Contract (Formation and Remedies) (Scotland) Bill: business and regulatory impact assessment

Summary costs and benefits

Option 1

Total benefit per annum: - economic, environmental, social

£0. Option 1 would not produce any benefits, given that the result would be that the uncertainties and lack of clarity stemming from the current common law of formation of contract and (a) mutuality and retention, (b) restitution after termination, and (c) contributory negligence would continue.

Total cost per annum: - economic, environmental, social; and, policy and administrative

£0. There would be no direct cost in choosing Option 1 as Option 1 represents the status quo.

Option 2

Total benefit per annum: - economic, environmental, social

Option 2 would bring (i) increased certainty and clarity and (ii) modernisation and simplification of the law. The Bill would save the parties time as they would not need to work around the current common law. Therefore commercial transactions would be able to be conducted more efficiently.

Total cost per annum: - economic, environmental, social; and, policy and administrative

The increased clarity and certainty which Option 2 offers would result in savings from reducing the need to resort to court action or seeking legal advice in some circumstances. An additional initial training cost and familiarisation cost would be likely, principally for solicitors but perhaps also for other professionals in the relevant fields. The costs would be small and would be incurred only on first implementation.