Introduction to law_DCFR.pdf

# Founding and expansion of the European Union The founding and expansion of the European Union represent a historical journey from economic cooperation to a broad political and territorial integration across Europe [6](#page=6). ### 1.1 The European Coal and Steel Community (ECSC) The genesis of the European Union can be traced back to the **European Coal and Steel Community (ECSC)**. This was established by the **Paris Treaty**, signed on April 18, 1951. The ECSC marked a pivotal moment in history, as it was the first instance where sovereign, independent countries voluntarily transferred authority over specific matters to a supranational structure. The founding members of the ECSC were Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands [6](#page=6). ### 1.2 Further European Integration Following the success of the ECSC, further steps were taken to deepen European integration. The **EEC (European Economic Community)** and **Euratom (European Atomic Energy Community)** treaties were instrumental in this process. The **Rome Treaty**, signed on March 25, 1957, was a cornerstone of this expansion, laying the groundwork for a common market and broader economic cooperation [6](#page=6). ### 1.3 Expansion and Broadening of Scope Over the subsequent decades, the European project witnessed significant **territorial expansion** as more countries joined the Union. Crucially, the EU's scope also broadened considerably beyond purely economic matters. The **EU-Treaty of 1992**, also known as the **Treaty of Maastricht**, was a landmark agreement that established the basis for intergovernmental cooperation in crucial non-economic areas such as foreign policy, security, administration of justice, and police matters [6](#page=6). ### 1.4 The Lisbon Treaty The most recent significant development in the EU's structure and functioning came with the **Lisbon Treaty**, signed in 2007. This treaty introduced a **new structure** for the Union, aiming to enhance its efficiency and democratic legitimacy [6](#page=6). --- # EU law and fundamental freedoms This section outlines core principles of EU law, including non-discrimination, EU citizenship, and the four fundamental freedoms, alongside the principle of subsidiarity [7](#page=7). ### 2.1 Key principles of EU law EU law is built upon several foundational principles that ensure a fair and integrated internal market [7](#page=7). #### 2.1.1 Non-discrimination and EU citizenship The principle of non-discrimination is enshrined in Articles 18-25 of the Treaty on the Functioning of the European Union (TfEU). This principle prohibits any discrimination on grounds of nationality within the scope of application of the Treaties. EU citizenship, established by Articles 18-25 TfEU, complements this by granting rights to nationals of Member States, including the right to move and reside freely within the territory of the Member States [7](#page=7). #### 2.1.2 The four fundamental freedoms The EU's internal market is underpinned by four fundamental freedoms, which are essential for economic integration: * **Free movement of goods:** This freedom, governed by Article 26 et seq. TfEU, aims to eliminate customs duties and quantitative restrictions between Member States, creating a customs union [7](#page=7). * **Free movement of individuals:** Covered by Article 45 et seq. TfEU, this freedom ensures the right of establishment and the freedom to work in any Member State for individuals and companies [7](#page=7). * **Free circulation of services:** As detailed in Article 56 et seq. TfEU, this freedom allows for the provision of services across Member State borders [7](#page=7). * **Free circulation of capital:** Governed by Article 63 et seq. TfEU, this freedom ensures the free movement of capital and payments between Member States [7](#page=7). #### 2.1.3 Competition law Beyond the freedoms, EU law also secures competition within the EU. This involves regulating against practices such as cartels, monopolies, dominant market positions, and the misuse of state aid to ensure a level playing field for businesses [7](#page=7). ### 2.2 The principle of subsidiarity The principle of subsidiarity, outlined in Article 5 of the Treaty on European Union (TEU), acts as a crucial check on the EU's legislative power [7](#page=7). * **Application:** In areas where the EU does not have exclusive competence, it should only act if and because the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central, regional, or local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level [8](#page=8). > **Tip:** Subsidiarity ensures that decisions are taken as closely as possible to the citizen, with the EU intervening only when its action is more effective than action taken at national, regional, or local level [8](#page=8). * **Multilevel governance:** This principle is integral to the concept of multilevel governance within the EU, where powers are shared and coordinated across different levels of government [8](#page=8). > **Example:** The EU's attempt to harmonize rules for genetically modified crops faced strong opposition from Member States due to diverse local environmental, economic, and cultural considerations, illustrating how national circumstances can influence the application of the subsidiarity principle [8](#page=8). --- # Stages of market integration The stages of market integration describe the progressive deepening of economic ties between countries, moving from the removal of tariffs to a fully unified economic and monetary system. ## 3. Stages of market integration The process of market integration, particularly within the European Union, involves a series of progressively deeper economic linkages aimed at fostering economic growth and preventing future conflicts. The EU's foundational treaties explicitly state the establishment of an internal