The Contract (Formation and Remedies) (Scotland) Act 2026: A quick guide for English lawyers

The Contract (Formation and Remedies) (Scotland) Act 2026 represents the most significant statutory intervention in Scots contract law for many years. The legislation, which received Royal Assent on 14 April 2026, is evolutionary rather than revolutionary: it codifies existing Scots common law rather than replacing it.

For English practitioners, the Act is interesting not just because of the practical implications for cross-border transactions, but because it highlights a number of longstanding doctrinal differences between Scots and English contract law.

Purpose and structure of the Act

The legislation is divided into two main areas: contract formation and contractual remedies. Its principal aim is to make Scots contract law more accessible and commercially practical while preserving the autonomy of contracting parties. Most of the Act’s key provisions operate only as default rules, meaning parties remain free to contract out of them.

Part 1: contract formation – key reforms

One of the most significant aspects of the Act is the statutory treatment of offer and acceptance. Scots law has historically shared many similarities with English law in this area, but there have always been important distinctions, and the Act brings these into sharp focus:

Acceptance of offers and the abolition of the postal acceptance rule

The Act abolishes the postal acceptance rule in Scots law. Under English law, acceptance communicated by post generally becomes effective when the letter is posted rather than when received. There has historically been a degree of uncertainty around this in Scots law, but the Act now adopts a receipt-based approach, which means acceptance only takes effect when it reaches the offeror. This reflects the realities of modern electronic commerce and creates a clearer and more predictable rule.

“Battle of the forms”

The Act also addresses the “battle of the forms” issue, where parties exchange competing standard terms. English courts usually apply the “last shot” doctrine, treating the final set of terms sent before performance as those which govern the contract. The new legislation adopts a more pragmatic approach in Scotland, allowing courts to conclude that a contract already exists, even where standard terms conflict or where parties are still negotiating some terms. The test is whether the agreement contains the essential characteristics of the contract type, as well as sufficient content to be legally workable. This reflects the flexible and commercially focused character of Scots law.

Consideration: the fundamental divide

One of the most fundamental differences between Scots and English contract law remains the absence of any requirement for consideration in Scotland. English law requires consideration for a contract to be enforceable, unless the agreement is executed as a deed. Scots law has no equivalent requirement. Gratuitous promises can be enforceable, provided any required formalities are satisfied. Similarly, contractual variations do not require fresh consideration in Scotland. As a result, concepts such as nominal consideration and deeds play a much smaller role in Scottish practice than they do in England.

Part 2: remedies and mutuality

The Act also modernises aspects of contractual remedies. It 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.

There is no change to the default position in Scots common law, where, unlike in England, enforcement of the contract is the primary remedy for breach, as opposed to damages. A key Scots principle is “mutuality”, under which a party in material breach may lose the right to insist on performance by the other party, and the Act recognises circumstances where a party may legitimately suspend or retain performance in the face of a breach of contract by the counterparty.

Where a contract fails or is terminated, the Act clarifies when and how benefits transferred under the contract must be returned or accounted for. This is particularly relevant in scenarios involving partial performance, prepayments or staged delivery models. In addition, the Act provides clearer guidance on valuation where contractual terms are incomplete or absent, reducing reliance on judicial assessment. This is designed to improve predictability where parties proceed without fully specified pricing structures.

Practical implications for cross-border lawyers

For English lawyers, the Contract (Formation and Remedies) (Scotland) Act 2026 is particularly relevant in cross-border commercial transactions. Scots contract law remains distinct from English law in a number of key areas, and assumptions based on English principles may lead to drafting errors or errors in advice.

In particular, whilst many commercial principles remain aligned between Scotland and England, differences continue to matter in areas such as contract formation and variation, gratuitous obligations, pre-contractual negotiations, standard form contracts and remedies following breach or repudiation.

In conclusion, Scotland continues to prioritise contractual substance over technicality. Above all else, this reinforces the importance of paying close attention to governing law clauses.

How we can help

Whether you are reviewing existing contractual arrangements or negotiating new agreements involving Scottish parties or assets, our team is well placed to provide clear and commercially focused advice.

If you have any queries relating to the topics discussed in this article, or require assistance with a cross-border matter, please contact Fraser Geddes or a member of our team here.