The Scots contract law framework developed primarily through case law, which shaped the core principles (intention, offer and acceptance). Legislative interventions, notably the Requirements of Writing (Scotland) Act 1995 and the Contract (Scotland) Act 1997, have supplemented that framework. The 2026 Act continues that trajectory. It does not attempt a full codification of Scots contract law. Instead, it lifts core doctrines out of case law and sets them out in a more structured and accessible way.

The Act applies only where a contract is governed by Scots law. English law remains dominant in UK commercial contracting due to standardiation of templates, the depth of case law and international familiarity. However, the Act strengthens the case for Scots law in certain contexts.

Part one of the act: contract formation

Offer and acceptance

Offer

The Act retains the requirement of offer and acceptance but refines how these concepts operate in practice. An offer exists where a reasonable recipient would understand that the proposer intends to be bound if the terms are accepted and where those terms are capable of legal effect.

Notably, the Act expressly recognises that offers can be directed broadly, from a named counterparty to a defined class, or even to the public at large. A recurring source of disputes in common law is whether a statement is a binding offer, or merely an invitation for others to make offers. By moving away from the named counterparty model, the Act focusses more on the question of whether the recipient reasonably understood there was an intention to be bound if accepted? This approach recognises that modern contracting is often mass-distributed, automated and digitally published. If the law only treated “offers” as individually addressed communications, it would struggle with processes such as online booking systems and published contractual terms that are immediately capable of acceptance. This provision therefore is essentially ensuring Scots law is compatible with scalable contracting mechanisms.

Acceptance

Acceptance is equally flexible. It may be communicated by words or conduct, provided it demonstrates “unqualified assent”. Silence, however, remains insufficient. Timing of acceptance is addressed more directly than under the common law. Acceptance must occur within any specified timeframe, or otherwise within a reasonable period.
The Act also clarifies when an offer comes to an end. Offers may be withdrawn before acceptance or before the offeree has begun acting in reliance on them. Rejection brings an offer to an end, and a “qualified acceptance” operates as a counter-offer. Offers may lapse due to significant changes in circumstances, although insolvency alone is not treated as terminating an offer.

Formation despite incomplete terms

One of the most commercially significant clarifications is that a contract can still be formed even where some terms remain unresolved. The test is whether the agreement contains the essential characteristics of the contract type, as well as sufficient content to be legally workable. In practice, this confirms that emails, calls, and messaging platforms may create binding agreements. For straightforward arrangements, that enhances enforceability. For complex transactions, it increases the risk of accidental contracts. The practical response will be a need for more disciplined drafting regarding:

• “Subject to contract” language;
• express conditions on when agreement becomes binding; and
• internal controls on who can bind the business.

The end of the postal rule

The Act replaces the traditional postal rule with a modern default general rule that communications take effect when they reach the recipient. This aligns Scots law with commercial reality but introduces new questions:

• Does an email “reach” a person when it enters their inbox, or only when it is read?
• How should out-of-office responses or server delays be treated?

Until clarified by the courts, parties should seek to manage this contractually, through deemed receipt clauses, read receipt practices, or carefully drafted notification provisions.

Part two of the act: remedies for breach of contract

At a very high level, part two seeks to clarify and rationalise the law relating to:

• mutuality, where both parties are in breach;
• restitution following breach or failure of contract;
• valuation of performance where contractual pricing is absent or incomplete; and
• withholding of performance in response to breach.

One of the key themes is a more explicit statutory articulation of restitutionary principles. Where a contract fails or is terminated, the Act clarifies when and how benefits transferred under the contract should be returned or accounted for. This is particularly relevant in scenarios involving partial performance, prepayments or staged delivery models. The Act also provides clearer guidance on valuation where contractual terms are incomplete or absent, reducing reliance on judicial inference. This is designed to improve predictability where parties proceed without fully specified pricing structures.

Another important feature is the treatment of withholding performance. The Act recognises that, in certain circumstances, a party may be entitled to suspend or retain performance in response to breach by the counterparty. This brings greater statutory clarity to principles that previously developed through case law.

Importantly, as with part one, the remedies regime operates largely as a default framework and parties retain the ability to disapply or modify these rules through express contractual drafting, preserving flexibility for sophisticated commercial arrangements. This therefore increases the importance of drafting clarity around suspension rights, termination consequences, valuation mechanisms on exit and the interaction between breach and ongoing performance. Fundamentally, the Act clarifies the answer to a recurring question in commercial practice - at what point did the parties actually bind themselves and what happens when they do not perform?

Emma Wills is a solicitor at SSE plc