Keith Mack
Scots contract law governs the rules of contract in Scotland. A contract is formed by the acceptance of an offer, which can be constituted by responding to an invitation to treat. The default rule is that contracts do not need to be in writing and can be created orally. However, the Requirements of Writing (Scotland) Act 1995 provides exceptions for certain types of contracts, such as those involving real rights in land or gratuitous unilateral obligations. A contract is a bilateral agreement that creates legally binding obligations between the parties, including agreement on the essentials such as the parties involved, the subject matter, and the price. Scots law also recognises unilateral promises as enforceable obligations, and consideration is not required as it is in English law. In Scotland, individuals under the age of 16 cannot enter into legally binding contracts.
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What You'll Learn
Scots contract law basics
Scots contract law governs the rules of contract in Scotland. A contract is formed by the acceptance of an offer, which can be constituted by responding to an invitation to treat. A contract is an agreement between two or more parties which creates or intends to create legally binding obligations between the parties to it. There must be an agreement on the essentials of the contract, including the parties, the subject matter, and the price.
In Scotland, the default rule is that contracts do not need to be in writing and can be created orally. However, the Requirements of Writing (Scotland) Act 1995 provides exceptions for specific types of contracts that must be created in writing, such as the creation, transfer, variation, or extinction of a real right in land. The act also introduced the concept of signing in counterpart to the Scottish legal system. The act states that a contract for the sale of shares or the exclusive purchase of goods does not require writing. A contract is considered formed when an email acceptance is sent or read, but specific provisions should be included if the parties wish to send notices by email.
A contract is distinct from a unilateral promise, which is a distinct and enforceable obligation in Scots Law. The English requirement for consideration does not apply in Scotland, meaning it is possible to have a gratuitous contract where only one party has duties to the other. If consideration is given, such as in a sales contract, the contract is said to be onerous.
The doctrine of frustration can be applied to release parties from their contractual obligations when unexpected circumstances have impacted the contract. For example, an external event has caused the performance of the contract to become impossible, or the contract has become illegal after it has been formed.
Finally, people below the age of 16 are unable to make a legally binding contract under the Age of Legal Capacity (Scotland) Act 1991.
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Bilateral agreements
A contract is formed by a bilateral agreement, which is an agreement between two or more parties that creates or intends to create legally binding obligations between them. In Scotland, a contract is formed by the acceptance of an offer, which can be constituted by responding to an invitation to treat. A variation of the original offer is considered a counter-offer, which must then be accepted to form a contract.
The default rule in Scotland is that contracts do not need to be in writing and can be created orally. However, certain types of contracts, such as those relating to the creation, transfer, variation, or extinction of a real right in land, must be in writing as per the Requirements of Writing (Scotland) Act 1995.
It is important to note that not all declarations made by one person to another will constitute a promise enforceable under Scots Law. For example, a declaration of intention, a testamentary provision, and an offer are not considered promises.
When forming a contract, there must be an agreement on the essentials, including the parties involved, the subject matter, and the price. In Scotland, individuals under the age of 16 cannot enter into legally binding contracts, as stipulated by the Age of Legal Capacity (Scotland) Act 1991.
The question of whether a binding agreement has been reached should be judged objectively, focusing on what each party was reasonably entitled to conclude from the other's attitude. Parties can agree that they will not be bound until a written contract is signed, and this intention will be upheld.
While Scots Law does not require consideration for a contract to be valid, it is still essential to understand the concept. Consideration refers to the requirement of reciprocal obligations, where both parties receive valuable consideration for their performance in the contract. In Scotland, this is not necessary, allowing for gratuitous contracts where only one party has duties towards the other. However, if consideration is given, such as in a sales contract, the contract is considered onerous.
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Contract formation
Scots contract law governs the rules of contract in Scotland. A contract is formed by the acceptance of an offer, which can be constituted by responding to an invitation to treat. A contract is an agreement between two or more parties which creates or intends to create legally binding obligations between them. There must be an agreement on the essentials of the contract, including the parties, the subject matter, and the price.
In Scotland, contracts do not need to be in writing to be valid, and can be created orally. However, certain types of contracts must be created in writing, such as those concerning the creation, transfer, variation, or extinction of a real right in land. When it comes to written contracts, specific requirements must be met for them to be legally enforceable. For instance, a document should be subscribed by the granter and witnessed by another person aged at least 16.
It is important to note that not all declarations made by one person to another will amount to a promise enforceable under Scots law. For instance, a declaration of intention, a testamentary provision, and an offer do not constitute a promise. A unilateral promise is also distinct from a bilateral agreement, which is required for a contract. The English requirement for consideration does not apply in Scotland, meaning that a gratuitous contract is possible. However, if consideration is given, such as in a sales contract, the contract is said to be onerous.
During contract formation, parties can agree that they will not be contractually bound until a written contract is signed. When determining whether a binding agreement has been reached, the question should be judged objectively, based on what each party was reasonably entitled to conclude from the attitude of the other. This underscores the importance of understanding the intentions of the parties involved in a contract dispute.
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Written contracts
In Scots law, a contract is formed by a bilateral agreement between two or more parties, which creates or intends to create legally binding obligations between them. While the default rule in Scotland is that contracts do not need to be in writing, certain types of contracts must be written to be legally enforceable. These exceptions are outlined in the Requirements of Writing (Scotland) Act 1995, which sets out execution requirements and ensures a document is "self-proving".
To be formally valid, a written contract document should be subscribed by the granter and witnessed by one other person aged at least 16. If a document containing contractual terms has been signed, the signatory is bound by those terms, even if they have not read them. If a document is unsigned, a party is not bound unless they are aware that the document contains contractual terms or reasonable steps have been taken to bring the terms to their notice.
It is worth noting that parties can agree that they will not be contractually bound until a written contract is signed. This was demonstrated in the case of Karoulias SA v The Drambuie Liqueur Company Ltd in 2005. In another case, Lord Braid found that the parties had reached a binding agreement for the sale of shares and that they did not intend for the agreement to be formalised in a written document before it became enforceable.
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Contract disputes
In Scots law, a contract is formed by the acceptance of an offer. This can be done orally or in writing, although certain types of contracts must be in writing, such as those concerning the creation, transfer, variation, or extinction of a real right in land.
- Objective Approach: The question of whether a binding agreement has been reached should be judged objectively, based on what each party was reasonably entitled to conclude from the other's actions and statements. The intentions or thoughts of the parties are not relevant.
- Governing Law and Jurisdiction: Contracts should include a governing law and jurisdiction clause, specifying that Scottish law and courts will govern the interpretation and enforcement of the contract. This provides clarity and establishes the forum for resolving disputes.
- Consideration: Scots law does not require consideration for a contract to be valid. However, in practice, it is unlikely that a commercial organisation would provide goods or services for free.
- Force Majeure: Contracts should include a force majeure clause to cover situations where performance becomes impossible due to circumstances beyond the control of either party, such as natural disasters or civil unrest.
- Assignment: The contract should specify if there is an option to assign or transfer contractual rights and responsibilities to another party and outline the procedure for doing so.
- Doctrine of Frustration: This doctrine can release parties from their contractual obligations when unexpected circumstances have impacted the contract, such as when performance becomes impossible or illegal.
It is important to note that contract law in Scotland is subject to periodic reviews and reforms, with the Scottish Law Commission working to ensure that contract law is clear, certain, and up-to-date. As such, it is advisable to seek legal advice when dealing with contract disputes to ensure compliance with the most current legislation and case law.
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Frequently asked questions
Scots contract law dictates that a contract is formed by the acceptance of an offer, which can be constituted by responding to an invitation to treat. Contracts do not need to be in writing and can be created orally, although certain types of contracts, such as those involving real rights in land, must be created in writing as per the Requirements of Writing (Scotland) Act 1995. To be legally enforceable, written contracts must also adhere to specific requirements, such as bearing a signature and the presence of a witness.
Lord Braid summarised the governing principles of contract formation in Scots Law, emphasising that the determination of a binding agreement between parties should be judged objectively. This means considering what each party was reasonably entitled to conclude from the other's attitude, rather than their actual intentions. Additionally, parties can agree to not be bound until a written agreement is entered into.
A contract under Scots Law is created by a bilateral agreement, distinguishing it from a unilateral promise. The contract should include an agreement on the essential elements, such as the parties involved, the subject matter, and the price. It is important to note that individuals under the age of 16 cannot form legally binding contracts in Scotland.
Scots Law does not require consideration, which means that gratuitous contracts are possible. Consideration refers to the requirement of reciprocal obligations, where both parties receive valuable consideration for their performance in the contract. However, in practice, commercial organisations rarely provide goods or services for free.
