Meeting of the Parliament 03 March 2026 [Draft]
I am pleased to speak in the debate on behalf of Scottish Labour. As a member of the Delegated Powers and Law Reform Committee, I was involved in the bill’s scrutiny. I thank my colleagues on the committee for their work throughout the process and the stakeholders who engaged with us during our evidence sessions.
The bill seeks to modernise Scots contract law by introducing a statutory set of default rules on contract formation and remedies for breach. Its provisions came in response to recommendations from the Scottish Law Commission, which concluded that certain parts of the current regime may be unclear for many people in that no single piece of legislation covers the topic.
The bill aims to improve certainty and accessibility in this area of law, and it is hoped that there will be no unintended consequences. As has been mentioned by those who have spoken so far, the vast majority of those who have given evidence, supported the bill on the grounds that it would make things simpler for laypeople.
Among the bill’s provisions is the abolition of the postal acceptance rule, which provides that a contract is formed when an acceptance of an offer is put in the post, as opposed to when it is received. When I spoke in support of the bill at stage 1, I welcomed that this change would allow the law to reflect the role that current communication technologies play. However, I must also say that—the committee discussed this—we simply cannot rely on the Royal Mail as perhaps we once could in previous decades, particularly before it was privatised.
The bill also allows far greater flexibility by allowing parties to contract out of the proposed rules that are set out in it. The bill does not represent a radical departure from, or a total transformation of, the current common law regime. It simply aims to codify what is believed to be the current law.
The bill does not deal with various aspects of contract law, including the law on the interpretation of contracts or the law on penalty clauses.
At stage 1, I highlighted that there had been a great deal of consensus on the bill’s provisions, and its proposals continue to receive broad support from legal academics and business groups. As has been said, the Law Society of Scotland has welcomed the bill and believes that it will improve the law’s accessibility for a range of users. The reforms are expected to improve access to justice by enabling users who might lack a high degree of familiarity with contractual agreements to set terms that are best suited to their needs with relative ease and without reference to case law or commentary. It was also said in the discussion around the bill that it might mean that Scots law is more attractive internationally.
The main substantive amendment to the bill at stage 2 was the insertion of a section on contractual retention, which clarified when and on what terms a party to a contract can utilise retention as a remedy. The bill as amended confirms that a party to a contract can
“temporarily withhold or suspend performance of an obligation that is due to be performed under the contract”
in the event of a breach by the other party, in anticipation of such a breach or
“in relation to an obligation subsisting when the contract is ended ... as a result of”
either a
“breach or an anticipatory breach.”
We welcome that change to the bill, as we believe that it serves to make general provisions of the law more accessible to individuals and small businesses. As the Law Society of Scotland has stated, such a remedy should be
“available in a flexible manner to facilitate more complex transactions and contractual arrangements that Scottish financial institutions (and other large Scottish business entities) are routinely party to.”
Scottish Labour will support the bill at stage 3, as we believe that it represents a careful, considered and proportionate step towards modernising Scots contract law. We hope that the Scottish Government will work closely with legal practitioners, businesses and advice services to ensure that the new statutory framework is well understood and smoothly implemented, with clear guidance, effective communications and on-going review. I thank everybody who has been involved in what has been a very uncontroversial piece of legislation, which I hope is successful in passing today.