The Bill will also allow contracts to be delivered electronically, removing the need to physically post documents.
The Committee found that the challenges of the current system for concluding contracts have led to some contracts being concluded under other legal systems where execution in counterpart is used. The bill, if passed, has the potential to encourage greater use of Scots Law.
Convener of the Committee, Nigel Don MSP said:
“As a Committee we support the general principles of this Bill.
“Whilst it may seem like a technical change, from the evidence we received, it was clear that it will make the process of agreeing contracts in Scots law one which has real scope to result in efficiencies and savings for businesses in Scotland.
“More generally the bill should enhance the reputation of Scots law and encourage more contracts to be signed under Scots law.”
The Committee’s report made the following recommendations, including:
Current system of signing contracts:
· It is apparent to the Committee that the problems associated with the current system in Scotland have, to an extent, led to a drift away from contracts being made under Scots law as parties determine that it would be easier to switch a contract to English law than to deal with the problems associated with the current system.
Potential benefits of the bill:
· The Committee considers that the Bill would appear to offer scope for savings and efficiencies to be made.
· The Committee considers the certainty of knowing from the outset that the contract can be conducted under Scots law and executed via the electronic delivery of a traditional document to be one of the Bill’s greatest benefits.
Practical challenges of the Bill:
· The Committee is not persuaded that the Bill will lead to an increase in instances of fraud and error where legal documents are signed under Scots law.
· Whilst acknowledging that instances of fraud and error may still occur when parties use execution in counterpart, the Committee is satisfied that sufficient safeguards are in place to guard against the risk of this happening.
· The Committee supports the use of electronic signatures, considering that they can provide a secure means of agreeing contracts and help prevent instances of fraud and error.
· The Committee is therefore supportive of any steps being taken to facilitate an increase in their use and welcomes the Law Society of Scotland’s electronic SMART card scheme which will provide all of its members with an electronic signature.
The Committee took oral evidence on the Bill over five sessions between June and October. Evidence was taken from a range of law bodies, commercial law firms, business and academic representatives, as well as from Registers of Scotland, the Scottish Law Commission (SLC) and the Minister for Energy, Enterprise, and Tourism.
The Bill is the first Scottish Law Commission Bill (SLC Bill) to be considered by the Committee following changes to Standing Orders in June 2013 which altered the Committee’s remit, allowing it to take the lead role in scrutinising certain SLC Bills.