard aims as well at private party protection (according to the interpretation of EU law, not national law).^[27] Whether this is normatively required will form a core discussion point in the following (see namely below Section 4.2).20

2.1.3 Areas of Public Good Regulation and the Values Pursued

In the following, not all areas of public good regulation will be discussed, but only those relating rather closely to European contract law – either because the regulation focuses on contract or because contractual claims constitute the instrument for private party claims. From the range of market failures, which are typically named and distinguished (see below Section 3.2.1), negative external effects and as well restrictions of competition are typically more or even exclusively related to tort claims. Contract law related are typically those problems that structural inequality of negotiation power raises – whatever the source of such structural inequality. Traditionally this concern revolves around information asymmetries. Whether there are not other sources of problems constitutes an important question in the remainder of this contribution. Three themes stand out when analysing the different areas of public good regulation (albeit not the whole range of them).

The first theme is dogmatic and revolves around the question whether private parties affected by violations of public good regulation have a private claim against the violators. In Section 2.1.2 above, the CJEU case law has been summarized. It went from a strongly positive answer to this question in competition law in 2001 (Courage) to an equally strong affirmation and positive answer to this question in a consumer law case related to CO₂ emissions in 2023 (Diesel). In between, less positive and less clear case law enters the scene – and the paradox is that this is the case even when the closest type of relationship between a business violating EU regulatory standards and consumers was at stake, a genuine contract relationship. The (in-)consistency of this counterintuitive result and the main interests to be taken into account will be discussed in one whole separate section (below Section 4). It should be kept in mind already at this stage that most such standards are formulated at EU level, and that therefore both with respect to content of the norms and with respect to their aim – to protect also private parties affected or not to protect them –, the EU is called upon to answer.

The second theme is values protected by public good regulation – perhaps the most interesting question with respect to content and underpinning theory. The values and their intended protection are paramount – as well in their diversity – when it comes to assessing the prime standards, their objectives, the development of their content and of the underpinning theory. This relates to such questions as whether there should be protection for parties that act, are likely to act or have acted under strong influence of cognitive biases – even if this affects the chances of other market participants (for instance, when the issue is whether comparative advertising should be allowed or banned). Alternatively, this relates to such questions as whether a party can be obliged to choose her remedies with a view to sustainability concerns (this is a question different from the one of traditional ‘paternalism’, because it relates to public21 good). One example would be that a consumer has to content himself, as currently is discussed with respect to the reform proposal for the Sales Directive, with repair rather than substitution whenever possible – even where ‘brand-new’ is valued more highly in the relevant circles.

The last theme is which areas of public good are contract law related to a sufficient degree to be included in the following. For some general questions of more instrumental character such as standing for private parties’ claims (first question above), all areas will be regarded – not to distort the overall picture. With respect to questions more closely related to content of the relationship, the following distinction will be made. Antitrust law standards are enforced by private parties in most cases via tort claims. Moreover, while cartelization often uses the form of contracts, the relationship at which the regulatory protection is aimed – the one between perpetrator and market or end user – is typically not contractual. Hence, no standards for a contractual relationship that is to be protected or enhanced in its functioning are at stake. A second area, institutional supervision (like banking supervision) is so special that the approach can well be selective and that only one case will be taken up – the duty of responsible lending in the consumer credit regime, where clearly and directly contract standards are at stake (see below Section 5.1.2). Other questions are left out, for instance, whether clients can rely on violations of banking supervision standards for private law claims – and do so against supervisory authorities, credit institutions or their representatives.^[28] Another important field is capital market law. In primary capital market law, the prospectus regime stands out as a paradigmatic field of regulation of disclosure – for which shape, one very well can ask the question how the regulatory theory and thereby the substantive standards evolved.^[29] However, the core question – whether there is a private party claim for violation of the standards – is so little disputed in principle, because answered positively in this case by a specific rule in the pertinent EU Regulation, that another part of capital market law is more interesting. It will form the focal point in the following. This is the law on the disclosure and fiduciary duties of intermediaries, which are regulated in two directives of 200422 and 2014^[30] and have already been addressed with the Bankinter case (above Section 2.1.2). This is indeed a genuinely contractual relationship, whose core duty is giving professional advice unaffected by own interests, and a relationship which moreover forms the direct link to the investor typically as well when prospectus liability is at stake.^[31] Yet another area is hotly discussed with respect to private party litigation and claims. This is violation of standards of ecological regulation, on which one of the most prominent monographs in German literature was written over the last years.^[32] One area is extraordinary, the mega-area of digitalisation. It is of high importance, and in good part also linked to contract law. It would, however, fill a whole contribution in its own merits. Therefore, this contribution opts for a compromise and focuses on one paradigmatic case and one core problem: that arrangements can become much more opaque and the client can loose her influence in front of the algorithm,^[33] that this can invisibly and systemically add to inequality in negotiation power to the detriment of the client.

The main focus in the following, however, will be on general contract law, weaker parties, genuine public good concerns impacting on contract law standards, also where consensus becomes almost inexistent (for instance standard contract terms) or where the contract becomes almost invisible (digital arena). In few words: the relationship of contract formation and content to the public good and mechanisms of structural failure.23

3.1.1 Theoretical Dimensions

Looking at the theoretical dimensions, albeit only briefly within the framework of a bird’s eye perspective,^[37] party autonomy – coupled with a claim of legitimacy when solutions are found on the basis of party autonomy^[38] has been justified as a value basis in various ways. Two strands of thought stand out in a history of thought perspective. This is, on the one hand, the ontological justification of autonomy as the prime emanation of man and her dignity,^[39] often coupled with a subsidiary claim pointing to the fact that those primarily affected should as well decide on the substantive solution.^[40] Human autonomy as dignity, as a principle, forms the starting point. The promise as such, in its full and unrestricted power and source of legitimacy, constitutes the foundation of contract law. The person capable of seeing the effects of her exercise of the power to bind herself is the paradigmatic type of actor. The second strand of thought falls into multiple forms that all justify, in principle, autonomy in a utilitarian way.^[41] They see party autonomy, to name some particularly27 important ones, as the easiest instrument to find and handle solutions in society (centralized gathering of information and decision power being more complicated).^[42] Or they see party autonomy as the most efficient means (overall) to allocate scarce resources to the best value users (and thereby maximise total welfare),^[43] or as the best means to foster innovation in society.^[44]

This line of thought where the focus is on consensus as a (core) source of legitimacy for the solution shaped by party autonomy goes hand in hand with a strand of theory concerning the prerequisites of the exercise of autonomy. Both increasingly become intertwined, so that already legitimacy is seen as being conditioned on the shape of prerequisites and whether these prerequisites of meaningful consent are met and to which degree. In contract law, the core prerequisite that is object of regulation – and even forms the core of contract law regulation – is information and its adequate distribution (of course, besides the old traditional prerequisite of legal capacity). The core themes – over times – are the disclosure of information, then the taking into account of the problem of information overload and finally the problems of distorted perception, retrieval and use of information (so-called bounded rationality, decision taking under the influence of cognitive biases). These developments, namely information overload and cognitive biases and regulation addressing them are to be taken up on the side of regulation (below Section 3.2.1).28

These strands of thought may have different weight in different parts of the (typically Western) democratic societies under the rule of law in market economies – liberal or more corporatist – and those private law systems that may follow this model. Despite those differences, however, they still form a primarily universal heritage in those societies in that they draw mainly on models of man and society as core source of justification. They, typically, refer to a particular law – for instance the common law of the US – not as the source of justification, but as an object of investigation, which is justified by such ‘universal’ approach (‘the common law is efficient’).^[45]

Very different in this respect are two theoretical approaches or considerations on party autonomy in the EU, of which the first is probably more prominently advocated, but less important. This approach sees – and often criticizes – European Contract Law as mainly instrumental for the establishment of the Internal Market.^[46] The core criticism is that such main scope deviates from a justice perspective in traditional contract law, which is based on the weighing of interests of the individual contract partners, while European Contract Law is seen to be too much concerned with market building. Concrete examples for such criticism are scarcely given and hence a discussion of it is difficult. Even more importantly, this criticism can be discussed in a meaningful way only with concrete examples, i.e. in a discussion of core cases of legislation, such as Unfair Contract Terms, Sales or Consumer Credits Directives (below Section 5). Already at this point, however, three claims can be named, which this contribution will make. It sees individual justice concerns (including those justifying party autonomy) as closely linked with market building and market regulation in modern contract law in general – just as much in national laws, already before European contract law (as secondary law) started to come into being in the mid-1980s. This will prove to be the case as well in European contract law, even though the regulatory side is stronger here (see more in detail start of Section 3.1.2 below). The core finding, however, will be that at least in the core29 examples of Unfair Contract Terms, Sales or Consumer Credits Directives, the models are taken from traditional national contract laws, albeit already with the themes of the 1970s, rather than constituting an aliud (see below Section 5). This goes, of course, hand in hand with the fact that harmonization often implied as well reform, European Contract Law increasingly taking the lead in reform also of national contract laws – particularly visible in ‘old’ sales law (below Section 5.2).

