Seòmar agus comataidhean

Some of the proposed reforms to the law of remedies for breach of contract relate to mutuality of contract. The bill seeks to abolish any rule of law to the effect that a party who is in breach of contract is not entitled to exercise any right or pursue any remedy arising from a breach of contract by the other contracting party.

A key feature of the bill in relation to the law of remedies concerns the restitution of benefits after termination of the contract for a party’s material breach. The bill provides that, where a contract is rescinded for breach and a party to the contract has received any benefit from the performance by another party of an obligation under the contract, the benefit must be returned, provided that the other party concurrently returns any benefit that it has received. The bill includes detailed rules on the valuation of non-money benefits for compensation, including payment for use of benefits that have been improved by the recipient.

Another provision concerns remedies for breach in relation to contributory negligence through amendment of the Law Reform (Contributory Negligence) Act 1945.

I know that this is all very technical, but that is a bit more detail on exactly what the bill goes into.

I understand that the RIAS wrote to the committee, expressing its view that provisions on retention should not be included. Its response to the committee seems to imply that the provisions introduce construction-specific rules into general contract statute, but that is not the case. Retention is a general remedy in the Scots law of contract, and it is in need of clarification, as the responses to our consultation will attest to.

The RIAS also states that the provisions risk incoherence with existing construction legislation, but any specific legislation on construction would take precedence over these more general provisions. To my mind, then, there is no risk of incoherence.

Dr Christie, who has an interest in construction law, did not in his evidence to the committee raise concerns about the coherence of the law, nor have such concerns been raised by others.

If the provisions are agreed by the Parliament, they should be the default. As I said, I will lodge any necessary amendments at stage 2, but I am willing to listen to the Law Society, if it has any suggestions on that area.

Yes. It allows a certain degree of flexibility.

Colin, do you want to come in on that?

I am confident that the bill will make the law more accessible and legally certain than what we currently have, and that guidance will not be needed. I understand that that was the majority view heard by the committee. We will publish the explanatory notes with the bill, which will provide a clear and accessible explanation about what the provisions do.

Contracts are widely used, and it would be a huge undertaking to publish and maintain guidance that accommodates the breadth of the purposes of contracts. For example, the RIAS has suggested that guidance should be prepared for the construction sector, but any such guidance would be of limited value for other business sectors, and vice versa. I therefore feel that, at the moment, the explanatory notes and the guidance that we will be giving are sufficient.

I understand that the RIAS wrote to the committee, expressing its view that provisions on retention should not be included. Its response to the committee seems to imply that the provisions introduce construction-specific rules into general contract statute, but that is not the case. Retention is a general remedy in the Scots law of contract, and it is in need of clarification, as the responses to our consultation will attest to.

The RIAS also states that the provisions risk incoherence with existing construction legislation, but any specific legislation on construction would take precedence over these more general provisions. To my mind, then, there is no risk of incoherence.

Dr Christie, who has an interest in construction law, did not in his evidence to the committee raise concerns about the coherence of the law, nor have such concerns been raised by others.

Yes—I am sorry; I did not mean to say yes to that. The Scottish Government, at this stage, has not given full consideration to whether the bill’s provisions, or some of them, might apply to existing contracts. That is not unusual for Government bills, as questions about transitional provisions are often looked at once a bill has been fully considered by Parliament.

Once the provisions of the bill have been agreed by the Parliament, officials will turn to questions of what transitional provisions might be needed. There are provisions to enable that in sections 24 and 25. My provisional view is that the bill’s provisions will apply for contracts that are entered into after the measures come into force. That has been echoed by witnesses who have given evidence to the committee.

It will be post stage 3.

My understanding is that it is normal for transitional provisions to be considered after the Parliament has agreed the final content of the bill. That allows us to consider the best approach to commencement. If some detailed transitional or other ancillary provisions are needed that are better left for regulation, it gives us time to engage with stakeholders on the best way forward.

If the provisions are agreed by the Parliament, they should be the default. As I said, I will lodge any necessary amendments at stage 2, but I am willing to listen to the Law Society, if it has any suggestions on that area.