market and an economic and monetary union with the euro as its currency. This integration is achieved through the removal of trade barriers, the creation of a common market, and the harmonization of policies [10](#page=10) [11](#page=11). ### 3.1 The progression of integration The integration process is typically visualized as a series of hierarchical stages, each building upon the previous one [9](#page=9). #### 3.1.1 Free trade area This is the initial stage of integration. In a free trade area, member states agree to remove tariffs and other trade barriers among themselves, but each country maintains its own independent trade policy towards non-member countries. An example of a free trade area is the European Free Trade Association (EFTA) [9](#page=9). #### 3.1.2 Customs union Moving beyond a free trade area, a customs union adds a crucial element: a common external trade policy. This means member states not only eliminate internal trade barriers but also adopt a common tariff and trade policy towards countries outside the union. The European Economic Community (EEC) achieved this stage by July 1, 1968, with its founding members: France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg [9](#page=9). #### 3.1.3 Common market / Internal market This stage represents a significant deepening of integration. A common market (also referred to as an internal market) involves the free movement of not only goods but also persons, services, and capital between member states. This is often termed "negative integration" as it focuses on removing barriers. The deadline for establishing this common market was January 1, 1970, with the concept of the internal market solidified with a deadline of December 31, 1992. "Positive integration," through harmonization of laws and policies, is also a key component of the internal market, as stipulated in Article 114 of the Treaty on the Functioning of the European Union (TFEU) [11](#page=11) [9](#page=9). ##### 3.1.3.1 Components of the internal market The internal market encompasses several key elements beyond free movement: * **Free movement of goods, persons, services, and capital**: This is the cornerstone of the internal market, ensuring that factors of production can flow unhindered across national borders [11](#page=11). * **Harmonisation**: This involves aligning the laws and regulations of member states to facilitate the single market. This is often referred to as "positive integration." [11](#page=11). * **Competition law**: The enforcement of competition rules, as outlined in Articles 101 et seq. of the TFEU, is vital to prevent anti-competitive practices that could distort the internal market [11](#page=11). * **Sectoral policies**: Specific policies addressing particular economic sectors are developed and applied to support the functioning of the internal market. * **Economic and Monetary Union (EMU)**: This represents the most advanced stage of integration. #### 3.1.4 Economic and Monetary Union (EMU) This is the highest level of market integration. An Economic and Monetary Union involves not only the establishment of a common market but also the coordination of economic policies and the adoption of a single currency. The EMU was formally established in 1992, with the introduction of the euro as the single currency on January 1, 2002, marking a decisive step. Article 119 TFEU also relates to this stage and Article 3 TEU explicitly states the Union's commitment to establishing an EMU with the euro as its currency [11](#page=11) [4](#page=4) [9](#page=9). > **Tip:** Understand that each stage builds upon the previous one, with increasing levels of economic policy coordination and harmonization required as integration deepens. The progression from a Free Trade Area to an EMU signifies a move from mere barrier reduction to the creation of a truly unified economic space. --- # Harmonisation of private law and the Draft Common Frame of Reference This topic explores the process of harmonising private law within the European Union through directives and introduces the academic Draft Common Frame of Reference (DCFR) as a significant legal toolkit [12](#page=12) [14](#page=14) [15](#page=15). ### 4.1 Harmonisation through EU Directives EU Directives are instruments used to harmonise laws across Member States. A key question in this context is whether an EU Directive has direct effect [12](#page=12). #### 4.1.1 Types of Harmonisation There are two primary approaches to harmonisation via EU Directives: * **Minimum harmonisation**: This approach sets a baseline level of regulation, allowing Member States to enact stricter rules if they choose. Consumer protection is a common area where minimum harmonisation is applied [13](#page=13). * **Maximum harmonisation (or full harmonisation)**: This approach aims for complete uniformity by preventing Member States from introducing more stringent regulations than those stipulated in the Directive. Product norms are an example of an area often subject to maximum harmonisation [13](#page=13). #### 4.1.2 Areas of Private Law Harmonised Several areas of private law have been subject to EU harmonisation, including: * **Corporate law**: Harmonisation has occurred regarding limited liability companies, public limited liability companies, and listed public limited liability companies [14](#page=14). * **Business-to-consumer contracts**: This includes regulations on unfair terms, sales contracts (covering conformity and remedies), contracts concluded outside of business premises (such as doorstep selling), and distance contracts (like online sales). Other harmonised areas in this domain include package travel and consumer credit, including mortgage credit [14](#page=14). ### 4.2 The Draft Common Frame of Reference (DCFR) The DCFR is an academic project that emerged from a political initiative to enhance the coherence of European