The second approach that would seem to be ‘EU specific’ is one that originated in such Member States as Germany and Italy, later on also strongly impacted on the EU legal order and is typically referred to as a trend of contract law towards materialisation. The key holding in this trend is that no longer only formal consensus is seen as sufficient source of legitimacy of the solution reached, but that consensus must be more ‘material’ for constituting such source. More precisely, the more material consensus is in a case pattern, the easier legitimacy can be assumed – material and formal consensus being two poles of ideal concepts, with a whole range of intermediate steps in between, a continuum.^[47] Material consensus refers, in principle, to a case pattern where each party can be seen to have a fair possibility to understand what the solution agreed to implies for her, i.e. that consensus de facto can come closer to what each party really intended (better chance for autonomy really reflecting intention).^[48] Legal norms such as disclosure rules or rules on mandatory advice or also fairness control can certainly exercise their influence on this issue. For this contribution, one last point is of primordial importance. The conceptualization of this trend is – at least in some Member States such as Germany, but as well in the EU itself – linked to the approach that sees in (constitutional) fundamental rights an overarching value system impacting on the whole legal system, as well private law – with direct or indirect effect on private law.^[49] What is important though is that30 overall trends of materialisation would seem to have developed mostly from discussions of an individual private law justice perspective, often as well based on such traditional private law instruments as fair dealing, unfair overreaching, good faith. Indeed, it has been powerfully shown that the case law of the German Constitutional Court and its outcome, which was highly influential in coining the concept of materialisation, has been reached in other Member States on the basis of exactly these traditional private law instruments (focusing on the individual relationship).^[50] One final remark is necessary. The Greek cleaning lady who was lured into the – solely formal, but not material – consensus to act as a surety for her father’s debts forms the very paradigm of what the same Court spelt out later on even more explicitly. Human beings may not be treated by law – or by a licence of the law conveyed to other human beings – as a mere means to an end, but have to be approached in the legal regime as an end in themselves.^[51]

3.1.2 EU Legislation and Case Law in Development

In principle, European contract law contains much more of a regulatory side than normal national contract law. For the plausibility of this claim, even without inquiring into the single rules in detail,^[52] it suffices to point to three characteristics. First, the largest part of European contract law is limited to consumers on the client’s side, a good part of the remainder addresses highly specialised services, namely financial services, where even businesses are rather inexperienced as clients. On the providers’ side, it always requires an enterprise. Hence European contract law is about a structural and pervasive asymmetry of negotiation power. Such role specific law – for consumers as a group irrespective of the individual weaknesses – is aimed at whole markets, and hence characteristic for public good regulation.^[53] Second31, European contract law is mostly mandatory law, not default rules – even though, overall it presupposes party autonomy nevertheless (see later) – and its main aim is to level out information asymmetries, a classical form of market failure. Thirdly, Article 114 (1) TFEU requires European contract law to remove obstacles for entry to entire national markets, if harmonization via European contract law is to be supported by this legal basis. According to the case law of the CJEU, these can be (national) private law and contract law rules, but only where they are mandatory even in the cross-border case,^[54] hence when they fall under Article 6 or 9 Rome I Regulation (mandatory consumer law, mandatory public good regulation). Thus, harmonization measures substitute at EU level national mandatory consumer law or mandatory public good regulation – their uniformity leading to a situation in which diversity in (national) mandatory laws no longer can hinder entry.

The structure described has to be seen in a broader context. The Internal Market as such rather constitutes a project for massive extension of party autonomy – even though European contract law, in essence, is rather of regulatory nature. Fundamental Freedoms as the main primary EU law tool for establishing the internal32 market have convincingly been described in their functioning as extending party autonomy across borders.^[55] Indeed, most of the party autonomy related CJEU case law elaborates on this freedom effect of the fundamental freedoms for private and contract law. This case law states not only that also (national) private law can create barriers to entry (or exit), hence restrict cross-border party autonomy, and then has to stand the test of fundamental freedoms. Rather the Court has strongly extended this freedom effect by two developments. First, it scrutinizes also de facto restrictions of the exercise of cross-border party autonomy, i.e. not only those rules that block, but as well those which ‘only’ dissuade contracting across borders (for instance for cost reasons).^[56] Second, while a justification for national law that has such dissuasive effect is possible, the prerequisites for this are demanding, in two ways. Already the terminology employed by the Court implies that ‘mandatory reasons of public good’ not only typically have to form public good regulation, but that the protective goals appear ‘mandatory’, in the Court’s perception with the same weight as the written exceptions in the escape provisions (for instance ‘public order’).^[57] Moreover, justification is excluded if a less stringent measure would be possible (principle of proportionality) – including in the Court’s case law information rules, which then is mirrored by the strong presence of information/disclosure rules in EU contract law harmonization.^[58] This holds true despite the fact that the range of mandatory reasons of public good is open and multi-facetted (among them consumer protection /33 protection of weaker parties, anticompetitive or unfair trade practices, environmental concerns, professional integrity in regulated professions, and others).^[59] Only in a very few cases has the Court seen these prerequisites of justification as being satisfied. The reference to mandatory reasons of public good, however, already highlights the functional link of this exercise of party autonomy to public good regulation – for the following mostly in the form of asymmetric positions in the negotiation process (see below Section 3.2.2). Public good regulation constitutes – be it at the national level or via harmonization at the EU level – the natural corollary to party autonomy (across borders).

EU secondary law aligns well with the basic rationale described for EU primary law. As it constitutes primarily regulation, it does not come as a surprise that the existence of party autonomy as an overarching principle is rather implied than spelt out explicitly (like, for instance, by Article 1134 Code Civil). Still, even in the case of standard contract terms, i.e. in the case where consensus is probably ‘thinnest’ (the client does not really give her consent in an informed way whatsoever), the Unfair Contract Terms Directive (UCTD) leaves a core space for party autonomy – as will be argued in the case study on this Directive (below Section 5.2). Indeed, Article 4 (2) UCTD gives full party autonomy, i.e. exempts from any ex-post judicial control, those parts of the agreement that define the main object of performance on each side (service/good and price) and the balance between both. It will, however also be shown that the Court restricts this exemption for the fixing of price and main performance and equilibrium between both to the extent that it is likely that indeed the customer clearly can understand the content of her commitment. In a second case study, on the consumer credit regime, it will be argued in two ways with respect to party autonomy and the prerequisites of its sound use (see below Section 5.1). First, the case study will point to the fact that, already in 1986, the regulation on interest rates (prices) was aimed to enhance informed choice in the most relevant aspects (at least as far as the well performing loan is concerned). Second, this case study will argue that after 2014 (at the latest), there is as well a regime for borrowers that are34 likely to succumb to cognitive biases and this in the face of the likelihood of crisis and ruin. The concept of a ‘material consensus’ that is required rather clearly looms behind good part of this regulation in the two directives (and a host of others). In summary to the case studies’ section, it will as well be shown that there is differentiation in the intensity of protection – the heaviest requirements being targeted to those situations where consumers face existential risk (see below Section 5.4). Also in the third case study, on the development of EU sales law from 1999 to 2019, party autonomy will play a core role. This directive is arguably the one that contains more traditional contract law rules than all others and many authors indeed see its regime as a model for contract law more generally. Therefore, it does not come as a surprise that, in principle, the regime is governed by the principle of party autonomy again – the subjective standard for establishing the quality owed takes precedence over an objective fixing according to market expectations, even though, in practical terms, the contrary may be true.^[60] There is, however, an interesting exception, where the information on quality cannot be sufficiently provided, because it evolves over time. This is the case with digital components, which require updates (see on all this and in more detail below Section 5.3).

