Meeting of the Parliament

Meeting date: Thursday, September 21, 2017

Official Report 876KB pdf

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Contract (Third Party Rights) (Scotland) Bill: Stage 3

The next item of business is a debate on motion S5M-07774, in the name of Annabelle Ewing, on the Contract (Third Party Rights) (Scotland) Bill at stage 3.

Before the debate begins, I point out that the Presiding Officer is required under standing orders to decide whether, in his view, any provision in the bill relates to a protected subject matter—that is, whether it modifies the electoral system and franchise for Scottish parliamentary elections. If it does, the motion to pass the bill requires support from a supermajority of members. That is a two thirds majority of all members, or 86 members.

In this bill’s case, the Presiding Officer has decided that no provision in the Contract (Third Party Rights) (Scotland) Bill relates to a protected subject matter. Therefore, the bill does not require a supermajority to be passed at stage 3. I am sure that we are all relieved to hear that.

15:42  

I refer members to my entry in the register of members’ interests, where they will find that I am a member of the Law Society of Scotland. I hold a practising certificate, but I am not currently practising.

It gives me great pleasure to open this stage 3 debate on the Contract (Third Party Rights) (Scotland) Bill and to invite members to agree to pass the bill this afternoon. I thank the Delegated Powers and Law Reform Committee members for their hard work and careful scrutiny of this narrow and specialist bill—they have been a great credit to the Parliament. I thank MSPs across the chamber for their comments on the bill during its passage through the Parliament, as well as the organisations and individuals who provided oral and written evidence to the committee. I am also very grateful to the Delegated Powers and Law Reform Committee clerks for their support.

I pay special thanks to the Faculty of Advocates. Its members have given their time and expertise generously as we have developed the legislative proposals on arbitration. I also thank all the witnesses who have supported the process and highlighted helpful improvements to the bill. Last, but not least, I thank the Scottish Law Commission. As always, the commission’s advice and views have been invaluable.

As I indicated during the stage 1 debate, the bill has its origins in the Scottish Law Commission’s “Review of Contract Law Report on Third Party Rights”, which was published in July 2016. This is the third bill to be considered as part of the SLC bill procedure. I take the opportunity to state that the process in place to scrutinise such bills continues to work very effectively; it is clear that we can continue to have confidence in that process.

I have mentioned the bill’s specialist nature, but it became clear through the scrutiny process that its provisions have the potential to impact on any one of us who may find ourselves the third party to a contract, so ensuring that the bill fulfils the policy aims of making the law fairer, clearer and more consistent is important.

As we have heard, these are the first significant developments to the law in this area in nearly 100 years.

The Contract (Third Party Rights) (Scotland) Bill has been widely welcomed by the legal profession and other professions, such as members of the Royal Incorporation of Architects in Scotland, recognising as they did the potential usefulness of the provisions for construction law.

The concept of third-party rights in Scots law is termed jus quaesitum tertio. I know that colleagues have become expert in the term as we have gone through the various debates on the bill, but jus quaesitum tertio dates back to the 17th century and the term is still used today. It has the literal meaning of “right acquired by a third party”.

For a third-party right to be in existence, the current law requires that the contracting parties intended to benefit the third party and that the right must be constituted irrevocably. However, this common-law doctrine is rarely used in Scotland and has been the subject of some criticism on the basis that it is inflexible and does not meet modern standards. The law has also been criticised as being unclear, with Lord Reed of the United Kingdom Supreme Court remarking that there is a need for commercial parties to have

“clearer rules in relation to third party rights under contract”.

The absence of confidence in the law as it stands among Scots law practitioners means that English law is sometimes chosen in place of Scots law to govern transactions that are otherwise Scottish in nature. The current uncertainty over third-party rights and the lack of flexibility therefore damage the reputation of Scots law by limiting its use.

The law as it stands is simply not working well for most people, if at all. We are aware that workarounds such as resorting to English law or the use of collateral warranties have been adopted to compensate for the law not being fit for purpose, but those workarounds can bring their own difficulties and issues.

A clear, positive and readily accessible statement of the law in a short statute will improve the standing and value of Scots law domestically—and internationally, given the multijurisdictional nature of many of the transactions in which contracts are created. The bill therefore abolishes the existing common-law rule and establishes a statutory basis for the operation of third-party rights in Scotland.

