Meeting of the Parliament 03 March 2026 [Draft]
Although this is a technical bill, its implications are far reaching. Contracts underpin everyday life, from employment to housing to business. The bill seeks to modernise Scots contract law by clarifying how contracts are formed and what remedies apply when obligations are not met.
Scots contract law is historically based on common-law principles, which are scattered across case law and are often hard to access. The Scottish Law Commission identified in its 2018 report that parts of the law were unclear, outdated and difficult to find, creating uncertainty for businesses and individuals.
The reforms in the bill follow the Scottish Law Commission’s recommendations and aim to provide greater certainty and accessibility. The bill introduces statutory rules on offers, acceptance, withdrawal and lapse. It also codifies remedies for breach, including restitution and valuation of benefits where no price is agreed. Those changes are intended to make the law clearer and more predictable.
There are questions about how the rules will interact with existing consumer protection frameworks. Consumers will still need to exercise caution when entering into contracts and read the small print. The bill allows parties to contract out of statutory provisions. Although that respects commercial freedom, some consumer advocates fear that it could weaken protections for individuals in asymmetric relationships. For example, if a consumer pays for a service that never occurs but the contract says that there are no refunds under any circumstances, under the bill, that policy might be enforceable if the consumer agreed to the contract, even though the default law would allow recovery.
A welcome change in the bill is the clarity on the right of retention. The bill confirms the right of a party to withhold payment when the other party is in breach. That means that you can withhold the payment if someone does not do what they said they were going to do and in doing so, you would not be in breach of contract law. That was always the case, but the bill has made it clearer. There are conditions and limits to that, of course. Retention only applies where obligations are reciprocal, and withholding must be proportionate to the breach. By clarifying that, the bill aims to reduce the need for court intervention, giving parties a clear legal basis for resolving disputes themselves.
The Scottish Law Commission has publicly welcomed the bill as a legislative implementation of its proposed reforms. The Scottish Greens are content to support the bill at stage 3 today.