3.2.1 Theoretical Dimensions

Public Good Regulation is not only rich in the number of areas into which it falls and in the values it aims to protect (see above Section 2.1.3), but as well in the theoretical approaches underpinning it. Therefore, any substantial summary of the theoretical approaches explaining public good regulation would reach well beyond the scope of this contribution. A choice is necessary for approaching just the interplay between public good regulation and private autonomy in European contract law.

While for Europe, the founding-fathers of a concept of public good regulation in relationship to the potential of party autonomy, have to be seen in the ordo-liberal35 school (to be taken up below Section 4),^[61] the discussion has since evolved and broadened. In essence, the ordo-liberal school saw its model as mid-way between (and normatively clearly superior to) laissez-faire (as they called it, i.e. unregulated, radically liberal markets) and planned (centralized) economy. Internationally, the mainstream – grounded in the analysis of F. Böhm’s and others – would seem to be that public good regulation is aimed at enhancing the overall legitimacy of the outcome of private law arrangements. This would be the aspiration, for instance, by strongly fostering a good and material exercise of party autonomy, coming closer to real, not flawed and uninformed, or potentially distorted will of each party – thus enhancing such freedom (and the legitimacy of consensus), not restricting it, or to put it differently: add to more material freedom.^[62]

This has – internationally – taken form namely in the so-called market failure theory, which tries to isolate patterns and situations in which party autonomy and market mechanisms do not function properly. This is the set of case patterns potentially in need of public good regulation. In these patterns, the aim is to reinstall or enhance free choice, for instance with a sufficient likelihood that party will formally expressed actually largely matches with the real interests and preferences of those parties. The three main case patterns that have been isolated and are mostly named (besides public goods issues) were (i) (combatting of) negative externalities, (ii) (combatting of) restrictions to free and unhindered competition as selection process – in fact largely one special case of negative externalities – and (iii) information asymmetries.^[63]

While the ordo-liberal school focused on restrictions of competition, the third form named is the one that clearly matters most in European contract law (see already account of the CJEU case law above Section 2.1.2). The core (regulatory) strategy to combat information asymmetries has already been addressed and given36 its theoretical basis in the concept of market for lemons (above Section 3.1.1) – from which the (mainly EU law based) information model has evolved.^[64] The preponderance of information rules and straightforward disclosure regimes in European contract law (and also other fields such as capital market law) constitutes, however only the first step. This is present in European contract law (as secondary law harmonization) already since its beginnings in the 1980s. The two most important theoretical developments reaching beyond and refining the model (and as well inspiring later legislation) have to be seen in the concept of information overload and the systematic research of cognitive biases. Case studies 1 and 2 show this development in a particularly clear way. The former is still closer to traditional – market-wide – information regulation. Just as much as insufficient information for the issues material to the decision (from no information to equal access to information), an overload of information can leave the addressee in a suboptimal position to decide in her best interest (‘drowned in information’, incapable of isolating the most relevant considerations).^[65] This, in principle, is still a market-wide problem – equal or at least similar for all market participants, at least consumer-clients. This is different with cognitive biases, situations, in which the individual addressee of information in her decision-taking gives too much weight to one aspect over others, contrary to what a37 rational calculation would suggest. Forms are presence bias (weigh comfort now more – and excessively – than risk for future) or framing/availability bias (think that what is presented / at hand are the most relevant aspects), incapability to assess statistical truth/risk, etc. – prospect theory was the flagship.^[66] The radical novelty of this source of ‘failure(s)’ in the consensus process lies in the fact that biases are distributed unevenly in society, some succumb to it, others not and in different degrees.^[67] This is the root for any legal strategy to personalize law.^[68] However, all these questions are still addressed within the analytical framework of the informational and will related bases of decision-making, here consent, and consensus.

More radically different would be a regulatory theory grounded in an analytical framework inspired by systems theory – not primarily in the sense of Niklas Luhmann’s, but rather of Catherine MacKinnon’s (with astonishing and noteworthy similarities even to Franz Böhm). In this perspective, the analysis would focus on assessing a concrete existing system and the distortive consequences it has, describe the fact pattern and rather aim at reforming the system as such. The second case named above gives a good illustration of this. It may well be that contracts have been properly formed, information on the legal instruments that could be used is sufficient and they could be used, and that all options taken could be made by free will. It is not even proven that the air carrier really used big data – alternatively, she could just use statistical data of law-suits (platforms like flight-right do typically sue only when they are concretely reimbursed). The combination of factual circumstances would still seem to lead to a system in which actual freedom of choice – in MacKinnon’s setting: freedom from discriminatory consequences – would de facto38 not exist for the affected party in the bulk of cases.^[69] Already the freedom of the air carrier to shape conditions in an overly complex way and to leave uncertainties – namely the business model introduced by low budget carriers mainly – leads to an environment, which makes legal procedures more complicated and less likely to happen. Similarly, Franz Böhm started from the insight that restrictions of competition carry such a high risk of the creation of massive power positions in societies that he opted for an outright ban as the best basic solution. Proof of the long-term effects were seen as so illusory that the overall assessment of the ‘system’ as such guided the political decision. This ban was, of course, combined with exceptions, restricting them, however, to cases where beneficial effects can be sufficiently well proven to outweigh the risks and burdens of restrictions of competition (see Article 101, 102 TFEU). The latter can be systemically so complex that a system putting the burden of proof of the future effects of such restriction on the antitrust authority (‘more economic approach’) carries the risk of leading to a systemic bias towards distorted markets. In the case named above, possibilities to distinguish via contract terms with respect to on-board small baggage, seats, priority – that also plays out in cases of over-booking – create a system of uncertainty and non-transparent (hidden) gains and possibilities of invoked excuses. Active standardisation and introduction of certain procedures would highly increase transparency, not really reduce (legitimate) freedom to shape offers and thus constitute more proactive, system-responsive regulation. The consumer credit regime forms a good example pointing into this direction, still much in the frame of an individual information paradigm (see below Section 5.1). Of great help for alleviating the standardised proof problem (most facts hidden within the system) would be including an ombudsman intervention. Such ombudsman could be included on every cancelled flight fixing authoritatively the legitimacy and legal consequences, a mandatory reimbursement, also in cases of flights booked via platforms (with penalties after a fixed term). This could be a fixed term minimum model with respect to the core conditions (seats, on board baggage). Like in the consumer credit regime the ‘effective price’ announced should represent the ‘normal quality’ flight. All these consequences could still be coupled with the possibility for the air carrier39 to offer alternatives that, however, apply only when actively chosen. A transparency rule, potentially monitored by the supervisory authority, might apply to the booking websites (perhaps even be combined with a regime prescribing box ticking schemes that are simple and not misleading in their framing). Approaching systems which de facto have proven to leave rights systematically unprotected, might be one of the big challenges namely in an arena, in which digital platforms and booking are dominant – but not only there.