Most importantly, the bill addresses the issue of irrevocability. For a third-party right to be in existence, the current law requires that the right must be irrevocable, so when the contract is formed—assuming that the criteria for the creation of jus quaesitum tertio are met—the contracting parties are unable to withdraw or change the third-party right. This is at odds with the freedom of the contracting parties themselves to modify, cancel or otherwise amend the terms of the contract.

Much of what is contained in the bill is intended to be the default position. It remains open to the contracting parties to define exactly what they intend to happen. Overall, I believe that the bill strikes the right balance by providing an effective legal framework for third-party rights that does not cut across party autonomy. I am pleased that this is a view that was shared by a number of witnesses. As the Scottish Law Commission points out in its business regulatory impact assessment,

“the Bill is general in its application and not confined to any particular sector or group. A wide range of sectors will potentially be able to make use of it.”

Voting for the Contract (Third Party Rights) (Scotland) Bill today will ensure that an important area of the law is subject to long-overdue reform. It is an area that could impact on any of us at any time should we find ourselves as third parties to a contract. For that reason, it is important that the law meets expectations and is fit for purpose, and I believe that these reforms will achieve that aim.

I move,

That the Parliament agrees that the Contract (Third Party Rights) (Scotland) Bill be passed.

15:48  

Before I start, I want to pay tribute to the work of my colleague, John Scott, who was convener of the current DPLR Committee at the start of this session and a member of its predecessor committee. He can take a considerable amount of credit for the smooth and constructive, yet careful and rigorous, way that the bill has been scrutinised. I thank him and the committee.

I have had a lot of catching up to do on contract law and third-party rights. It was not something that we talked about much in my previous job as a Scottish Sun journalist, nor is it the big talking point on the number 31 bus in East Kilbride, but it is an important bill.

As I said, this has been a constructive process. As John Scott said in the stage 1 debate, this is the third Scottish Law Commission bill to be scrutinised by the Parliament. The Scottish Law Commission bill process itself is relatively new and was created to improve the implementation rate of Scottish Law Commission reports. To put it simply, the process is there to update, simplify and improve the law in Scotland. As parliamentarians, lawmakers and representatives of the people, we welcome that.

The bill follows the Scottish Law Commission’s report, “Review of Contract Law: Report on Third Party Rights”, which was published in July 2016. I thank the commission and in particular Professor Hector MacQueen for their constructive and helpful engagement with the Parliament at all points in the process.

The bill proposes changes to the law in Scotland that allows parties to a contract to create rights for third parties. The main aim of the bill is to make the law clearer and more usable in that area.

Some may find the bill quite dry, technical and ever-so-slightly dull; I might even have fallen into that trap, but that would be to miss the point. This is a bill that provides clarity in law, not just for politicians, Queen’s Counsels and judges, but for ordinary men and women in everyday situations in all our constituencies.

The bill means that if a family holiday goes wrong, family members who did not book the break themselves but still suffered the holiday from hell will be able to enforce their rights under statute. It means that, under statute, an informal carer will be able to enter into a contract to get building work done on behalf of a client who suffers from dementia and lacks the capacity to make that contract. And it means that a subcontractor who is running a small business and struggling to pay their bills will have the statutory right to claim payment from the contractor who signed the original contract. For real people, in everyday situations, the bill will ensure fairness and equity.

As I said, in what was a constructive process, the Scottish Law Commission engaged with the Parliament from the start and will doubtless do so again. I also thank the Scottish Government—in particular, the minister, Annabelle Ewing—for listening to the DPLR Committee and responding to the will of the Parliament.

The Government’s stage 2 amendments responded to the concerns of witnesses such as the Faculty of Advocates, the Law Society of Scotland and others, and to the recommendations in the committee’s stage 1 report. The amendments cleared up any semblance of doubt over the enforcement of the right in relation to arbitration, and they removed the potential for unintended consequences of the application of existing third-party rights under the common law of jus quaesitum tertio—or something like that—after the provisions of the bill are commenced.

The amendments ensured that what will emerge following the parliamentary process will be even clearer than the bill that was introduced. I thank the minister and her officials for their constructive, democratic and thoughtful approach.

