Circular economy in private law
Project period: 2025–2028
The conventional linear economic system is placing an excessive burden on our planet. Its “take-make-waste approach” results in an increasing scarcity of resources, produces high greenhouse gas emissions, and exacerbates the global waste problem. The fact that Earth Overshoot Day is occurring sooner every year—as early as 24 July in 2025—highlights the urgent need for action. In current policy debates, sustainability is often portrayed as being at odds with economic efficiency, and it is suggested that one objective can be achieved only at the expense of the other.
A circular economy offers a promising way out of this alleged dilemma by combining environmental and economic objectives. As a regenerative model of production and consumption, it keeps materials in circulation through mechanisms such as reuse, repair, refurbishment, upcycling, and recycling. In this way, it extends product life cycles, reduces resource consumption and prevents waste, which rather than being disposed of functions as a secondary raw material. At the same time, circular economy strengthens the resilience of supply chains—a crucial advantage in times of geopolitical crises and global market uncertainty.
Despite its potential, such a circular reformation presently faces a number of hurdles as there is a lack of a level playing field between linear and circular business models, and both lock-in effects and transition costs are hampering the switch. Although a collective shift is needed to achieve positive network effects within the respective sectors, we still lack a clear legal framework capable of ensuring a legally certain and coordinated transition. Private law plays a central role in this regard: contracts and property are key institutions of private law that shape our economy; civil liability creates economic incentives; and consumer law has a significant influence on individual consumption patterns.
The legal framework for a circular economy is beginning to take shape, though not at a sufficient pace. Since 2016, numerous countries have adopted circular economy roadmaps. National examples include Germany’s National Circular Economy Strategy (2024). At EU level, the European Green Deal (2019) and the New Circular Economy Action Plan (2020) have created a fundamental legal framework, and the first concrete legislative acts in this regard are the Repair Directive and the Ecodesign Regulation.
Despite the key role played by private law in the circular transition, there has so far been a lack of sufficient research. The present project fills this gap. It sets out the key principles of a circular private law system and, using various concrete starting points, demonstrates how the circular economy can be implemented in the civil law areas of contract law, tort law, and property law. The project examines the implementation of the EU right to repair in Germany and identifies remaining regulatory gaps. It also analyses the legal framework of ‘product-as-a-service’ models and the resulting need for adjustments to tenancy law—particularly with regard to consumers. Furthermore, it examines whether a new category of ‘refurbished’ products, situated between new and second-hand products, is necessary to establish better incentives under warranty and liability law. Finally, the project develops a concept for a ‘circular sales contract’ which could create a private-law basis for the recovery of secondary raw materials and coordinated waste prevention. Examples of innovative business concepts will serve to demonstrate the practical and commercial feasibility of such circular business models.
The project makes clear that the creation of a ‘circular private law’ capable of supporting a circular transition requires a fundamental rethinking of private law. At present, private law is still largely characterised by a linear approach. It ignores the end of a product’s life cycle. Moreover, there is an absence of liability frameworks for collective network liability, and there is a need for a stronger focus not only on the intersection of consumer law and sustainability but also on the interplay of public and private law regulation.
Publications
Linked projects
Verónica Ruiz Abou-Nigm / Antonia Sommerfeld, Circular Fashion and Legal Design: Weaving Circular Economy Threads into International Contracts , IE Law School, José María Cervelló Chair website
https://catedracervello.ie.edu/wp-content/uploads/sites/570/2024/12/AJ8-288-I.pdf
https://catedracervello.ie.edu/en/project/18th-edition/
Max Planck Private Law Research Paper No. 25/13
Awards
XVIII. José María Cervelló Business Law Prize (2024) from the IE Law School and the law firm ONTIER