Potentially yet another approach would be to see human dignity (and more generally human rights) as the prime aim of regulation, at least as one that takes precedence whenever human dignity is substantially at stake. This as well deviates already substantially from market failure rationale, but, of course, is mandated constitutionally if indeed fundamental rights form an overarching value structure. Case Aziz decided by the European Court and responsible lending, introduced as a duty in the Mortgage Credit Directive, form strong examples for such new trend (both discussed in the case studies below Sections 5.1 and 5.2). They might be seen as instances of Red Box and Green Box approach, with enhanced participation rights and enhanced emphasis on constitutional public values.^[70]

3.2.2 EU Legislation and Case Law in Development

If the side of public good regulation is dominant in European contract law, as suggested and illustrated in this contribution, it does not come as a surprise that the main lines already discussed for party autonomy (above Section 3.1) mainly have to be taken up now. This is again done both for EU primary law and for EU secondary law – the latter also specified in the three case studies (below Section 5). As said, the development from Black box to Red and Green boxes constitutes the main connecting thread. As said as well, competition law (against restrictions of competition), regulation of stability, but as well general public good (administrative) law, namely with respect to ecology, will largely be left out^[71] to focus mainly on contracts.40

On the Fundamental Freedoms side (primary EU law), public good regulation used to be concentrated in harmonization measures, i.e. secondary law – otherwise remained in national law and had to be assessed via the benchmark of ‘mandatory reasons of public good’ (see above Section 3.1.2). With the advent of the EU Charter of Fundamental Rights, this changed – for instance if antidiscrimination is to be seen as a field of public good regulation (see Article 20–26 EU Charter), albeit different in structure from the traditional market failure concept. This change does not only lead to new structures being included, and this change cannot only be discerned as well in more recent legislation (responsible lending) and CJEU case law (Aziz and following). To the contrary, this change constitutes as well a true game-changer in that it brings about the following new ‘equilibrium’. While before, the Fundamental Freedoms were all-encompassing in that all contracts and transactions were caught by one freedom, the freedom of services as the freedom ‘of last resort’,^[72] the public good regulation containing such freedom was not. It was either to be found at Member State level or in EU secondary law – fragmentary as such. Fundamental rights are conceptualized differently, rather in a vision of completeness, by which at least the most important inroads into the protected sphere of human actors and their personality should be caught. This is a perspective considerably different from that of the market failure concept (which as well would be seen as rather well covering the most important forms, i.e. as structurally being all-encompassing). The market failure concept focuses on suboptimal functioning of decision-making, primarily in markets and economic institutions/settings, while fundamental rights focuses on impact on the human personality and its gravity. In this respect, with the advent of EU fundamental rights codification, there is now as well an all-encompassing system on the ‘other side’, the public good regulation side. Both key primary law concepts and sources, Fundamentals Freedoms and Fundamental Rights, in part even run in parallel according to mainstream view. This is so when not just goods and services are at stake, but as well a personal side to the freedom, like freedom of workers’ movement or the rights conveyed by the concept of citizenship.^[73] 41

In EU secondary law, the three case studies (with their clear tendency towards materialisation over the decades and common value regulation) form the initial architecture (see below Section 5). Other important developments include the following measures, all mainly on the side of contract law regarding public good regulation. The Unfair Trade Practices Directive regulates deceptive and aggressive trade practices,^[74] which are seen as unfair competition. It bridges the gap to contract law in many respects, for instance in that systematic breach of contract, for instance in case 2 of the introduction, constitutes an unfair trade practice.^[75] Mega-areas or fields of regulation are capital market related contract law, namely in MiFID I and II (thematised in the Bankinter case),^[76] and the impact of digitalization on contract law, namely in the Digital Contents and the new Sales Directive,^[77] but as well on platforms, most importantly the Digital Markets Act.^[78] This latter area would seem to be42 one where risk of systemic failure in the sense explained in the section on theory would be in need of particular exploration. A very special case, both in the history of its development and in theory building, is antidiscrimination law (contracts).^[79] Typically it is not included in traditional concepts of public good regulation (or at least not prominent there), even though its function would clearly seem to be public good regulation and its purpose mostly protection against particular market-wide weaknesses of a (large) group of parties. Moreover, its impact comes mainly or at least largely to bear in the area of contracts. With respect to development of common values – its core aim –, this area even constitutes an absolute protagonist in development. Perhaps, even more generally, fundamental rights will become increasingly a guiding principle of future EU (contract law) regulation– just in line with the image of ‘overarching value architecture’. Thus, in all these acts and fields, one can increasingly find rules and regimes dealing with all phenomena and approaches named in the section on theory. These are information overload, cognitive biases as such or of different kinds, and systemic failures (as in antidiscrimination law or the digital arena). This has as well increased fundamental rights protection in contract law – the latter having been elevated in the last decade as well to a concern which the EU cares for globally in chains of contracts directed from Europe, i.e. with their decisional centre in an EU based firm.^[80] 43

4.1.1 From Separation to Integration Concepts

Historically – both with respect to theoretical underpinning and with respect to EU legislation, in part as well case law – four phases seem paramount with respect to how the relationship between private law and public good regulation is conceptualized. The first two phases arguably just constitute two divergent approaches on both sides of the Atlantic.^[81]

What is interesting at the outset is that an explicit and strongly expressed conceptualisation of the relationship of public good regulation and private law can be found only after World War II (or already towards the end of it), while public good regulation in the US as such dates back to the 1890s and 1930s already. This refers to the areas of Antitrust Law, Banking Supervision, Capital Market Supervision. The idea of an ordo-liberal market constitution – with an equilibrium between autonomy (‘private law society’) and ‘order’ (for competition) – constitutes a first fully-fledged conceptualization. The key argument was that both pure laissez faire and planned economy are so flawed, had so grossly underperformed in National-Socialist and Communist regimes, that the intermediate concept had to be preferable. This was to combine free (liberal) markets inspired by private initiative on the one hand with protection by the state or a supranational order, for protection against inroads to that freedom on the other.^[82] Without theoretically excluding other needs of market orders, i.e. public good regulation, the core area of such protection at that time was seen in antitrust law or prohibition against restrictions of competition, which was indeed introduced as the one substantive regime that found its way into the Treaty of Rome (1958), and in parallel as well into German law. One can even speak of a ‘European Competition Union’, because parallel to the prohibition for private enterprises to restrict competition, a parallel prohibition addressed to Member States was introduced not to use their ‘monopoly’ power and discriminate against offers and enterprises from other Member States (albeit only indirectly). Indeed, already the Treaty44 contained such prohibition to act in this way for Member States via legislation (Fundamental Freedoms), subsidies (State Aids) or preferential awarding of (huge) works contracts (Public Procurement). The greatest strengths of this approach lie probably in its analytical clarity, clearly distinguishing the two functions of innovation via party autonomy and publicly imposed protection of that autonomy. This implied both an analytical separation (and clarification) and – very importantly – the stressing of a functional link. Indeed the prohibition is not primarily aimed at limiting the freedom of those engaging in anticompetitive initiatives, but at enhancing the freedom of all others to be able to use their freedom not only in a formal, but in a material way.^[83] The gravest weakness of the approach – besides being a very apolitical, somehow meritocratic, perception of how and by whom such regulation should be brought about – lies probably in the exclusiveness, which is given to a separation model. Indeed both functions named are attributed on the one hand solely to public rule-setting (order) and on the other solely to private party initiative and autonomy – and before the CJEU Courage case in 2001, private parties had difficulty in having their private interests play out in damages claims. The development will show that other arrangements of the interplay may have considerable advantages and that in any case the functional link described between public good regulation and the enhancement of material freedom calls for a more integrated concept.

In a second phase, starting very quickly after the first phase and partly even in parallel, now prominent on the other side of the Atlantic, protagonists started from a profound critique of public good regulation, most acutely of antitrust regulation. The main argument namely by Henri Manne and Oliver Williamson was that private arrangements were often economically very plausible and furthered the creation of economic wealth. They exemplified this for tailor-shaped governance arrangements in long-term relationships for which the future could not be foreseen and for mergers as a means to monitor management of companies because (and if) they all could be targeted by takeover bids made by competitors.^[84] While these concrete examples were highly convincing and lead as well to exceptions from merger or antitrust control, the approach proved more problematic when generalized to the so-called ‘more economic approach’, which, in its extreme version, reversed the45 burden of argument and of proof.^[85] No longer had the exception from a ban of anticompetitive arrangements to be proved – advantages, which a particular arrangement did consistently bring –, but any antitrust regime had to prove that it brought more economic advantages than a laissez faire approach, and this potentially also in the long run. While theoretically ‘in dubeo pro libertate’ seemed to form a powerful foundation for such claim, the outcome – because of the difficulty of long-term forecasts – was potentially to throw out the baby with the bathwater. Despite the proven or perceived overall highly adverse effects of anticompetitive behaviour, it was rendered overly difficult to ban it. In principle, however, the more economic approach remains an approach that primarily distinguishes (and separates) the two spheres, private law and autonomy on the one hand and public good regulation on the other. There was just a shift in outcome, in tendency giving priority to the private arrangement and largely restricting the order that is aimed at restoring the freedom of all market participants (not just those that are in power to shape the arrangements). Besides this germ to dismantle antitrust law (at least partly), the weaknesses of the approach indeed remain largely the same as those named for the ordo-liberal approach. These are a very apolitical, somehow meritocratic perception of who decides on the advantages of regulation or laissez-faire, and a disregard for the mutually enforcing power of private law and public good regulation in their interplay.