On 5 September, the First Minister announced that in this year’s programme for government there will be a prescription bill, which the DPLR Committee expects to scrutinise. I look forward to scrutinising that bill and to engaging constructively with the Scottish Law Commission. Indeed, I look forward to holding the Scottish Government to account as we work together to improve Scots law and ensure that it remains relevant and competitive alongside other legal systems.

Perhaps most important, I look forward to hearing and championing the views of those who are affected by the legislation, from advocate to artist, solicitor to student and professor to punter.

United States Supreme Court judge Louis Brandeis said:

“If we desire respect for the law, we must first make the law respectable.”

The work of the Scottish Law Commission in seeking to update and improve Scots law to make it relevant and competitive is to be commended, and I thank the commission for its work on the bill. I support the motion in the name of the minister, that the Contract (Third Party Rights) (Scotland) Bill be passed.

Thank you, Mr Simpson. You are surrounded by advocates and I do not think that they are finding this the least bit dry.

15:54  

This afternoon, we conclude the passage of the Contract (Third Party Rights) (Scotland) Bill. For those of us who contributed to the stage 1 debate, I imagine that much of today’s debate will be fairly familiar. This is not the most debated, controversial or wide-ranging piece of legislation that we have considered, but that does not diminish its value.

I thank the Scottish Law Commission for its work on the bill. The commission plays a significant role in ensuring that our laws are relevant, accessible and consistent. For over 50 years, it has worked to recommend laws to improve, simplify and update the law of Scotland. In the past 20 years, the Scottish Parliament has provided greater opportunities for taking forward its work, and high-profile—even contentious—pieces of legislation have originated from it. They include the Abolition of Feudal Tenure etc (Scotland) Act 2000, which took considerably longer to pass than the bill that we are considering, and the legislation on the protection of the rights and interests of adults who are incapable of managing their own affairs. However, the Contract (Third Party Rights) (Scotland) Bill has passed with a degree of consensus. I note that such was the consensus that, at stage 2, MSPs were entirely content with the minister’s amendments.

I thank the committee members for their work on the bill and all the witnesses who gave evidence to the committee. The expansion of the role of the Subordinate Legislation Committee to include law reform is proving to be effective. We owe a debt of gratitude to the many witnesses who give us their time and expertise to support the legislative process and the work of the Parliament. Indeed, the witnesses provided effective reasoning to the committee, which highlighted those issues in the stage 1 report. Their input has been invaluable.

The discussion at stage 1 persuaded the minister to lodge a number of amendments at stage 2, including amendments to provide greater clarity to section 9 and its relationship with section 1, following discussions with the Faculty of Advocates. In speaking to the amendments, the minister said that a number of the points that the faculty raised

“go beyond third-party rights into possible wider changes to the law of arbitration”

and that she did not

“consider the bill to be the right vehicle for addressing all the points that were raised by the Faculty of Advocates.”—[Official Report, Delegated Powers and Law Reform Committee, 27 June 2017; c 2.]

Will the minister in closing reflect on the merits of those points from the Faculty of Advocates and on whether the Government intends to pursue a different route to addressing them?

The minister also recognised the Law Society of Scotland’s argument that section 10 is superfluous, and she lodged amendments to address that, as well as amending sections 12 and 13.

The amendments that were agreed indicated that there was a desire to deliver a bill that is clear, efficient and readily understood.

The bill that we intend to pass, which originated from the important work of the Scottish Law Commission, has received considerable scrutiny from the Parliament, and there has been valuable insight and improvement from suggestions that other interested parties made. It will provide a new statutory framework with clearer rules on third-party rights and greater clarity in Scots law. However, there is recognition that the act is unlikely to be widely adopted at any time soon and that practitioners will continue to use the established workarounds or English law. Although there is substantive evidence that supports the introduction of the bill, its use is likely to be limited, with a preference for the familiar and a tendency towards caution to be anticipated. However, in time, if the benefits of the act are clear, that may encourage legal practitioners and their clients to use it, particularly in the pursuit of flexibility. It provides an additional tool to be used alongside existing alternatives.

What role does the Scottish Government see for itself and its partners in promoting the potential benefits of the legislation? Raising awareness of it and the opportunities that it presents could increase the application of the law, which would lead to increased confidence and familiarity. I hope that the Government will consider the merits of taking that work forward once we have concluded this afternoon’s business.