Contract Law. It was published in 2009, following earlier academic efforts to harmonise European private law, such as the Lando Commission's "Principles of European Contract Law" (PECL) and the UNIDROIT "Principles for International Commercial Contracts". The DCFR is built upon the EU's legal acquis (the entire body of EU laws, common rights, and obligations) and prior academic scholarship [15](#page=15). #### 4.2.1 Purpose of the DCFR The DCFR serves multiple purposes: * It acts as a potential model for a political Common Frame of Reference [16](#page=16). * It raises awareness of the existence of European private law and demonstrates that diverse legal systems often arrive at similar solutions for common problems [16](#page=16). * It functions as a "tool box" offering inspiration for the revision of both EU and national private law [16](#page=16). > **Tip:** Understanding the DCFR as a "tool box" is crucial; it's not binding legislation but a valuable academic resource for legal reform and interpretation. #### 4.2.2 Structure of the DCFR The DCFR is organised into several books covering a wide range of private law topics: * Book 1: General Provisions [17](#page=17). * Book 2: Contracts and other juridical acts [17](#page=17). * Book 3: Obligations and corresponding rights [17](#page=17). * Book 4: Specific contracts and the rights and obligations arising from them [17](#page=17). * Book 5: Benevolent intervention in another’s affairs [17](#page=17). * Book 6: Non-contractual liability arising out of damage caused to another [17](#page=17). * Book 7: Unjustified enrichment [17](#page=17). * Book 8: Acquisition and loss of ownership of goods [17](#page=17). * Book 9: Proprietary security in movable assets [17](#page=17). * Book 10: Trusts [17](#page=17). #### 4.2.3 Key Principles within the DCFR One notable principle within the DCFR is the concept of good faith and fair dealing, as articulated in provision I.–1:103 [18](#page=18). * **Definition**: The expression "good faith and fair dealing" refers to conduct characterised by honesty, openness, and consideration for the interests of the other party involved in a transaction or relationship [18](#page=18). * **Prohibition**: It is considered contrary to good faith and fair dealing for a party to act inconsistently with their prior statements or conduct if the other party has reasonably relied on these to their detriment [18](#page=18). > **Example:** If a seller repeatedly assures a buyer that a product is compatible with a specific system, and the buyer purchases it based on this assurance, the seller cannot later claim the product is not compatible if that would cause the buyer detriment. This would likely be a breach of good faith and fair dealing. #### 4.2.4 Reception and Relevance of the DCFR The DCFR has not been enacted as binding legislation, given its status as a draft. Its reception has been mixed, with some viewing it critically and others embracing it as a valuable academic tool. The practical relevance of the DCFR continues to be a subject of discussion [19](#page=19). --- ## Common mistakes to avoid - Review all topics thoroughly before exams - Pay attention to formulas and key definitions - Practice with examples provided in each section - Don't memorize without understanding the underlying concepts

| Term | Definition | |------|------------| | Supranational structure | An international organization or entity that transcends national boundaries and governments, possessing independent authority and decision-making power over member states in specific areas. | | European Coal and Steel Community (ECSC) | An organization established by the Paris Treaty in 1951, marking the first instance of sovereign nations transferring authority to a supranational body. It was a precursor to the modern European Union. | | Treaty of Rome | Signed in 1957, this treaty established the European Economic Community (EEC) and the European Atomic Energy Community (Euratom), significantly advancing European integration beyond the ECSC. | | Treaty of Maastricht | Also known as the Treaty on European Union, signed in 1992, it led to the formation of the European Union (EU) and introduced intergovernmental cooperation in areas like foreign policy, security, justice, and police. | | Lisbon Treaty | A revision of the EU's founding treaties, adopted in 2007, which introduced a new structure for the EU and aimed to improve its democratic legitimacy and efficiency. | | Non-discrimination | The principle that individuals should not be treated unfavorably because of who they are or what they believe, a core tenet of EU law ensuring equal treatment for all citizens and businesses within the Union. | | EU-citizenship | A status granted to nationals of EU member states, providing them with specific rights such as the freedom to live, work, and study in any EU country, and the right to vote in European Parliament elections. | | Fundamental freedoms | The four key freedoms guaranteed by EU law: the free movement of goods, individuals (persons and companies), services, and capital, which are essential for the functioning of the internal market. | | Customs union | An agreement between countries to eliminate customs duties and other trade barriers on goods traded between them, and to adopt a common external trade policy towards non-member countries. | | Internal market | A single market established by the EU where goods, services, capital, and people can move freely across the borders of member states, fostering economic growth and competition. | | Subsidiarity | A principle stating that the EU should only take action in areas where it does not have exclusive competence if and because the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central or regional and local levels, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level. | | Multilevel governance | A