As of the 1990s, first trends towards integration approaches come to the fore in the EU – and the Courage case constitutes a powerful beacon for such trend at the beginning of the new Millennium.^[86] Besides this line of cases, the core features of the development would seem to be the following. With information asymmetry as a key target of research on market failure, triggered by Akerlof’s seminal article on ‘markets for lemons’,^[87] now information problems came into the limelight of research and practice and more generally structural disequilibria between the two sides of markets, now typically in a contract law world. This gave rise to several revolutions. Firstly, the focus of regulation changed from anticompetitive behaviour to information problems – thus triggering a second wave of regulation, now on information. Secondly, on the side of contract and of companies (limited by shares), public good regulation containing this kind of market failure triggered the creation46 of two new areas of the law. These were consumer law on the one hand (contracts) and capital market law on the other (companies), both strongly relying on disclosure rules as type of regulatory instrument – alternatively, where information fails, content control as in standard contract terms law.^[88] Thirdly and most importantly for the development of theory discussed here, the aspect of individual protection within the relationship (against dishonesty, traditional private law ban of deceit) and the aspect of the overall impact on market structure (markets, where lemons drive out honest offers) went hand in hand.^[89] This can be observed in both new areas of the law. Individual protection and functional protection of the institution as such were systematically seen in parallel now.^[90] The problem of such integration is that it mixes the two functions, which the ordo-liberal model convincingly had seen as differing from each other. On the other hand, the background of ordo-liberal model allows us still to keep the functions as conceptually different and separate, while then much more vigorously emphasizing the functional link between both as well. This arguably constitutes indeed he most important aspect of the relationship between private autonomy and public good regulation. If indeed public good regulation is primarily for the sake of increasing material use and possibilities of autonomy of all parties, integration of the two sides would seem also theoretically required. With respect to the CJEU case line, two developments are worth retaining in this context. On the one hand, there is an increasing trend towards an integration. Integration in this respect would imply that private parties – if they can prove harm and are summarily within the group of those that the market or public good regulation aims at – should as well have a claim that is not illusory, and this as a command set at EU level, mostly then executed via national law. On the other hand, while Courage (2001) and Diesel (2023) strongly support this claim – and others in between concur – the case, which is most directly contract related, the Genil/Bankinter case (2013), points least in this direction. This is highly astonishing – and not easy to justify – both from the theoretical and from the dogmatic perspective. As47 shown, it was the focus of a more contract law related form of market failure, information asymmetries, which triggered the trend towards integration in conceptualizing the relationship between private law and public good regulation. Moreover, doctrinally and in a comparative law perspective, contract law, because of the more demanding relationship between the parties than in erga omnes relationships, typically reaches at least as far, but often also goes further in depth and width of claims than tort law does.

The fourth and last phase is more difficult to characterize, again with rather strong divergences in mainstreams across the Atlantic. On the one hand, there is a considerable trend towards milder forms of regulation, based on party autonomy in the form of opt-in or opt-out. Nudging parties to socially desirable outcomes has gained much attention, potentially even using parties’ cognitive biases with a view to achieve such outcomes, but leaving the choice to opt out.^[91] Similarly, designs of self-executing contracts have prominently been developed, including the large variety of blockchain designs.^[92] In many of these forms, the aims of fostering and protecting party interests individually and of protecting or furthering a public good, like market stability or equality on markets, are closely intertwined again. The increasing success of these instruments dates back to the first years of the Millennium, the US discussion taking the lead. A peak was arguably reached in the years of the outbreak of the global financial crisis, while, on the other hand, a trend48 towards more demanding regulation clearly took off only in the second decade. Also in this second trend, with such more demanding and robust regulation, private law concerns and the aims of public good regulation appear as strongly intertwined, but this other side of the fourth phase leads back to Europe. Indeed, the EU development plays the more prominent role here. This development – where concerns of social and ecological sustainability are in the forefront – can be summarized as a ‘green box’ approach. This largely relates to a change in goals, which can be described as follows.

4.1.2 From Black Box to Red Box and Green Box Approaches

Historical development, of theory and legislative evolution, cannot only be described for the interplay of party autonomy and public good regulation. Of high importance is as well the question, which overall goals are dominant in the different phases.

In company law, this has been broadly described as a transition from a black box approach to a red box and eventually a green box approach – from 1968 to today.^[93] The black box approach describes a world where the aim of EU harmonization (and potentially as well CJEU case law, for instance on fundamental freedoms) is primarily to foster internal market needs. In this case, regulation is primarily aiming at securing the reliability of the main actors in internal markets, limited liability companies, to the outside world, reliability as a debtor (validity of the company and power of attorney and their certainty despite legal diversity) and reliability or at least foreseeability in economic terms (minimum capital, capital maintenance, standardized and tested accounts). The inside of the black box (company) is of little importance at this stage, for instance its governance and decision structure. The addressee is a rational confident actor. The transition to a red box approach takes place at a time, when Europeanization of contract law only started or had just started, namely in the 1990s. The European Community develops from an Internal Market compound to a Union with strong political dimensions, external and internal, not least with a core common economic good, the common currency (Euro). At the same time, mobility both of shares and of companies as whole entities largely increases with the development of a general capital market law in the 1990s and the start of the Centros line of cases by the CJEU (1999). In the red box approach, fully developing in the 2000s, highly increased participation becomes the key policy, based on the view that a broad and diversified discussion at all levels is paramount also in the strategies of the largest actors (listed companies in particular). This is true both with respect to shareholder voting in general meetings (largely enhanced by Shareholders Directive I of 2007 with opening de facto voting possibilities, but as well49 proxy voting via informed intermediaries) and with shareholders having a say also in a broader range of core developments of the company (such as takeovers), but as well with other stakeholders. Also labour, labour councils, but as well co-determination are important objects of regulation at EU level. Hence, ‘wisdom of the crowds’ as one of the dominant features in theoretical development, namely in new economic sociology, would indeed seem to form a concept that strongly inspires the company law development at EU level as of the 2000s – i.e. as a federal policy (and this is radically different from the US development). Diversity of images of actors, including more vulnerable ones (as well those of bounded rationality), becomes more noticeable as well. The third phase would seem to be characterised by a renewed political stance that is robust enough to formulate key political postulates again. These postulates transcend individual will – even if it comes ‘in crowds’ – and relate to social sustainability and to ecological sustainability. The key example for the first would seem to be the European Banking Union (2013), which reacted to massively dysfunctional developments of shareholders’ egoism, discrediting to some extent ‘wisdom of the crowds’ paradigms. This scheme can be summarized as forbidding a strategy that fosters private gains where losses are massively socialised, like in the financial and the sovereign debt crises. The key example for the second is to be seen in the CSR agenda, with the Non-Financial-Reporting Directive of 2014 (with update 2022), in which the responsibility of listed companies seated in Europe is regulated (namely reporting and due diligence duties, the latter in Directive 2024/1760/EU). This is a responsibility of listed companies seated (or otherwise anchored) in Europe for the impact on human rights and ecological parameters, which the value and supply chains have that they steer.

