Seòmar agus comataidhean

Some of the proposed reforms to the law of remedies for breach of contract relate to mutuality of contract. The bill seeks to abolish any rule of law to the effect that a party who is in breach of contract is not entitled to exercise any right or pursue any remedy arising from a breach of contract by the other contracting party.

A key feature of the bill in relation to the law of remedies concerns the restitution of benefits after termination of the contract for a party’s material breach. The bill provides that, where a contract is rescinded for breach and a party to the contract has received any benefit from the performance by another party of an obligation under the contract, the benefit must be returned, provided that the other party concurrently returns any benefit that it has received. The bill includes detailed rules on the valuation of non-money benefits for compensation, including payment for use of benefits that have been improved by the recipient.

Another provision concerns remedies for breach in relation to contributory negligence through amendment of the Law Reform (Contributory Negligence) Act 1945.

I know that this is all very technical, but that is a bit more detail on exactly what the bill goes into.

I will bring in Michael Paparakis to speak to the technical side.

I understand that the RIAS wrote to the committee, expressing its view that provisions on retention should not be included. Its response to the committee seems to imply that the provisions introduce construction-specific rules into general contract statute, but that is not the case. Retention is a general remedy in the Scots law of contract, and it is in need of clarification, as the responses to our consultation will attest to.

The RIAS also states that the provisions risk incoherence with existing construction legislation, but any specific legislation on construction would take precedence over these more general provisions. To my mind, then, there is no risk of incoherence.

Dr Christie, who has an interest in construction law, did not in his evidence to the committee raise concerns about the coherence of the law, nor have such concerns been raised by others.

I will ask Colin Gilchrist and Michael Paparakis, because they have been dealing on the official side.

Yes. It allows a certain degree of flexibility.

Colin, do you want to come in on that?

Good morning. The bill that we are discussing today implements recommendations that the Scottish Law Commission made in 2018. It largely restates the current Scots law of contract formation while clarifying some doubts about the law that have crept in over the years.

Contract law is vitally important to our everyday economic life and for all types of transactions, involving businesses and individuals alike. Many contracts are made, carried through, and become the subject of disputes between parties who have no professional assistance. One of the bill’s principal purposes is to produce legal rules that are clear, certain and accessible. Like most of the witnesses that you have heard from, I think that we have achieved that.

As you know, part 1 of the bill concerns the formation of a contract. The main reform that is proposed in part 1 is the abolition of the postal acceptance rule. Abolition of this rule has been a long-time recommendation that the SLC has made repeatedly over the past 50 years. I am glad to bring forward a provision that will, finally, give effect to this recommendation and bring Scots law into line with other international instruments that have no such rule.

Part 2 of the bill, meanwhile, deals with remedies for breach of contract. Although that part is not as wide as the consultation topics discussed by the SLC, it is in line with the SLC’s recommendations and stakeholder opinion. The committee has heard from a number of witnesses about why the scope of the bill should not be widened.

There is one exception, which is the law of retention. I wrote to the committee in October to set out my intention to lodge amendments at stage 2 that would reform the law. That is the end result of a period of consultation, building on the considered work of the SLC and Lorna Richardson of the University of Edinburgh over the past decade or so. The law of retention is unclear, and we have in the bill an opportunity to introduce some much-needed clarity. Having listened to the evidence given to this committee, I am pleased that there has been broad consensus on the general purposes of the bill.

I look forward to answering the committee’s questions.

As the committee heard from a range of stakeholders, there is uncertainty in a number of specific points around contract law. I think that only one respondent to the committee’s call for views was outright against reform. The overwhelming majority of consultees agree that law reform is needed in this area.

The bill largely restates the common law on formation of contract to improve accessibility to the law and make important reforms to clarify and modernise the law. As I said in my opening statement, the principal reform on contract formation is the abolition of the postal acceptance rule, which has been a repeated recommendation by the SLC for more than 50 years. We are going to make the law clearer and more accessible, and the committee and Parliament should take that on board.

I have considered carefully Dr Brown’s comments, particularly the suggestion that reforming contract law inadvertently alters the wider Scots law of obligations and formation of trusts, wills and promises. Although the bill puts in statute law on formation of contract, it is not a complete codification of the law. Section 23(a) states:

“The provisions of this Act are without prejudice to any enactment or rule of law which … regulates any question which relates to … the formation of a contract … but is not provided for by the provisions of this Act”.

The law on other contractual matters is also saved by section 23. As Professor MacQueen told the committee, Dr Brown’s concerns appear to be “misplaced”, and I agree with that assessment. I also note that Dr Brown’s view was not shared by the other stakeholders who gave evidence.

Yes, I think that it is. I might bring Michael Paparakis in, but I think that this relates to electronic communications and section 13. We have not been specific in the bill—for example, we have not referred to emails in the legislation itself, but the explanatory notes include guidance on, for example, an information technology outage and emails. I note that the Law Society of Scotland has also raised concerns, and if the committee or the Law Society have suggestions for strengthening the bill, I am open to those, but I feel that we have covered that aspect.

Absolutely. I think that, both in our constituencies and personally, we are all dealing with the fact that Royal Mail is totally different from what it was 20 years ago. We have to move with the times.