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Contract Law

A contract is an agreement which creates or is intended to create a legal obligation between the parties to it.

EU Initiatives

Following previous work on a Draft Common Frame of Reference (CFR) for contract law in the EU, the European Commission published a Green Paper in July 2010, seeking views on a number of options for progressing towards a European Contract Law for consumers and businesses. To ensure that the governmental response was as well informed as possible, in August 2010 the UK Government, in association with the Devolved Administrations, issued a Call for Evidence from interested parties: a Government response was then sent to the European Commission in January 2011.

In parallel, the European Commission is also reviewing the 'consumer acquis' (covering the reserved area of consumer protection), including Draft Directive on 'Consumer Contractual Rights' and Green Paper on 'Consumer Collective Redress'. The UK Government liaises with the Scottish Government on the work.

Following discussion with the Scottish Government, a Call for Evidence was issued by the UK Government on 28 February 2012, about the potential costs and benefits of the European Commission’s proposed Regulation for a Common European Sales Law. The Call for Evidence was issued with the aim of obtaining evidence/views from interested parties to assist Government in developing a future position on the proposed Regulation. The proposed Regulation will apply in business-to-consumer and business-to-business contracts where one of the parties to the contract is a Small or Medium Enterprise. The Call for Evidence runs until 21 May and is available at https://consult.justice.gov.uk/digital-communications/common-european-sales-law

Domestic Initiatives

The Draft CFR is already being utilised as a reference point in Scotland, with the Scottish Law Commission (SLC) having included it as a focus for attention in its 8th Programme of Law Reform. In due course, taking account of the views which it receives, the SLC may make recommendations to the Scottish Government for the reform of Scots contract law.

Meantime, following earlier work by the SLC, the Scottish Government consulted on a Penalty Clauses (Scotland) Bill from 8 July until 8 September 2010. The summary analysis and copies of the actual responses are now available in addition to the previously available supporting documents:

The summary analysis notes that, in light of the consultation responses, " Ministers have decided that further work will be needed to see if changes to the proposals can allay the concerns raised by some consultees before a bill is taken forward, and have asked the Scottish Law Commission to take this forward as part of their wider work on contracts".

Legal Writings (Counterparts and Delivery) (Scotland) Bill

The Legal Writings (Counterparts and Delivery) (Scotland) Bill was introduced to the Scottish Parliament on 14 May 2014. It implements the vast majority of the legislative recommendations contained in the Scottish Law Commission (SLC) Report on Formation of Contract: Execution in Counterpart (SLC No231; April 2013) which was published as part of the SLC's review on contract law.

The Bill will provide a clear framework by which parties may "execute a document in counterpart" under Scots law and will also provide a mechanism to enable documents created and signed on paper ("traditional documents") to be delivered by electronic means for legal purposes.

The Business Regulatory Impact Assessment and the results of the Equality Impact Assessment can be accessed via the links below:

Third Party Rights (Scotland) Bill

The Scottish Law Commission published their Review of Contract Law Report on Third Party Rights in July 2016 - the Report which includes a draft Bill can be accessed via the link: SLC Report 

As part of the Programme for Government announcement made in September 2016, the First Minister announced the Scottish Government's intention to take forward a Third Party Rights Bill. The Minister for Community Safety and Legal Affairs wrote to a number of stakeholders inviting them to comment on the draft Bill in the Scottish Law Commission Report in light of the Scottish Government's commitment to legislate on this issue. Two responses were received as attached:

Faculty

Scottish Law Society

The Business Regulatory Impact Assessment, which was completed by the Scottish Law Commission, and the results of the Equality Impact Assessment can be accessed via the links below: