Contract Formation in Scotland

October 27, 2010

The Scots law of contract has often, where no Scottish authority exists, made use of English case law as precedent. However, there are a number of basic elements of Scottish contract law that differ quite distinctly from the English, and where English authorities have been rejected.

When it comes to the formation of contract, one of the four fundamental elements outlined above is absent in Scots law: consideration. To form a contract under Scots law, or to vary such a contract, no consideration is required. The other three elements (offer, acceptance and intention to form legal relations) are all present in Scots law and much of the detail within those three elements is the same as the English treatment (although the ‘intention’ component is approached differently).

One major exception from the requirement of acceptance (although it could be considered as outside the proper definition of ‘contract’) is the concept of ‘unilateral promise’ in Scots law. This allows unilateral, binding obligations to be entered into without any acceptance by the promisee, which are perfectly enforceable. The undertaking must clearly be intended to be binding and must be distinct from an offer. The Requirements of Writing (Scotland) Act 1995 requires that certain unilateral obligations must be in a written document, but excluded from this are most unilateral obligations undertaken in the course of business.

A more delicate difference is in the use of the term ‘subject to contract’. In English law, it has developed a recognised (although not unchallenged) meaning indicating that the contract is yet to be concluded. In Scots law, there is no such settled meaning, and the courts will construe it on a case-by-case basis.

These are the main differences to the English position outlined above in the area of ‘the basics of contract formation’. If you bear these differences in mind, the ‘Points for the Practitioner’ in Gillian Cordall’s article are all equally valid in a Scots law context. However, there is a long list of distinctions the further and deeper you delve into contract law. A few to bear in mind are:

–          the principle of jus quaesitum tertio, as opposed to the Contracts (Rights of Third Parties) Act 1999;

–          similar, or identical, terminology used for similar, yet different, concepts, such as ‘deed’, ‘condition’ or ‘joint’; and

–         the absence of the English ‘equity’ concept. 

Alison Marshall is a board member of the Scottish Society for Computers and Law and is a solicitor at CCW LLP: