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

Other Impact Test

Scottish Firms Impact Test

80. No Scottish Firms Impact Test was carried out. The aim of the Bill is principally to provide certainty and clarification in the law. Such certainty and clarification was highlighted by stakeholders as an area in need of reform and we anticipate that the Bill would be beneficial to relevant professionals and individuals alike.

81. It is anticipated that the Bill will bring benefits to all parties who wish to enter into contractual arrangements – both members of the public and business – as opposed to one particular sector, market or industry. The legal sector and businesses, the Scottish Government anticipates, would enjoy the greatest immediate benefit from the passage of the Bill, but this is not to the exclusion of any other sector. Further, it is not anticipated that the proposals will have any significant cost implications for any markets or industries. On the contrary, the Bill has the potential to reduce costs per transaction.

Competition Assessment

82. It is not anticipated that the Bill would have an impact on competition within Scotland. The recommendations reflected in the Bill do not create a competitive advantage for any particular sector or individual; they simply offer benefits for professionals and individuals alike.

83. As discussed above, the legal sector, other relevant professionals and businesses would be positively affected by the Bill. The Scottish Government does not anticipate an impact upon any particular market or product.

84. The Bill would not result in any restrictions on competition in the legal services market or in other relevant professional markets. The number and range of suppliers would not be affected, nor would the ability of suppliers to compete be limited. The Scottish Government does not consider that the proposal would reduce incentives to compete vigorously.

Consumer Assessment

85. The Scottish Government does not anticipate that the Bill, if passed by the Scottish Parliament, will have a detrimental impact on consumers within Scotland. As mentioned above, a comprehensive statutory statement of the law on formation of contract will benefit consumers in so far as it enables any party wishing to do so to know what steps Scots law requires for a contract to exist. Furthermore, abolition of the postal acceptance rule will result in the law according more with the expectations of consumers, who do not anticipate being bound in contract without their knowledge

86. The Bill does not propose any change to the consumer protection regimes already in place.

Test run of business forms

87. The Bill does not introduce any new business forms.

Digital Impact Test

88. The Scottish Government is of the view that the changes proposed in the Bill can be applied effectively should business processes change as a result of technological advances. Under the Bill, for example, account is taken of the increasing use of electronic communications in negotiations leading to the formation of a contract, which fills a gap in the present law and does so in a way consistent with current international understandings of how to deal with the question. In its generality it is also capable of application to future technological developments in electronic communications, a point particularly stressed by the Law Society of Scotland and Pinsent Masons in response to the discussion paper on formation of contract.

Legal Aid Impact Test

89. Whilst it is possible that issues arising from the Bill might be such as to require civil legal aid or advice and assistance in terms of the legal aid scheme, the parties whom the Scottish Government expects to use the Bill will not in a number of cases be eligible for legal aid, that is, businesses, because legal aid is only available to individuals.

90. The proposals in the Bill are not anticipated to have any significant impact on the legal aid fund and so the Scottish Government’s view is that the Bill will not adversely affect either the legal aid scheme or the legal aid fund.

Enforcement, sanctions and monitoring

91. The Bill does not require public enforcement and imposes no sanctions. As previously noted, the Bill clarifies, increases the certainty of and modernises the law in relation to formation of contract and discrete aspects of the law of remedies for breach of contract. Further, the Bill provisions are default only and parties are therefore free to contract otherwise than as provided for. Ultimately, any disputes concerning the provisions of the Bill would be resolved by litigation or other dispute resolution process between the affected parties.

Implementation and delivery plan

92. If passed by the Scottish Parliament, the majority of the provisions will come into force on the day or days appointed by the Scottish Ministers by regulations.

Post-implementation review

93. In accordance with section 3(1) of the Law Commissions Act 1965, the SLC has a duty to “keep under review” the laws with which it is concerned. The Scottish Government expects the SLC will endeavour to stay informed of the Bill’s reception by the legal profession and wider business community if it becomes an Act.