Law and Economics of the Withdrawal Right in EU Consumer Law

Abstract

This paper analyses possibilities for amending the withdrawal right under the EU consumer law, aiming to reduce the information asymmetry between contracting parties in distance sales and thus increase the number of concluded contracts and the overall contractual surplus. The main findings are that the rules suggested in law and economics theory (the personalized mandatory rules and the mandated-choice model) may not be optimal tools for amending the withdrawal right because they mostly seem to neglect the allocation of risk between contracting parties. Thus, this paper suggests the new 'risk allocation' rules as a tool for amending the withdrawal right, focusing on its use in distance sales. If amended in line with those rules, the withdrawal right could deal with information asymmetry problems more efficiently, incentivise contracting parties to enter more distance sales contracts, and increase the overall contractual surplus, especially within the realms of e-commerce. The suggested proposal is conceived - at least for the time being - more as a thought experiment; relevant empirical analysis may follow up at a subsequent phase.