15:58  

Anything that demystifies the legal process so that it is better understood by the layperson and improves access to justice can only be good. That is why I am happy to support the Contract (Third Party Rights) (Scotland) Bill at stage 3. The bill will replace the current law, which is causing a great deal of uncertainty and confusion.

The Delegated Powers and Law Reform Committee, which was the lead committee, took evidence from a wide variety of stakeholders, who welcomed the reform. I suppose that it could come under the category of being a commonsense improvement. The Royal Incorporation of Architects in Scotland said that it will clear up

“areas of ambiguity and doubt”,

and the Law Society of Scotland stated:

“The law on this issue is outdated compared to the approach of other modern legal systems”.

The general aim of the bill is to provide a new statutory framework with clearer and more usable rules on third-party rights. The proposed changes are based on recommendations that were made by the Scottish Law Commission, which found that the existing law is no longer fit for purpose—or, to put it another way, it is long past its sell-by date.

Under the current law, it is not clear whether third parties have a right to claim damages for breach of a third-party right so, as I understand it, the bill strengthens the rights of the third party. Examples of where such rights might apply are insurance contracts, company contracts, construction contracts and, of course, pensions, where an employer’s pension scheme might allow a third party to be nominated as the beneficiary if an employee dies while in employment.

Time limits for bringing claims under the current law are also very unclear. The general rule is that, in most cases, a claim can no longer be made five years after the day on which loss, injury or damage first occurred. However, the Prescription and Limitation (Scotland) Act 1973 does not even mention third-party rights. Under Scots law, third-party rights have to be irrevocable, but there is uncertainty as to what that actually means, and the SLC believes that the need for irrevocability is one of the main problems with the current law. Put simply, the rule of irrevocability is too inflexible and is one of the main problems with the current law. That rule in itself would be cause for a new statutory framework.

The bill also includes rules under which third-party rights to arbitrate could be created. In England, Wales and some other countries, the law enables third-party disputes in certain circumstances to be dealt with by arbitration. However, Scottish arbitration legislation under the Arbitration (Scotland) Act 2010 does not deal expressly with third-party rights, and the bill will correct that.

I end with the good news that the bill is not expected to result in any new costs; indeed, there is an argument that it could provide savings to businesses and the legal profession.

I stated at the outset that I applaud anything that brings clarification to legal matters and enhances access to justice. For that reason, I am happy to recommend the Contract (Third Party Rights) (Scotland) Bill to the Parliament.

16:01  

I am delighted to see further progress in the passage of the bill and I welcome the opportunity to take part in the stage 3 debate. I have been involved in the scrutiny of the bill in my role as a member of the Delegated Powers and Law Reform Committee. I have enjoyed the process and, over the months, my initial view that the measure was worthy of support has never wavered. Since I spoke in the stage 1 debate back in May, amendments have been made that make the bill even more fit for purpose. They included the tightening of the language that is used to ensure that the provisions are readily understood and other measures that were unanimously agreed to by the committee.

The committee heard compelling evidence from bodies such as the Scottish Law Commission that the existing law really needs to be updated. That was brought home when, during discussion on the bill, reference was made to case law going back to Wood v Moncur in 1591. Case law in the centuries since then has only added to difficulties with interpretation, flexibility and clarity, to such an extent that the Law Society of Scotland has said that many lawyers are not comfortable with giving advice in an area of the law that is so unclear.

As regards modern day commercial activity, the current law clearly is not working. Many groups choose to enter into contracts under the more flexible terms that are set out under the revised law in England and Wales. Since 1999, the law there has been in sharp contrast to the irrevocable nature of the law here in Scotland. The need for irrevocability in the current law is one of its main problems and has led to significant barriers to the use of third-party rights, as it restricts the freedom of the contracting parties.

I hope that another of the pleasing effects of the bill will be a return of parties, happy once more to use the law of Scotland in settling disputes and seeking remedy. Reform will not only remove concerns that limit the usage of Scots law in commercial transactions but keep Scots law fit for purpose for modern usage. The bill will bring much-needed clarity to the law and it will remove many of the barriers and address many of the concerns that the Scottish Law Commission and others have told us about. The bill will not only assist business but be of great benefit to individuals, whether they are booking a family holiday or are a third-party beneficiary of a life insurance policy.

Further, the bill clarifies that a third party could be entitled to any remedy to which a contracting party would be entitled, and it removes any doubt as to whether third parties have the right to claim damages. It will bring our law more into line not only with the law of our neighbours in England and Wales but with that of friends across the Commonwealth, in places such as Singapore, New Zealand and several Australian states, which in recent years have moved away from positions similar to the current law in Scotland.

In conclusion, I thank all my colleagues on the Delegated Powers and Law Reform Committee, the former convener John Scott, the current convener Graham Simpson, ministers, parliamentary staff and all those from outside the Parliament who have assisted us in our role.

The bill gives us the opportunities that I have mentioned; it gives us clarity and flexibility, and it restores confidence that Scots law on this topic is among the most up to date in the world. It will be of great benefit to both businesses and individuals. I am delighted to continue my support for the bill this afternoon.

16:05  

As another member of the Delegated Powers and Law Reform Committee, it is a pleasure to follow Alison Harris. As you have heard, Presiding Officer, over the past several months, the committee has been the lead committee on the bill. It is fair to say that we have become fairly well acquainted with the arguments for why the change in the law is necessary.

As I previously set out during the stage 1 debate on the bill, the evidence of those from whom we have received submissions—including the Law Society of Scotland, the Scottish Law Commission and the Faculty of Advocates—is clear that the current common-law arrangements are not sufficient and that clarification is required. As other colleagues have said, the fact that there is so much agreement on the content of the bill is welcome. The largely uncontroversial nature of the bill also undoubtedly means that members will be repeating many of the same points throughout this short debate.

When reading the Official Report of the stage 1 debate, I was struck by Murdo Fraser’s comments—I do not think that he is in the chamber—in which he rhymed off all the challenges that we face as MSPs and said that, despite his own legal background, he had found it quite challenging to construct a lengthy speech on the bill. I am not sure whether that was because of the bill’s dry and technical nature or because we all agree so much on its merits. I associate myself with that sentiment of consensus.

I thank the witnesses who gave expert evidence to the committee over several committee meetings. I also thank the clerks for their support throughout the process. I echo Graham Simpson’s remarks in his tribute to John Scott, whom we already miss from the committee. However, I am sure that Graham Simpson will be an able replacement. We are already learning about our new convener and the fact that he spends time on the number 31 bus in East Kilbride—you might be interested to hear that, Presiding Officer.

Witnesses have told us that codifying and updating the law on third-party rights will provide clarity, flexibility and revocable rights, which will promote the use of Scots Law. That was an important point for everyone on the committee.

Ross Anderson from the Faculty of Advocates suggested that the bill might benefit people who might not have access to expensive legal advice. He made an important point when he said:

“One of the great advantages of the bill is that it sets out, in modern language, what the law actually is.” —[Official Report, Delegated Powers and Law Reform Committee, 21 March 2017; c 8.]

I pay tribute to the Scottish Law Commission for being a leader on the issue and for proposing the changes to Parliament.

Although the changes appear to be largely technical and not, on the face of it, to be of mainstream and pressing importance, the issue of third-party rights is important and the change will make a difference to many people, as the minister pointed out in her opening speech. As Rona Mackay noted, the change to the law could benefit many people, from those involved in insurance contracts to those involved in construction contracts and pensions.

I want to pick up one point that arose in the evidence to the committee in respect of future enforcement of the law. It has been said that the bill will promote the use of Scots law, but although there has been widespread support for the bill, witnesses have suggested that they do not expect the bill’s provisions to be adopted straight away.

I hope that we will see the bill used and adopted in Scotland. I also hope that the Scottish Law Commission and the Law Society of Scotland, among others, can play their part in raising awareness of the changes among their members to ensure that those who need the provisions of the bill will be able to make good use of them.

I am no legal expert, but the evidence that the committee heard clearly highlighted that the codifying of third-party contract rights will be important to improving the use and reputation of Scots law.

I welcome the amended bill.

16:09  

I put on record my thanks to the former convener of the DPLR Committee, John Scott, for his chairing of the committee, particularly as the bill progressed through it. John was a fine convener and I am sure that Graham Simpson will be, too—I wish him well in his new role. It can be a challenge to take part in scrutinising a bill at the end of its progress, but Graham Simpson made an excellent contribution today, for which I thank him.

