Scotland updates contract law on formation and remedies
Scotland has updated how contracts are made and enforced. According to legislation.gov.uk, the Bill passed the Scottish Parliament on 3 March 2026 and received Royal Assent on 14 April 2026. The short title is the Contract (Formation and Remedies) (Scotland) Act 2026, and it aims to make everyday deals clearer for both consumers and businesses.
Think of sections 2 to 13 as the default playbook for making a contract. They apply unless the offer itself, or a prior agreement between the parties, says otherwise. That opt‑out can be express (“we agree to use our own rules”) or implied (customs you both follow). You can even adopt these rules with tweaks, as long as you both agree before the contract forms.
A contract forms when you agree on terms you mean to be legally binding and there’s enough detail to give it legal effect. You can still make a contract even if one or a few points are left open-unless one party has made clear that a specific point must be settled first. Courts can look at what you said and what you did to decide whether agreement was reached, not just whether someone wrote “I accept”.
What counts as an offer? The other side must have reasonable grounds to think you mean a binding deal if they say yes, and what you’re proposing has to be legally workable. Offers can be made to a single person, a group, or even the public. The Act leaves the Scots law of unilateral promises untouched, so a promise can still stand on its own where the law already allows it.
Saying “yes” can be done in words or by conduct that clearly shows unqualified agreement-silence alone won’t do. The offeror must be, or ought to be, aware of that conduct. In some settings, starting to perform the task named in the offer (or by your shared practice or trade usage) creates the contract, even without sending a separate “I accept”. Picture a supplier who begins packing goods exactly as requested where both sides work that way.
Timing matters. Acceptance must happen before any deadline in the offer, or-if no deadline-within a reasonable time after the offer takes effect. A notice “reaches” someone when it’s made available to them so they can access it without undue delay. That can be delivery to their business address or home, or an electronic message becoming available to read. In short: emails and in‑app messages count once they are accessible, not only when opened.
One big change for students to note: the postal rule is abolished. An acceptance sent by post no longer takes effect when posted. It takes effect only when it reaches the offeror. If you rely on the post, you now carry the risk of delay or loss until the message arrives.
Revoking, rejecting, or withdrawing? The offeror may revoke an offer, but only before acceptance, before agreement is otherwise clear from the offeree’s conduct, or before the offeree begins performance in the way the Act recognises. If you make a public offer, you must revoke it by the same method (or by the method you specified). An offer stated to be irrevocable, or declared as such, can’t be revoked. A qualified acceptance operates as a rejection and a counter‑offer. You can also withdraw an offer or an acceptance if the withdrawal reaches the other side before, or at the same time as, the original notice-useful if you’ve sent the wrong email and catch it in time.
When do offers lapse? A fundamental change of circumstances ends an offer, and it can no longer be accepted. Death or legal incapacity of either side after the offer is made counts as fundamental; insolvency does not make an offer lapse automatically. That distinction is deliberate: a business going into administration doesn’t, by itself, kill an outstanding offer.
Negotiations and “battle of the forms” still demand care. If you add, change, or omit terms in your “acceptance”, that reply is treated as rejecting the original offer and making a counter‑offer. However, if you’ve agreed on everything except a non‑essential point, a contract can still form unless someone has been explicit that the missing point must be fixed first.
If things go wrong, sections 17 to 24 set out how remedies work. Even where both parties are in breach, either can rely on the other’s breach until the contract is lawfully rescinded for their own breach, though you can’t insist on performance that falls due after rescission or on performance the other side is lawfully withholding. Parties can agree different remedies, but these are the defaults.
When a contract is rescinded for breach, benefits must usually be returned. Money is repaid. Transferable benefits (like goods) are returned if reasonable; if return is unreasonable or impracticable, their value must be paid. Non‑transferable benefits are paid for at their value, and if they were sold for more than their value, the higher amount is due. Any “fruits” (like rent or profits from using the benefit) must also be returned.
How do we measure value and deal with changes? Start with the value at the time the other side performed. If there was an agreed price, pay the fair proportion for the performance actually received; if not, pay a reasonable sum a willing provider and recipient would have agreed. Liability reduces if, because of the other side’s non‑performance, you had to incur a real disadvantage to preserve the benefit. If you must return a benefit, you may owe compensation for any drop in value-unless that change came from the other side’s non‑performance or from your reasonable but mistaken belief that their performance matched the contract. If you improved the benefit, you can usually claim for the value of that improvement, unless doing so was itself a breach or you knew you’d likely have to return it.
The Act also recognises “contractual retention” - your right to withhold or suspend performance after a breach by the other side, in anticipation of a material breach, or in relation to obligations that still exist when you end the contract for breach. Obligations are presumed to be counterparts unless shown otherwise, and counterpart obligations can sit in linked contracts within the same transaction. Any retention must not be clearly disproportionate to the breach; you can retain only part if that keeps things proportionate. If you retain because of an anticipatory breach, you must notify the other side before or as soon as reasonably practicable after starting to withhold. Retention lasts until the breach is cured or damages are paid. If someone challenges your retention as disproportionate, they carry the burden of proof; and it’s a defence to a breach claim to show your non‑performance was lawful retention.
There’s a neat clarification on apportioning losses: the Law Reform (Contributory Negligence) Act 1945 is read so that “fault” includes breach of contract. That means damages may be reduced to reflect each party’s share of responsibility, not just their negligence in tort or delict.
What stays the same? The Act doesn’t disturb rules that require writing, prescribe contract forms, govern essential validity, protect against unfair terms, or safeguard specific groups of contracting people. Scottish Ministers can make regulations to tidy up or start remaining provisions. Some sections come into force the day after Royal Assent-15 April 2026-while others will begin on dates set by Ministers. For your notes: test yourself with two scenarios-when does an email acceptance “reach” a business, and when is withholding payment proportionate on a snagging list? If you can explain both, you’ve got the new law’s rhythm.