In company law, this is a development, which primarily crystalizes in a succession of legal acts – even if some of them relate to each other, like, for instance, Shareholders Rights Directives I and II (2007 and 2017). In contract law, the development becomes visible more prominently also within the single acts, not in a succession of acts, but as developments in each act. The three cases studies in Section 5 below illustrate this impressively. They relate to the three arguably most paradigmatic directives, whose initial version came into force already before the turn of the Millennium, i.e. towards the end of a phase in which a black box approach was dominant, just at the start of the other two phases and developing in them. Thus, the object of the case studies is formed by the core area that had been seen as foundational for a European contract law and that in the 2010s, also occupied well beyond half of the CJEU case law of that decade.^[94] Buzzwords for the last phase, the green50 box, will be responsible lending, human rights and dignity concerns in standard terms law and contracting, and a sales law that takes concerns of ecological sustainability as a key consideration (see below Section 5). With respect to a green box approach, it should as well be kept in mind that the key company law act, the CSR Directive (compendium), is conceived as straddling the limits between company and contract law. While it is about company reporting and due diligence duties, its focus is then on the impact of global value and supply chains (contracts) on human rights and on ecological aspects – such chains that the company steers, but that extend into countries of origin globally and are contractual by nature.

4.2.1 Hierarchy of Norms – Hierarchy Also in Concepts?

If the universally accepted prevalence of EU Law over national law is taken as a starting point for the normative analysis of the questions asked here, one conclusion would seem plausible at first sight (especially if primary EU Law and mostly also secondary EU Law are seen as being directly applicable as well in national practice, e.g. before national courts). This conclusion would be that contents of EU Law and their aims take precedence over contents of national law. As public good regulation initially occurred mostly at EU level – with respect to regulation of restrictions of competition – and also later, namely with respect to EU contract law analysed here, the regime at EU level was public good regulation in essence,^[95] one further conclusion would seem plausible at first sight as well. The conclusion would be that public good regulation is of higher importance than contract law, that it takes precedence and that this refers as well to the prime principle of contract law, party autonomy and private party initiative.

First doubts on the essence of both conclusions are cast already by the fact that primary EU Law, namely its fundamental freedoms regime, contains a powerful programme for the extension of party autonomy (across borders) as well. This implies that EU Internal Market law – including secondary law in the form of harmonization – has the ultimate goal not of restricting private initiative and party autonomy but of establishing an equilibrium between party autonomy and respect for the public good. Prevalence of EU Law therefore rather only implies that EU law – and not national law – primarily has to decide in concrete cases which aims are51 pursued,^[96] in most cases more concretely whether public good regulation is aimed only at protecting the public good or as well private party interests such as those of investors or consumers. This is often specified explicitly in recitals, in many cases as well implied, for instance when Article 101 TFEU specifies that (relevant) restrictions of competition – i.e. an exception from the general ban – can only be justified if this furthers as well the interest of consumers (thus as well the main argument in the CJEU Courage case decision). Hence, in the cases where recitals or implicit indications of goals speak in favour of such protection of private interests as well – a vast majority of cases at least where contract law is concerned –, it is flawed already doctrinally to negate private party claims when these parties suffer damages from a violation of the relevant public good regulation.

4.2.2 Equal Ranking of Party Autonomy and Public Good Regulation in Theory

If approached from a theoretical perspective, which tries to appropriately reflect the overall architecture of the ‘European Project’, prevalence of public good regulation ‘only’ and disregard for the interests of affected private parties would appear still less plausible. This has two sides, one of market order theory, one of political philosophy.

If indeed the main aim of public good regulation in the form of antitrust law was to protect more material autonomy of all market participants – and not primarily to curtail the freedom of competitors that want to engage in anticompetitive practices –, as already the ordo-liberal school maintained,^[97] the one conclusion is obvious. The functional link between public good regulation and enhancing party autonomy would be blatantly disregarded if any violation of such a regime – aiming at enhancing more material party autonomy – was not sanctioned also in favour of the prime bearers of (such rights to) party autonomy. When moving from antitrust law to public good regulation in the area of structural asymmetries between parties engaged in negotiations – and hence to the core of contract law –, the argument becomes even stronger. This is so because as well the path-breaking theoretical writings – laying ground for public good regulation in this respect, namely in information economics – explicitly insist on that protection of the proper functioning of markets and protection of the individual counterpart(s) are intrinsically linked.^[98] Moreover, most of such public good regulation stems from (i.e. developed out of) old contract law principles.52

On the political philosophy side, the interplay of freedoms and public good protection in Western market economies, and very prominently in the continental European form of capitalism (‘social market economy’) would seem most appropriately captured by the equal autonomies model developed within Habermas’ discourse theory. Habermas indeed rejects both a prevalence of private autonomy – often justified in natural rights thinking, namely in an age of enlightenment spirit, and today in libertarian and radical liberal approaches – and a prevalence of the public will and autonomy. He rather sees both at equal footing. This implies that the private autonomy is so strongly rooted in our societies that public autonomy is not absolutely free how to regulate it, but rather encounters a boundary where the essence of private autonomy starts. Conversely, the public autonomy and will is not seen as being subordinate to a prime principle pro libertate. Both are on an equal footing, equally legitimized, regulations that further the one above the other must be avoided. To the contrary, the equilibrium must be reached in each individual case (in a discourse as free from power influences as possible).^[99]

4.2.3 Prevalence of Private Party Protection and Claimants in Practice

The foundational value judgement – from the perspective of a whole range of social sciences and philosophical approaches, underpinning information regulation, social market economy and even Internal Market architecture – would therefore seem to be equilibrium between public good regulation and party autonomy and not priority of one concept over the other (see above Section 4.2.2). While this would seem already slightly astonishing given the prevalence of EU law over national law (see above Section 4.2.1), the true paradox comes at the side of practical implementation. Indeed, here prevalence has to be given in the large majority of cases to private party protection – wherever public good regulation implicitly or even explicitly wants to further it ‘as well’ – and not public enforcement (e.g. fines). This is so despite the fact that most of private law and as well contract law, namely party autonomy, is primarily regulated in national law. The reason for this claim is to be found in the principle that all aims targeted by any regulation – also public good regulation – should be satisfied whenever a solution satisfying all aims can be found – and not just some of them. This would seem to be the logical consequence of such foundational concepts as ‘overlapping consensus’ or, more doctrinally, of proportionality. For each aim, it has to be asked if53 there is a means to achieve it, whether there is not another equally effective means less intrusive on other goals also envisaged and whether means and outcome are in appropriate proportion to each other.

Two considerations are paramount for this line of argument. Firstly, compensation of private parties is possible in perfect alignment with public enforcement, because the latter is aimed at eliminating the harm done to markets and institutions, not at creating income. Therefore, compensation of private parties helps on the one hand public good enforcement (this side of the coin was even the very reason why the concept of a private advocate general was developed), while on the other hand it needs not be a source of over-enforcement either. The amount of private party claims can be estimated and this burden factored in when public fines are fixed. Conversely, barring private claims would frustrate one key goal of public good regulation wherever (explicitly or implicitly) it is aimed at private party protection as well. Secondly, contract law relationships are already established, concretized, and contract claims for this reason also reach at least as far as tort claims, often further (claims also for purely monetary damages and more broadly in case of vicarious liability). For this reason, the risk of not finding boundaries for private law claims (dispersed, unclear damages) is minimal, while – because of the relational bond already established – the violation of standards aimed as well at private party protection gains particular normative weight. This is so particularly if the concepts violated had initially been developed in contract law. For this reason, it is astonishing that CJEU so vigorously imposed private law claims – by European command! – in (mostly tort law) cases Courage, Manfredi and Diesel defeat devices while in contract law cases like Genil / Bankinter and also Millennium Bank, it refrained from formulating a clear EU law basis for a private law claim. Political prominence of the case – large scale cartels and climate fraud – may require a higher level of public fines, for private law claims, contract law close relationships are even more important as a normative factor.