The bill is not contentious, as we can gather from the speeches that we have heard from around the chamber. It provides the opportunity to codify and modernise the common law on third-party rights. As was stated during the passage of the bill, the current law has caused some concern and confusion, but this bill, which was proposed by the Scottish Law Commission, will rectify that, which stakeholders have welcomed.

This is the third such bill from the SLC and the first in this parliamentary session. I was a member of the DPLR Committee in the previous session, when we scrutinised a similar bill, the Legal Writings (Counterparts and Delivery) (Scotland) Bill. At that time, I thought that the DPLR Committee was a useful avenue for Parliament to use to deal with law reform, and I am genuinely delighted that the committee now has the power and responsibility to look at law reform and to assist with that wider issue in Scotland.

The DPLR Committee has been supportive of the bill, as those who provided evidence suggested. Paragraphs 27 to 40 of the committee’s report touch on the speed of law reform and the introduction of the bill. The evidence shows that there was not much concern about that.

I return to a point that I made in committee and during the stage 1 debate. The minister stated in the stage 1 debate that, when she next met Lord Pentland, she would raise with him the issue of “bundling”. The SLC proposals relate to smaller, focused legislative improvements, but I asked the minister whether she and the Scottish Government, along with the SLC, would consider whether further SLC bills could incorporate more than one area of law reform. I am pleased that the minister provided a commitment to explore that issue in the future. Law reform does not take place regularly or in a vacuum and, as the bill and the area that it covers highlight, if it is possible to improve and update the law through having more SLC bills that cover multiple areas bundled together, we could make even more headway with law reform. However, we are not alone. Similar legislation was first mooted in Westminster in 1937, with a bill being presented to the UK Parliament in 1999.

Paragraphs 51 to 61 of our report highlight that, under the bill, the codification of the law of third-party rights provides certainty for users of Scots law. Law firms will be able to use the legislation, instead of using expensive collateral warranties or law from other jurisdictions. During the stage 1 debate, Murdo Fraser referred to collateral warranties, which were also touched on as we went through the evidence. Collateral warranties can be expensive and there was a hint that some organisations might still prefer to use them, because of the revenue that they can generate. The bill will help us deal with that and it will help Scots law. It will ensure that cases that do not use English law can use Scots law.

Witnesses were clear that there will not be a rush to use the new legislation, because training will certainly be required once the bill has been enacted. Nonetheless, it will, in time, be used for a greater number of contracts, and that can only be of economic benefit to Scotland.

Although the bill is short—it has only 15 sections—it was clearly well written, as only seven amendments were lodged, which were agreed to unanimously at stage 2.

I echo others’ comments by thanking the SLC, the Scottish Government, everyone in the DPLR team and witnesses for their efforts in bringing the bill to a successful conclusion.

16:14  

I once again thank the Scottish Law Commission for undertaking the work that has resulted in the Contracts (Third Party Rights) (Scotland) Bill, which we are debating at stage 3. In ensuring that our legal system is fair, balanced and just, we must listen to the people who work daily in their legal fields. The Parliament took that approach with the bill.

I also thank the Delegated Powers and Law Reform Committee for its informative stage 1 report, which gave us an insight into why we need to make this small but crucial legal change. Speeches from around the chamber today have been supportive of the principle behind the bill and the need to make the change. In the short time that I have, it is difficult for me to reflect on all of them, but I am grateful for the consensual and constructive way in which colleagues have approached the debate, which was reflected in their speeches.

The bill has support from across the legal profession and has been backed by a range of stakeholders. Its general principles allow us to ensure legal certainty and flexibility in advancing third-party rights. Replacing the existing common law with a statutory version will end reliance on the ad hoc development of case law. That legal certainty should also allow parties who enter into a contract to use Scots law, not laws from other jurisdictions.

The policy memorandum informs us that the bill will promote the use of Scots law. However, witnesses who spoke to the Delegated Powers and Law Reform Committee raised a note of concern that the legal profession might not adopt the bill’s provisions following its ascent to an act. Witnesses indicated that legal practitioners and clients might continue to use familiar practices such as collateral warranties and English law. We will have to be mindful of that in the coming years to ensure that the bill’s ambitions are achieved. Scrutiny will be of key importance as the bill moves forward. Third-party rights must become more flexible, more adaptable and easier to understand and apply.

Another aim of the bill is to make it easier for contracting parties to create and remove third-party rights. The Law Society of Scotland and the Faculty of Advocates welcome the abolition of irrevocability. The abolition of the rule will also ensure that protections and balances are required for third parties that enter into contracts.