system of governance where decision-making processes involve multiple levels of government, from local to supranational, with significant interaction and interdependence between these levels. | | Free Trade Area | A group of countries that have eliminated or reduced tariffs and trade barriers among themselves, but each country maintains its own trade policy towards non-member countries. | | Common market | A type of customs union that also allows for the free movement of labor and capital among its member states, creating a more integrated economic space. | | Economic and Monetary Union (EMU) | A framework within the EU that coordinates economic and fiscal policies, establishing a common monetary policy and a single currency, the Euro, for participating member states. | | Negative integration | The process of removing existing barriers to trade and market access, such as tariffs and quotas, to create a more unified market. | | Positive integration | The process of actively creating common rules and harmonizing legislation across member states to achieve specific policy objectives within the internal market. | | Harmonisation | The process of aligning laws, regulations, and administrative provisions of EU member states to remove obstacles to trade and ensure a level playing field within the internal market. | | EU Directives | Legal acts of the European Union that set out a goal that all EU countries must achieve. However, it is up to the individual countries to devise their own laws on how to reach these goals. | | Direct effect | A principle of EU law that allows individuals to directly invoke provisions of EU law before national courts, provided those provisions are clear, precise, and unconditional. | | Minimum harmonisation | A form of harmonization where EU law sets a baseline standard that member states must meet, but allows them to implement stricter rules if they choose. | | Maximum/Full harmonisation | A form of harmonization where EU law aims to achieve complete uniformity by preventing member states from introducing rules that are more stringent than those prescribed in the directive. | | Corporate law | The body of law governing the establishment, operation, and dissolution of companies, including rules on limited liability companies and public limited liability companies. | | Business-to-consumer (B2C) contracts | Contracts entered into between a business seller and an individual consumer, often subject to specific consumer protection regulations to ensure fairness. | | Unfair terms | Contractual clauses that create a significant imbalance in the parties' rights and obligations to the detriment of the consumer, which may be deemed void under EU law. | | Sales contracts | Agreements for the sale of goods, where EU law specifies requirements for conformity of the goods with the contract and remedies available to the buyer in case of non-conformity. | | Distance contracts | Contracts concluded between a trader and a consumer under an organized distance sales or service-provision scheme without the simultaneous physical presence of the trader and the consumer, for example, online sales. | | Package travel | Contracts that combine at least two different types of travel services (like transport and accommodation) for the purpose of the same trip or holiday, offering comprehensive consumer protection. | | Consumer credit | Loans provided by a lender to a consumer, where EU law aims to ensure transparency and fairness in the terms and conditions of credit agreements. | | Mortgage credit | Loans secured by immovable property, where EU law establishes consumer protection rules regarding the information provided and the contractual terms. | | European Commission Communication | An official document issued by the European Commission to present its views or proposals on a particular matter, often serving as a basis for legislative action. | | Draft Common Frame of Reference (DCFR) | An academic project that produced a comprehensive set of model rules for European contract and tort law, intended as a potential basis for future EU legislation. | | Lando-Commission | An academic initiative that developed the Principles of European Contract Law (PECL), aiming to create a unified set of contract law rules for Europe. | | Principles of European Contract Law (PECL) | A set of model contract law rules developed by the Lando-Commission, intended to promote the harmonization of contract law in Europe. | | UNIDROIT Principles for International Commercial Contracts | A set of principles developed by the International Institute for the Unification of Private Law (UNIDROIT) to provide a flexible and harmonized framework for international commercial transactions. | | Acquis communautaire | The entire body of EU law, rights, and obligations that have been adopted and are binding on member states. | | Good faith and fair dealing | A legal standard of conduct requiring parties to a transaction or relationship to act honestly, openly, and with consideration for the interests of the other party. | | Juridical acts | Legal actions or declarations of will intended to produce legal effects, such as contracts or unilateral promises. | | Non-contractual liability | Legal responsibility arising from causing harm or damage to another person outside of a contractual agreement, often referred to as tort law. | | Unjustified enrichment | The legal principle that a person should not be allowed to profit unfairly at the expense of another, requiring the restitution of benefits unjustly obtained. | | Proprietary security in movable assets | Legal rights granted over movable property to secure the performance of an obligation, such as a pledge or retention of title. | | Trusts | A legal arrangement where a person (the trustee) holds assets for the benefit of another person (the beneficiary), recognized in some jurisdictions. |