5.1.1 Regulation via Enhancement of Information

The EEC Directive of 1986 did not regulate consumer credit contracts more generally – and this holds true irrespective of the big lacuna it left in its scope of application (excluding mortgage credits).^[103] Also within its scope of application, the directive did56 not regulate most of credit agreement law – not contract formation, not contract termination, not even the then much debated issue of excessive interest rates – hence not the core of any private law regulation of loan and credit agreements. The directive went for a precisely targeted approach and regulated only one, but highly important issue: the information regime. Indeed, it introduced an information regime with two core types of information. The first part of the regime is about condensing complex information on components of the interest rate into just one – easily comparable – figure, the so-called efficient interest rate. The rationale is to include a multitude of components such as interest rate itself, handling fees, agio or disagio – all components certainly reasonable for good tailor-shaping of the credit arrangement, but rendering the ‘price’ as core parameter rather opaque and difficult to assess for standard borrowers. By establishing one figure, this core parameter is now subject to easy comparison of offers made by competing banks – with two effects mainly. Enhancing competition between suppliers of credit (and thereby customers’ selection), thus contribution to efficient allocation on markets, and hereby as well drying out particularly oppressive offers. Increased market competition indeed very strongly reduced risk of excessive interest rates (and case law thereon indeed mostly disappeared). The market regulation dimension is obvious. The second part of the regime is no longer about comparing, but about adjusting to borrower’s needs and financial capacities. This is equally important. The regime wants to give the informational basis for assessing whether the loan is affordable in the single case. Therefore, the overall (yearly or monthly) sum of burdens had/has to be disclosed in an easily understandable way. This constitutes as well market-wide regulation, but now rather individualized, different from debtor to debtor, already pointing to some aspect of regulation of sub-prime debts (yet still only as an ‘offer’ to the debtor, not as professional ‘control’ of sub-prime debt). This would seem to be indeed the two most important information needs for borrowers – however, only in good times. What the 1986 version of the directive still largely left out was the possibility of crisis, of adverse developments in the future. Hence, it is very much a regime for a rational, well performing borrower, for ‘good times’. Additional rules for ‘bad times’ appeared necessary.^[104]57

5.1.2 Addressing Risk, Also Existential

The EC Directive of 2008 and the EU Directive 2014 bring – respectively – a reform of EEC Directive 1986 for consumer credit outside mortgage credit and the new coverage of mortgage credit. While there are, of course, important differences in problems and volumes between general consumer credit and mortgage-backed consumer credit, underpinning theory and contents still overlap considerably. The general thrust is to extend the information paradigm more to risks of non-performing loans and to have the robustness to combat as well in substantive terms, i.e. via mandatory commands, sub-prime debt – or to put it differently: to protect (potentially sub-prime) borrowers from their own biases, namely over-optimism and presence bias.

The first main development, already in the EC Directive of 2008, is additional rules on risk of ‘bad times’.^[105] While the concept of a ‘material consensus’ that is required for a good decision and solid consensus already loomed behind the EEC Directive of 1986 – for performing loans, for preparing them on the solid debtors’ side (‘can I afford the credit?’) and for the sake of competition (price transparency) –, this path is now continued and deepened. Scenarios of crisis have to be explained, concrete examples to be given. While there could, for instance, still be a further-reaching proper duty to loan advice (like in the investment services environment), with an approach of ‘know your customer’, namely with an in-depth discussion of the individual risks that have a certain likelihood to come about, the main thrust is laudable. However, this is still regulation for rational borrowers and more of an ‘offer’ to them for the risk scenario – not extremely thick –, not yet the approach that some ‘control’ and ‘guidance’ may be helpful. We are still before the (outburst of the) global financial crisis, but bounded rationality research had been around for one or two decades already, also in the legal discourse. Therefore, a more stringent approach was thinkable already then.

This state of affairs becomes even more apparent with respect to ‘responsible lending’. In the EC Directive of 2008, such a rule could be found in the proposal, but was struck out in the adopted act (with some unclear referral in the recitals).^[106]58 Certainly ‘responsible lending’ is as well still more important in mortgage-credit loans (already because of their sheer size), but for certain layers and ages of society it has its relevance already outside. The instance that, however, most powerfully pushed into the direction of adopting such a concept in the legal regime was the global financial crisis with massive sub-prime lending – then non-performing loans – in the US as the initial triggering event (of course, with many other causes as well in the later investment chain). This ‘toxic’ development was clearly anchored in the area of mortgage-backed consumer loans. The EU Directive of 2014 that regulates this area for the first time in the EU then introduces a duty of responsible lending explicitly and as one of its core pieces of regulation in Article 18 and 20 (see also Article 7).^[107] Two features are noteworthy from a regulation and theory perspective. This is now a regime for borrowers that are likely to succumb to cognitive biases and this in the face of the likelihood of crisis and ruin – i.e. the rational borrower paradigm is no longer used as the exclusive point of reference. Moreover, the regulator now has the robustness to combat as well in substantive terms, i.e. via mandatory commands, sub-prime debt. This is now not only for the sake of stability of banks (and thereby the public good of systemic stability), but is primarily aimed to protect (potentially sub-prime) borrowers from their own biases, namely over-optimism and presence bias. Indeed, the rule had already existed before for some time in the banking supervision regime, i.e. for the sake of institutional and systemic stability. When now the rule also targets the protection of the sub-prime debtor herself, the main rationale would seem to be to protect such debtor from a choice in favour of short-term comfort, but at the expense/price of high probability of existentially ruinous development. In other words, this is a rule of caution for the sub-prime borrower, ultimately fostering his claim to – also material – long-term human dignity. One last word of caution is needed. This laudable development does not imply that mandatory command, for the sake of particularly vulnerable, potentially biased consumers is necessarily the preferable strategy for all market transactions in European contract law, not even for consumers (see below Section 5.4).59

5.2.1 Initial Goals: Weighing of Party Autonomy, Thin Consensus Control and Subsidiarity

Hardly any directive is as clearly an answer to a regulatory model (theory) as UCTD. This directive – as unfair contract law in many Member States already before – constitutes a direct emanation of the mainstream information model developed on the basis of Akerlof’s market for lemons and adverse selection model.^[111] The starting point is that a lack of information in the material points for consent is likely to lead to decisions not aligned with the real preferences of those deciding – at least one party –, but thereby as well to suboptimal allocation (not to those valuating the good or service particularly highly). Hence individual justice is just as much at hazard as is market functioning. The core reaction deduced from this state of affairs is threefold. Where this information can be given and as well digested to a meaningful extent and where the information asymmetry can thus sufficiently be levelled60 out, information rules are proposed, i.e. transferral of the information needed. Then party autonomy may rule again. Where this is not possible, but alternative modes of informationally satisfactory decision-making can be found, these are preferred to heteronomous solutions, for instance mandatory law solutions. This can include solutions with information intermediaries as well as a reference to solutions found as best practice in the relevant context of the transaction at stake. Finally, where such alternatives are not possible, heteronomous solutions (including mandatory law solutions) constitute the choice of last resort, because otherwise the chance of overreaching would be too high. Not only the UCTD responds to this model. To a larger or lesser extent, Member States’ laws, enacted in the 1970s, do as well, probably most directly the German Unfair Contract Terms Act – together with the parallel French regime the most influential source for the UCTD.^[112] Thus, the UCTD, among all three acts analysed in the case studies, constitutes the one where most visibly pre-existing regulatory solutions for the public good have really been ‘harmonized’. In the consumer credit regime, the European legislature rather cast new ground with the solutions found, and in the sales regime, it mainly remained within the boundaries of traditional private law, at least in the 1999 act.

In the UCTD, all three kinds of solutions named and aimed to respond to information problems can be found. With respect to party autonomy remaining largely intact (first level), this implies that there are indeed issues where the UCTD leaves party autonomy reign. This is important to note, because, as is well known, standard contract terms are typically not read and this is often even rational and therefore consensus is particularly ‘thin’, when one agrees with them. The directive nevertheless leaves a core space for party autonomy. Indeed, Article 4 (2) UCTD gives full party autonomy, i.e. exempts from any ex-post judicial control, for those parts of the agreement that define the main object of performance on each side (service/good and price) and the balance between both. This is so, because in this respect consensus is typically not thin, but well informed – on these issues, also clients focus their attention. At the same time, it is precisely this focus, which is safeguarded as well by the Directive – by asking that the terms of such delineation of the main object of the contract need to be clear and easy to understand, in plain language. Case law has concretized this in the sense, that even price fixing elements, when they come in addition to the mere statement of the price, fall under standard contract terms61 control and scrutiny.^[113] This relates, for instance, to clauses on the question when variable interest rates fixed in the loan agreement change. They can fall outside this room reserved for party autonomy (or ‘exemption’ from control), wherever they are not easy to understand and automatic in application (simple reference to a public variable interest rate such as Euribor).

