Under the Contract (Formation and Remedies) (Scotland) Act 2026, a contract is formed when the parties have agreed terms clear enough to enforce and intend to be legally bound, usually when an unqualified acceptance of an offer reaches the person who made it. The Act also abolishes the postal acceptance rule. Its main provisions have not yet come into force.
The Act received Royal Assent on 14 April 2026 and aims to modernise and clarify the Scots law of contract. This guide explains what will change for businesses, what stays the same, and what to do now while the commencement date is awaited.
In brief
- The Act puts the rules on offer, acceptance and contract formation into legislation for the first time, based on the Scottish Law Commission’s 2018 report on contract law.
- A notification, including an acceptance sent by email, will take effect when it reaches the recipient. The postal acceptance rule is abolished.
- A contract can exist even where some terms are left open, if the parties intended to be bound.
- Part 2 deals with remedies for breach of contract, including mutuality, rescission and the return of benefits, and contractual retention.
- Most of the rules are defaults. Businesses can agree different terms in their contracts.
- Sections 1 to 14 and 16 to 26 will come into force on a date set by the Scottish Ministers in commencement regulations.
Has the Act come into force?
Not yet, at the time of writing. The Scottish Parliament passed the Bill in March 2026 and it received Royal Assent on 14 April 2026. Only the general provisions came into force the next day. The substantive provisions in Part 1 (formation) and Part 2 (remedies) will take effect on a day the Scottish Ministers appoint by regulations. You can check the current status on legislation.gov.uk, which lists any commencement regulations and changes to legislation as they are made.
Until then, the existing common law continues to apply. Contracts agreed today are governed by the current rules, including the postal acceptance rule where a contract is accepted by post.
When is a contract formed under the 2026 Act?
Section 2 sets out the general test. A contract is formed when the parties have reached agreement and intend to be legally bound, and the agreement is sufficiently certain to be enforced. That can happen even when parties are still negotiating some details, if their words and conduct show they intended to be bound.
| Issue | Position under the 2026 Act |
|---|---|
| What is an offer? | A proposal made to one or more persons, where a reasonable person would understand the offeror intends to be bound if it is accepted (section 4) |
| What is an acceptance? | Any statement or conduct showing unqualified agreement to the offer (section 7). Silence alone is not normally acceptance |
| Qualified acceptance | A reply that adds, changes or leaves out terms is a rejection and a counter-offer (section 8) |
| Contracts by conduct | A contract can be formed by acts without notice to the offeror, such as starting performance, where the offer, the parties’ practice or custom allows it (section 3) |
| Revocation of an offer | Only effective if it reaches the offeree before acceptance. An offer stated to be irrevocable cannot be revoked (section 5) |
| Time limits | Acceptance must arrive within the time stated in the offer or, if none, a reasonable time (section 11) |
| Lapse | An offer can lapse on a fundamental change of circumstances, such as death or incapacity, but not insolvency alone (section 6) |
The end of the postal acceptance rule
Under the current common law, a posted acceptance takes effect when it is posted, not when it arrives. That rule dates from a time when post was the main way to communicate. Section 14 of the Act abolishes it.
Instead, section 13 says a notification takes effect when it reaches the recipient, meaning it is made available to them in a way that lets them access it without undue delay. An email will usually reach the recipient when it arrives in their inbox and is accessible, even if they have not read it. The Explanatory Notes suggest that an automatic out-of-office or non-delivery message may mean an email has not reached the recipient. Businesses that make and accept offers by email should keep this in mind, and can agree their own rules in the contract.
What does Part 2 change about remedies for breach of contract?
Mutuality
Under section 17, a party in breach is no longer prevented from enforcing the contract against the other party simply because they are in breach themselves. Both sides can pursue any remedy for breaches that occurred. However, a party in breach cannot demand performance after the contract is rescinded, or while the other party is lawfully withholding performance.
Rescission and return of benefits
When a contract is rescinded for a material breach, sections 18 to 21 set out a framework for returning benefits received under the contract, or paying their value. There are rules on how the value of the benefit is calculated, what happens where a benefit has been used, improved or reduced in value, and where returning it would be impossible.
Contractual retention
Retention is the right to temporarily withhold or suspend performance in response to the other party’s breach. Section 22 confirms that a party may withhold its own performance where the other party is in breach, or where an anticipated breach is material. Retention must not be clearly disproportionate, and notice is needed for an anticipated breach. Retention ends when the breach is remedied.
Contributory negligence
Section 26 amends the Law Reform (Contributory Negligence) Act 1945 so that damages for breach of contract can be reduced where the claimant’s own fault contributed to the loss. Parties can exclude this in their contract.
What stays the same?
The Act does not replace all of Scots contract law. Section 27 preserves other legislation and the common law where the Act does not deal with a matter. In particular:
- the Requirements of Writing (Scotland) Act 1995 still applies, so contracts for land and other specified contracts must still be in signed writing;
- unilateral promises remain binding in Scots law without acceptance;
- the general rules on damages, interdict and specific implement continue;
- the rules on interpretation of contracts are unchanged.
What should businesses do now?
- Review your standard terms. Check how your contracts deal with formation, notices and acceptance, and whether you want to keep the default rules or set your own.
- Update notice clauses. Say clearly how and when notices by email or post take effect.
- Address retention. Decide whether to limit or exclude the right to withhold performance, especially in supply and construction contracts.
- Consider contributory negligence. Decide whether your contracts should exclude it once section 26 is in force.
- Watch for the commencement date. Check legislation.gov.uk or speak to your solicitor for updates.
Our commercial contracts lawyers can review your terms against the new legislation, and our contract drafting and review service can update templates before the provisions of the Act come into force. If a dispute has already arisen, see our guide on protecting your business from contract disputes.
Frequently asked questions
When does the Contract (Formation and Remedies) (Scotland) Act 2026 come into force?
The main provisions will come into force on a date set by commencement regulations made by the Scottish Ministers. At the time of writing, no date has been set.
Does the Act apply to contracts made before it comes into force?
The formation rules will matter for contracts formed after commencement. Contracts already in place were formed under the existing law. Check the commencement regulations for transitional provisions when they are published.
Is an email acceptance binding when it is sent or when it is received?
Under the Act, an acceptance takes effect when it reaches the recipient, not when it is sent. Under the current law, the position for email is less certain, which is one reason for the reform.
Can we contract out of the new rules?
Yes. Most of the provisions are default rules, which businesses can vary or exclude by agreement between the parties.
Does the Act apply in England?
No. It is an Act of the Scottish Parliament and applies to contracts governed by Scots law.
Speak to a commercial contracts solicitor
We help Scottish businesses draft, review and enforce contracts. Call us on 0141 471 9166 or book a free consultation to discuss how the 2026 Act affects your terms.
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About the author
Scott Stevenson, Associate Director, Complete Clarity Solicitors
Scott Stevenson is an Associate Director at Complete Clarity Solicitors in Glasgow, the firm behind Business Lawyer Scotland. He studied at the University of Strathclyde and helps business owners and commercial clients work through practical legal problems. Colleagues value his calm, logical approach under pressure. Before law, Scott played football professionally from the age of 17, and he is now also a FIFA licensed football agent.
This guide reflects Scots law as at November 2026. The main provisions of the Act were not in force at the time of writing. It is general information, not legal advice for your circumstances.