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

Options

Option 1 – Do nothing

61. In terms of Option 1, the Bill would not be introduced and the current common law position in relation to formation of contract (including the outdated postal acceptance rule) and in relation to mutuality, restitution after rescission, and contributory negligence would remain. The opportunity would be lost to address the uncertainties and lack of clarity stemming from the current law and the benefits discussed below would not be realised.

Option 2 – Introduce the Bill

62. In terms of Option 2, the recommendations outlined in the Report in relation to formation of contract and remedies for breach of contract that are given effect to through the Bill would be introduced. If implemented, the changes to the law would be brought about resulting in increased clarity, certainty, simplification and modernisation of the law.

63. The Scottish Government therefore recommends Option 2.

Sectors and groups affected

64. The Bill is general in its application and not confined to any particular sector or group. As any member of the public may wish to enter into a contract, the draft Bill is capable of impacting upon anyone in Scotland who has the capacity to contract. The Scottish Government anticipates, however, that the Bill’s effects would most greatly be felt by the legal profession and businesses. Legal practitioners’ work is currently adversely affected by the complexity and a lack of clarity of the law in relation to formation of contract, and remedies for breach of contract (mutuality, restitution after rescission, and contributory negligence) which the Bill seeks to reform. Similarly, clarifying and simplifying the law in these areas will help to encourage businesses to opt to use Scots law in the drafting of their contracts. The provisions on mutuality and restitution after rescission should also facilitate the quicker settlement of contract disputes between businesses exercising the “self-help” remedies of withholding performance or terminating the contract in response to breach by a party.^[22]

65. The Scottish Government has concluded that the Bill will not impact upon any person by virtue of their particular religion, belief, age, sexual orientation, gender, race or ethnicity.