Scottish Labour will support the bill because we want a legal system that guarantees certainty while providing flexibility and fairness for all parties. In addition, when things go wrong, we need the right to proper arbitration. The bill can deliver those outcomes and is an important step forward. We are happy to support it and the motion in the minister’s name at decision time.

16:18  

I echo the thanks of my colleague Graham Simpson to our colleague John Scott, who was the convener of the DPLR Committee when the bill was introduced to Parliament, for his sterling work on the bill and in that committee. He did not shy away from dealing with issues of detail in their occasional horror.

No doubt we are all agreed that simplification and clarification of the law is a good thing. As I commented in my speech in the stage 1 debate on the bill, the case of Carmichael v Carmichael’s executrix is a good illustration of the human importance of what we do in making law—law that can be for the good or the ill, even if it appears to deal with mundane and technical issues.

I will not repeat for the sake of speaking the areas already mentioned by others in which the bill will clarify and improve the law of Scotland, such as the current inflexibility of the irrevocability rule and the enforceability of third-party rights in relation to damages. Is this adieu to jus quaesitum tertio, as we lawyers pronounce it—no disrespect to my colleague Graham Simpson? Lord Stair spoke of that third-party right in I.10.5 of the second edition of his “Institutions of the Law of Scotland”, which was published in 1693, as quadrating to our customs.

I hasten to add, by reference to my entry in the register of interests, as a practising advocate, that Stair is no longer the daily resort of a Scottish court practitioner, nor is the case that Lord Stair referred to. That was Auchmoutie v Laird of Mayne, which was decided on 25 November 1609 and recorded in “Morison’s Dictionary of Decisions” at page 12126. We would not expect it to be, as it related to an action of “spuilzie of teinds” and—a very ancient term—the “circumduction of the term”, which was no longer applied in the “modern form of procedure”, according to the seventh edition of “Bell’s dictionary and digest of the law of Scotland”, which was published in 1890. There is a serious point to make. Unless an act, even an act of this Parliament, is entirely clear, the courts can be thrown back on historic terms and case law.

I made certain comments in the previous debate, including on section 10(1) of the bill as introduced, which related to renunciation by the third party. However, that provision does not appear to have remained in the bill.

The policy memorandum to the bill stated:

“The principal policy aim of the Bill is to replace the current common law”.

The financial memorandum referred to the abolition of the jus quaesitum tertio rule, but reference was made in the explanatory notes to the importance of having a clear method of rejecting the third-party right if desired, hence section 10(1) of the bill as introduced.

In her letter to the DPLR Committee dated 24 May 2017, the minister said that the Scottish Government had come to the view that section 10(1) was superfluous. She wrote:

“It is simply a statement of what is already a matter of general principle.”

Presumably, that is a general principle of the common law, which, at least, raises a question mark over the operation of the act. Question marks lead back to Stair, Auchmoutie, Bell and the Laird of Mayne.

I ask the minister whether, notwithstanding section 12, the bill that we pass into law today merely modifies the jus quaesitum tertio rule, completely abolishes the rule, or codifies the rule to make it purely statutory in the act-to-be—in other words, in the bill that we will vote on today. If there is no clear answer to that question, it could be goodbye, hello to jus quaesitum tertio.

It is very difficult for a Presiding Officer who has to know whether words are appropriate.

16:22  

What can I say? On the Government side of the chamber, we verge to the view that it will be goodbye jus quaesitum tertio, but I will be happy to write in detail on the detailed point that Gordon Lindhurst raised.

I thank all members who have spoken in the debate for their contributions and their interest in this piece of legislation, which has demonstrated the importance of the bill and of modernising our law on third-party rights. As we have seen, we have been wending our way from jurisprudence that dates back to the 16th century through that from various centuries in between to bring us up to speed in the 21st century. In itself, that demonstrates the need for a fresh look at the matter.

I welcome Graham Simpson to his new role as convener of the Delegated Powers and Law Reform Committee. He recognised that, although this is perhaps not the most exciting of bills that the Parliament has had the opportunity to scrutinise, it is nonetheless important as it sets forth important rights for our constituents, which is what we should always come back to when we are debating matters in this chamber.

