A Guide to Doing Business in Scotland Commercial Contracts in Scotland

To maintain its daily operations, every organisation must enter into a variety of commercial contracts. To reduce the risk to business operations in relation to such contracts, it is critical that these are clear, precise and legally binding so businesses minimise commercial risk.

 

In Scotland, commercial contracts (although there are some exceptions) do not require to be in writing and there does not require to be any form of consideration. Nonetheless it is advisable that contracts are documented in writing due to the practical difficulties that an unwritten contract can cause with regard to commercial operation and enforcement and litigation in the event of a dispute.

Be aware

If a signatory does not have the requisite capacity to bind a party, the contract will not be legally binding and it is therefore important to check that the parties have the proper capacity to enter into a contract.

For example, in Scotland, if a director signs a document in the presence of a witness, the company will be bound to the terms of the agreement.

Unfair contractual terms and consumer protection

The laws in Scotland and the UK provide various protections for consumers due to the imbalance in bargaining power between the parties.

Find out more

Sales and marketing agreements

In Scotland and the UK, there are some commercial sales contracts that are regulated, e.g. the engagement of agents. These regulations give protection to commercial agents with regard to such terms as termination, limitations on post-termination restrictions, compensation or indemnity following termination. There are also competition laws relevant to distribution and franchise agreements.

Promotion and advertising

There are commercial terms which need to be considered in contracts with regard to advertising both online and offline, such as the general advertising rules enforced by the Advertising Standards Authority.

Compliance and enforcement

Execution of the commercial contract is not the end of the process as there needs to be ongoing monitoring and communication between the parties to ensure the contract is operating properly and the terms are being correctly implemented. Breach of contract occurs when one of the parties has failed to perform its obligations under the terms of the contract.

Key components of a valid contract in Scotland

  1. Designations i.e. the names and addresses of the parties.
  2. Defined terms e.g. a definition of the “Services” to be provided or “Products” to be supplied.
  3. The price or charges to be paid as well as the payment terms and interest provisions.
  4. Delivery obligations and the transfer of risk and title, where relevant.
  5. Length/duration of the contract.
  6. Termination events e.g. material breach and the consequences of termination.
  7. Limitations on liability, for example, in Scotland, it is impossible to exclude liability for death, personal injury or death but financial limits on liability can be enforced provided they are reasonable.
  8. Warranties and indemnities with regard to the actions (or omissions) of the parties.
  9. Obligations of confidentiality to ensure the protection of commercially sensitive information.
  10. Audit rights in relation to certain obligations e.g. royalties/commissions or quality criteria.
  11. Governing law for the contract e.g. Scots law and the jurisdiction and forum for disputes e.g. internal escalation for processes, the courts (Scottish), arbitration or mediation etc.
  12. Rights of assignation e.g. can either party assign its rights and/or obligations to a third party.

Our Awards & Accreditations

  • Shortlisted for Firm of the Year at the Scottish Legal Awards 2022.

  • In 2016, we became one of the first law firms in Scotland to become Living Wage accredited employers.

  • Winners of Corporate & Commercial Team of the Year and Family Law Team of the Year at the Scottish Legal Awards 2020.

  • Our Real Estate team won the Property Team of the Year Award at the British Legal Awards in 2018.

  • Winner of SME of the Year at the Scottish SME Awards 2017, hosted by Scottish Business Insider.

  • Highly Commended for Commercial Team of the Year at the British Legal Awards 2016.

  • We are a proud member of the Legal Sustainability Alliance, a network of law firms committed to working collaboratively to reduce our environmental impact

  • In 2019, MacRoberts achieved Cyber Essentials Plus certification, a UK Government entry-level information security standard. 

  • MacRoberts holds the ISO 9001:2015 certification for Quality Management, the most widely recognised quality management system standard in the world.

  • MacRoberts holds the ISO14001:2015 certification for Environmental Management, demonstrating our ongoing commitment to environmental awareness.

  • MacRoberts holds the ISO27001:2013 certification for Information Security, an internationally recognised security gold standard.

  • Business continuity is a critical element of the Business Management System at MacRoberts and we hold full accreditation with the ISO 22301:2019.

  • MacRoberts is a member of IP Inclusive, a network of intellectual property professionals working to make our community more equal, diverse and inclusive.

  • We are active members of the PRIME Programme – an organisation that focuses on ensuring a career in law is open to talent from all economic and social backgrounds.

  • MacRoberts supports the Scottish Business Pledge, a values-led partnership between Government and business that is based on boosting productivity and competitiveness through fairness, equality and sustainable employment.

  • We are supporters of the Partnership for Change, a network of organisations and individuals who share a common ambition to improve diversity on boards and in senior leadership.

  • MacRoberts is a Disability Confident employer, and are committed to disability equality across our firm.

  • MacRoberts fully supports flexible working practices and supports family-friendly working practices.

  • MacRoberts is a member of The Glass Network, Scotland's organisation for LGBT+ allied legal professionals.
  • In 2022, MacRoberts received a Bronze Award in Stonewall's Workplace Equality Index for our commitment to LGBTQI+ inclusivity in the workplace.

  • MacRoberts is a longstanding member of Scotland Food & Drink, the leading trade association for Scotland's food and drink industry.

  • MacRoberts is an Associate Member of SELECT, Scotland's largest construction trade association.