Scotland is notorious in legal circles, because its contract law differs from English common law (and, naturally, from those systems that derive from English common law, such as the American system). This notoriety is undeserved. The foundations of Scottish contract law are not that exotic, and few differences impact on ordinary life.

The Basics

In Scottish law, as in most Western legal systems, a contract consists of an offer and an acceptance. Five factors must be present for the contract to be valid.

  1. consensus in idem
    This is a fancy Latin term for both parties agreeing to a material degree what the contract covers. For instance, if I contract to buy a chicken and mean a hen, and you contract to sell me a chicken and mean a rooster, we do not have conensus in idem. No contract is formed.
  2. consent
    Both parties must freely consent to the contract. A contract formed under duress is not a contract. The exemplar case for this principle is from the 1600's when an Earl forced a contract on another man by holding a loaded gun to his head to make him sign. (Modern case law is so dull by comparison.)
  3. capacity
    Not everyone is capable of forming a contract. The insane are deemed incapable of contracting. Contracts with children under 16 are void, and those with anyone between the ages of 16 and 18 are voidable (that is, a court may set them aside). In the ordinary course of business, many contracts (such as minor purchases) are still carried out with children.
  4. formality
    The contract must be documented to the level of formality required by law. In 1985, the Requirements of Writing (Scotland) Act cleaned up the law in this area, specifying when a written document was needed. Basically, gratuitous promises, trust deeds, and contracts involving land must be written.
  5. legality
    No contract to break the law is valid.
    It is assumed that if you're breaking one area of the law, you don't deserve the protection of another area in enforcing your contract. If I promise to sell you a bunch of E's for a given sum, and sell you aspirin instead, don't bother to sue me.

Note the absence of a sixth criterion, a central component of the other write-ups in this node. This is the major area where Scots law differs from the rest of the world: there is no requirement for compensation. Benefit (or rather, material benefit) does not have to be mutual - unilateral obligations, known as gratuitous promises, are valid contracts in certain circumstances.

Invitations to Treat

When considering Scots contract law, if is important to distinguish between an offer and an invitation to treat. An invitation to treat is a way of saying, "Make me an offer. I am willing to trade." In the real world, it also sets the price of the offer that the seller is likely to accept. It is not in itself an offer, subject to acceptance.

The display of goods in a shop, advertisements on a shop window, and "for sale" ads in the paper are all invitations to treat. A vendor is not required to accept the offers that come as a result of that invitation, and may impose additional conditions when forming the actual contract. (Note that false advertising is still a crime - it is simply not a violation of contract law.)

In the real world, the distinction between an invitation to treat and an offer to sell is in the small print. A vendor can add conditions to the contract formed by accepting an offer to buy, even though those conditions were not stated in the invitation to treat. The best example of this is actually a company that failed to add conditions at the right moment.

The owners of a car park posted a sign inside the ticket gates, stating that they did not accept liability for lost or stolen items. They argued that the ticket barrier was an invitation to treat. The contract, they said, was formed when a car was parked. Therefore, the terms and conditions were notified before formation of a contract, and parking the car constituted acceptance of those terms. The plaintiff (who had had his car stolen) argued that the contract was formed when he took the ticket from the entry gate, at which time the exclusion of liability was not visible, and therefore not part of the contract. (The car park company lost, and now post the exclusion of liability by the ticket barrier. However, the case does illustrate the difference between an invitation to treat and an offer).

Note that a tender or quote, for instance from a builder, constitutes an offer rather than an invitation to treat. Such an offer is binding.

Revocation of Offer

So you've made an offer, and it's a ghastly mistake. If you can't revoke it before it is accepted, you'll be bound by a contract. How can you do this? Alternatively, you want to accept an offer and have a contract. How can you tell if the offer still stands?

An offer (that has not yet been accepted) is revoked when:

  1. The offeror tells the offeree that it is revoked.
  2. The other party makes a counter-offer.
    It is then up to the original offeror to accept, make another counter-offer, or walk away.
  3. Either party dies or becomes insane.
  4. A time limit was set on the offer, and that time limit expires.
  5. A "reasonable" amount of time passes after an offer with no set time limit.
    I'm sure you can imagine how much time and effort has gone into defining the word reasonable.

Revocation of Acceptance

Can't be done. Offer + Acceptance = Contract, remember? The only way to (in effect) revoke an acceptance is to prove that the contract formed is void or voidable. If it fails on one of the five basic criteria at the top of this write-up, then a court may either refuse to enforce it (if it is void), or set it aside (if it is voidable). Otherwise, the contract stands, and you violate it at your legal peril.

Source: Scottish Business Law, Second Edition, by Moira McMillan and Sally McFarlane, 1996.

I am not a lawyer, and nothing in this write-up constitutes legal advice. The textbook I used is out of date, and the law changes all the time. If you need legal advice, contact a solicitor; the best this write-up can do is help you communicate with any legal advisor you hire.