I welcome the support that has been expressed from the outset for the reforms, and I am grateful for the time that members have taken to engage with what is quite a discrete and specialist area of contract law and for the constructive way in which they have approached the scrutiny of the bill. I very much welcome the careful consideration that has been given.

The bill has, undoubtedly, benefited from a willingness among stakeholders to participate fully in the development of the legislation. There has been little, if any, disagreement about the need for the reforms, and the process has been more about ensuring that the provisions meet the aims of the reforms.

I again thank the committee for its supportive and helpful stage 1 report, which enabled us to focus clearly on a few issues that might have benefited from further consideration. We took on board the committee’s views and we spoke further with key stakeholders. We were therefore able at stage 2 to lodge a few amendments, which have ensured that the bill is clear and usable and that a small gap in its application was plugged. We are confident that the amendments that we made to the bill at stage 2 have further improved it. That was a very useful process, and all credit goes to the hard-working, diligent members of what is now Mr Simpson’s committee.

I am of the firm view that any opportunity to enter into an informed discussion with stakeholders about various issues enhances policy considerations. In response to the specific question raised by Claire Baker, I would say that we indeed addressed some of the issues that were raised by the Faculty of Advocates, in particular regarding arbitration. My door is always open to members of the faculty should they wish to pursue any of the issues further.

The ability to create third-party rights is important. There are many reasons for third-party rights to be created and, as we have heard, those apply as much to individuals as to businesses. They provide vital entitlements and protections for individuals and businesses. Contracting parties to a contract and those who are provided with third-party rights in a contract should all benefit from the law being clearer, up to date and more flexible, for we all deserve a legal framework that is fit for purpose. The bill will deliver that.

In the few minutes that I have left, I will deal with a couple of themes that have recurred during the passage of the bill; indeed, they have been referred to this afternoon. I hope that we are about to pass the bill, and a key issue is, of course, what happens next. How do we encourage recourse to the legislation? Reform of this kind often turns out to have a momentum of its own.

Professor MacQueen has spoken personally about the bill at various contract law conferences, and I am sure that that method of spreading the word will continue. During the passage of the bill, Jonathan Gaskell and Craig Connal also spoke about the role of the profession and practitioners in raising the profile of the eventual legislation.

I am confident that there are strong advocates for the bill among the profession. Numerous positive articles have already been written and published about the legislation, and all of that will continue. David Wedderburn of the Royal Incorporation of Architects in Scotland spoke about getting in at the ground level. He indicated that the Royal Incorporation of Architects would be issuing practice notes to members alerting them to when the bill becomes an act.

All those actions will help to ensure that the relevant people are aware of the change in the law and what it could mean for them. Once people start to use the provisions in the bill, that, too, should instil confidence that the law is now fit for purpose. The Scottish Government stands ready to do what we can to help the process along.

I am optimistic that, given the clear benefits of the bill in saving time and money, people will no longer need to look to workarounds such as applying the law of England, which is more costly for contracts here in Scotland, or using collateral warranties—I am optimistic that those workarounds will no longer be necessary, so we can save time and money. I am therefore optimistic that that will be a great incentive to members of the legal profession in properly advising their clients.

An analogy with the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015—again, a Delegated Powers and Law Reform Committee bill—is perhaps apposite here. Prior to that legislation being passed by the Parliament, the inability of documents to be executed in counterpart meant that Scots law was less attractive in the commercial world. However, we have received some qualitative anecdotal feedback that supports the view that the 2015 act has had a positive impact in that regard. It has generated efficiencies. For some, it has made the decision to use Scots law easier. We see no reason why the Contract (Third Party Rights) (Scotland) Bill would not have a similar effect in improving and encouraging the use of Scots law to create third-party rights.

In response to a point made by Stuart McMillan—I know that he raised it in the committee—on having discussions with Lord Pentland about the approach to the reform process, I am to meet with Lord Pentland, I believe, in the next few weeks, and I will of course be happy to raise that point directly with him.

I believe that the Contract (Third Party Rights) (Scotland) Bill is a worthy one for the Parliament’s consideration. It will bring much-needed reform, and it will help individuals and businesses. It will make the law of Scotland more modern, bringing us from where we have been earlier today—the 16th century—right up to the 21st century. Once again, I thank members across the chamber for their stated support during this stage 3 debate, and I invite them to pass the bill tonight.