For the remainder of the regulatory steps, all those not based on leaving complete party autonomy, the first onward developments of the information model need to be kept in mind. In the UCTD, there was, from the beginning, already a rule forbidding surprising content (Article 5 UCTD), i.e. what could be expected in such standard terms – already a rule combatting information overload to some extent. Reaching well beyond this, the CJEU and doctrine have developed this rule into a duty of formulating standard contract terms as concisely, well ordered and easy to understand as possible (duty of transparency).^[114] This reaches well beyond most national contract laws on information overload. While the latter thus was targeted rather directly – and indeed one core question would seem to be whether this rule does not apply to European contract law very generally –,^[115] the other main onward development, taking into account bounded rationality and cases of biases, is much less clearly addressed.^[116] 62

The remainder of regulatory steps consists of two levels that are distinguished – and this, in my view again rather much in line with the information model as explained above. The first level is one where there is a close proxy for full consent by the affected party herself. Situations falling under this category can be described as follows. There is a fair possibility to know the content of standard contract terms, ascertained by a duty to submit the standard contract terms envisaged to the contract partner before formation (mainly national law command, Article 5 UCTD) – even though often it may also be rational for the consumer not to read them.^[117] Moreover, there is a proxy decision mechanism and decision taker. This is the legislature (with her default rules) combined with the perception and consent of the market circles in the particular field. The UCTD makes sure that this is the standard by submitting clauses to ‘good faith and fairness’ control. This is mainly so because case law and doctrine specify this standard as one that is only met if the deviation from national default rules rather adopts the character of an adaptation of the default regime than one of (considerable) deviation from it in favour of one party’s interest and to the detriment of the other’s.^[118] Best practice in markets plays a major role in assessing whether the concrete clause rather constitutes adaptation only and not considerable deviation.

The third step is to disallow party autonomy in the remainder of cases – where deviation is no longer fair, an area rather simple in principle (‘too thin a consent for too large a deviation’ from the posited default fairness standard). This, however, is the area, which in the first decade of the application of the UCTD triggered the hottest debate – that of where the competence lies for the filling of and giving of content to this general clause: with the national courts or with the CJEU?^[119] This is an issue of63 unity of the control standard versus subsidiarity and factual knowledge of the case. More important for the context of this contribution, however, is that this possibility ‘of last resort’ was as well already taken into account in the very first foundational piece on the information model, by G. Akerlof.^[120] Altogether, the claim broadly made that there is no (or no longer) room for an information model in standard contract terms law is surprising, the title catchy,^[121] but it overlooks the fact that the model is much more nuanced than just relying on the simple transfer of information.

5.2.2 Developing into the Core Tool for Addressing Key Values

Certain concepts in the UCTD that have been developed over the years by (national and) CJEU case law or doctrine, have already been mentioned, for instance developing a duty of transparency. Probably the most important and indeed seminal step was, however, developing the UCTD into a legal measure that brings fundamental rights, namely those related to procedure, into the circle of those reasons for which party autonomy can be regulated.^[122] The coming into force (full effectivity) of the EU64 Charter on Fundamental Rights in 2009 certainly helped to trigger this case law trend. It may be that this approach was later on also overstretched, developing a large amount of substantive human rights out of rules that probably had not been intended to support such rights – for instance a right to housing against credit institutions tendering loans.^[123] This, however, rather constitutes a question of concrete design of the fundamental right than one of principle, namely how UCTD worked as a gateway to this development. Indeed, this would appear as a very consistent step if really fundamental rights are seen as an overarching value system – taking precedence over all others – as today, almost three quarters of a century after Lüth and still 25 years after the Surety case,^[124] is largely accepted in a large number of Member States and in the CJEU case law.^[125] What is noteworthy so, is that even if the debatable ruling can be found already in the Member State law itself – for instance eviction without a due process possibility of being heard before as well in substance –, the Court, contrary to Article 1 (2), is prepared to submit to its scrutiny standard contract terms grounded in such Member State law.

5.3.1 Paradigm for a Breach of Contract Regime and Consumer Autonomy

The Sales Law Directive of 1999 is arguably the piece in European Contract Law that most explicitly spells out party autonomy also with respect to content (not only the ‘whether’, but the ‘how’ of a contract). For the core content, the question which quality of the good is owed, the directive opts for giving precedence to the subjective standard, the agreement of the parties.^[129] While, in practice, this will not be66 an issue of explicit agreement in all or even in the majority of cases – in which case then the objective standard of ‘legitimate market/clients’ or more generally party expectations is owed –, this is, in principle, a landmark decision. It was disputed in the legislative process, it is as well contrary to most EU contract law that is mandatory, it is, however, taking consumers’ sovereignty seriously.^[130] Where, if not for the quality the consumer and her preferences should decide autonomously? The most important prerequisite for the legitimacy of such statement is – as always – that the consumer can be seen as acting in sufficiently full knowledge of the matter, and emphasis on transparency of the quality offered was indeed the core thrust of case law in this matter.^[131] Moreover, where this transparency cannot be provided, the subjective standard cannot apply – and the 2019/771/EU version even provides a legislative example for this. When this directive deals with digital content that needs constant updating – the direction of which cannot necessarily be foreseen – it opts indeed for putting ‘legitimate expectations’ as an objective (and market-wide) standard at equal footing with the subjective standard.^[132]

Conversely, on the side of public good regulation, the 1999/44/EC Directive lacks specific rules or approaches. It may be interesting in approaches to new phenomena, introducing novel types of rules for areas that later on become object of public good regulation. Supply or distribution chains may be one example,^[133] but even67 these – especially distribution chains –, are regulated more with a focus on the individual relationship and the interests involved, in a private law perspective, than with a view to the structural, systemic issues.

5.3.2 Adaptation of the Regulatory Part in the Light of Digitalization and Sustainability

Also in the version of Directive 2019/771/EU, the directive not only keeps the main structure and principles developed in the regime of Directive 1999/44/EC (and the UN Convention on the International Sale of Goods of 1980), but also its primarily private law character. It has been mentioned, on the side of party autonomy, that in certain parts, the subjective standard has been coupled with an objective one. As this is in areas where no transparency for the future can be achieved (with respect to the direction digitalization and the need for updates will take), this remains still within the boundaries of the fundamental initial approach – with preference on consumer autonomy.

With further focus on the new needs in the age of digitalization and even more with sustainability as true guiding principles for the reform,^[134] there is, however, now a stronger focus on public good regulation as well. With respect to sustainability, the following developments point into this directive – and always the question is, whether a particular rule serves mainly consumer interests (as weaker party), a public good interest (environment) or both in parallel. The starting point (and basic step) can be seen in that now durability has been advanced to a prerequisite of quality^[135] – in the interest of both consumers and environment, hence without clash between public good goals. A second step – for many authors a logical consequence and a main aim in the current reform of the Directive – would be to extend the period of prescription beyond two years, to the limit of normal life expectancy of this kind of68 product.^[136] Where the sales contract is coupled with a long-term element such as the agreement to keep the software needed updated, this is already the case under the current regime.^[137] Again, this (general) extension of the time of prescription can be seen as being in the interest of both (most) consumers and environment, but the negative consequences for the supply side are apparently felt to be higher than in the first case (durability as prerequisite for quality). Finally, there could as well be the duty – on both sides – to choose repair primarily, and no longer to have the right to choose between repair and substitution^[138] this solution now rather in the interest of environment/sustainability, even if reducing consumer’s option rights.