The Contract (Formation and Remedies) (Scotland) Bill was passed in a final stage three vote in the Scottish Parliament.

It builds on recommendations made by the Scottish Law Commission and introduces reforms to update and clarify Scots law on contract formation and remedies for breach of contract.

It sets out rules on when a contract comes into force, including in situations where parties are still negotiating some terms, and allows parties to claim back what they have provided if a contract breaks down due to a serious failure by the other party.

The bill also makes it clearer when a party can withhold payment, goods or services if the other side fails to hold up their end of the agreement.

Victims minister Siobhian Brown said: “Contract law is important to our everyday life and this bill will modernise important parts of the Scots law of contract while clearing up doubts that have arisen over the years, making the law more accessible and fit for purpose.

“By providing clearer default rules for how contracts are formed and what happens when they break down, we are making the law work better for everyone, including small businesses who may not have the legal expertise to navigate uncertainty in the current rules.”