A contract is formed on the parties coming to an agreement on all but one matter or all but some matters, provided that the agreement is otherwise an agreement within the meaning of subsection (1).

But where a party explicitly requires that, for a contract to be formed, there must be agreement on a specific matter there is no contract unless the parties come to an agreement on that matter.

For the purposes of subsections (1) to (3), whether there is agreement or not may be determined from the statements and conduct of the parties (whether or not such statements and conduct consist of, or include, the acceptance of an offer).

The contract is formed on the offeree’s beginning to perform the acts in question.

Subsections (1) and (2) are subject to section 11(1)(b).

Subsections (1) and (2) are without prejudice to the application of any relevant enactment, or rule of law, in relation to the constitution of a unilateral promise.

Subsection (1) is subject to subsections (3) and (4).

An offer in relation to the formation of a contract lapses on a fundamental change of circumstances and having lapsed can no longer be accepted.

But an offer such as is mentioned in subsection (1) does not lapse where, after it is made but before a contract is formed, the offeror or offeree becomes insolvent.

Subsections (1) to (4) are without prejudice to the application of any relevant enactment, or rule of law, in relation to the transaction with regard to which the offer is made.

In subsection (2)(b), “incapable” has the meaning given to that expression by section 1(6) of the Adults with Incapacity (Scotland) Act 2000.

But any such conduct as is mentioned in subsection (1)(b) must be conduct of which the offeror is, or ought to be, aware.

Silence or inactivity is not in itself to be taken to show such assent.

This section is without prejudice to section 2(2) and (3).

Subsection (2) is without prejudice to section 2(2).

Performance of an act as described in section 3(1) is effective only if it is begun before the expiry of any period of time mentioned in subsection (1).

Sections 13(3) and (4) apply for the purposes of subsection (2)(a) as they apply for the purposes of section 13(1).

The period begins on the taking effect of the notification of the offer.

In relation to the formation of a contract, a notification to a person of an offer, acceptance, counter-offer, withdrawal, rejection, revocation or declaration takes effect on reaching that person.

Subsection (1) is subject to section 11(1).

For the purposes of subsection (1), a notification reaches a person when it is made available to the person in such circumstances as make it reasonable to expect the person to be able to obtain access to it without undue delay.

In this Part (except where the context otherwise requires), a reference to a “postal service” is to be construed in accordance with the definition of “postal services” in section 27(1) of the Postal Services Act 2011.

In this Part, any reference to the taking effect of a notification is to be construed in accordance with section 13.

Sections 22 to 24 apply in relation to any breach of contract, or anticipatory breach of contract, except in so far as the parties to the contract have agreed otherwise.

The parties to a contract may agree that the Law Reform (Contributory Negligence) Act 1945 is to be disregarded in determining any question as to reducing, by virtue of a breach of the contract by a party, any damages recoverable from the other party.

An agreement of the kind referred to in subsections (1) to (3) may be express or implied.

Subsection (2) applies where any two parties to a contract (those parties being in this section referred to as “PA” and “PB”) are each in breach of the contract.

PA is entitled to exercise any right, or pursue any remedy, arising out of PB’s breach provided PB’s breach occurs before the contract is lawfully rescinded for PA’s breach.

On a contract being lawfully rescinded for breach of contract, this section and sections 19 to 21 apply if a party to the contract received any benefit from the performance by another party of an obligation under the contract.

But this section and sections 19 to 21 do not apply in respect of any benefit which fully reciprocated the performance of such an obligation by the party which received the benefit.

The party which received the benefit is in those sections referred to as “the recipient”.

The benefit must be returned to the other party provided that the other party concurrently returns any benefit it received from the performance by the recipient of an obligation under the contract.

In so far as the performance was a payment of money, the amount received must be repaid.

In so far as the benefit was not a payment of money but is transferable by the recipient, it must be transferred to the other party unless it would be unreasonable or impracticable to do so, in which case its return is to be by the payment to the other party of its value.

The requirement to return a benefit includes a requirement to return the fruits of the benefit (whether natural or civil).

This section applies where the recipient is required, by section 18(6) or (7), to pay the value of a benefit.

The payment is the value of the benefit as at the time of the performance by the other party.

Where there was an agreed price, the value of the benefit is that proportion of the price which the value of the actual performance bears to the value of the promised performance.

Where there was no agreed price, the value of the benefit is the sum of money which a willing and capable provider and a willing and capable recipient would reasonably be taken to have agreed for the actual performance.

But subsections (2) to (4) are subject to subsection (6).

The recipient’s liability to pay the value of a benefit is reduced to the extent that, as a result of the non-performance of an obligation owed by the other party to the recipient (being an obligation under the contract) the recipient is compelled, without compensation, either to dispose of the benefit or to sustain a disadvantage in order to preserve it.

This section applies where the recipient is required, by section 18(6), to transfer a benefit.

The recipient must pay compensation for any reduction in the value of the benefit as a result of a change in the condition of the benefit between the time of receipt and the time of transfer to the other party.

The recipient must pay the other party a reasonable amount for any use which the recipient made of the benefit (except in so far as the recipient is liable to pay compensation to the other party under section 20(2) in respect of that use).

The effect of the contractual retention must not be clearly disproportionate to the effects of the breach or anticipatory breach referred to in subsection (1).

PA may contractually retain part of an obligation in order that the contractual retention is not clearly disproportionate in terms of subsection (4).

PA may exercise contractual retention until PB has performed the obligation referred to in subsection (1) or has paid damages in lieu of performance.

For the purposes of subsection (1), a notification must be written or oral.

In proceedings disputing a contractual retention on the basis of section 22(4), it is for the party disputing the contractual retention to show that the contractual retention is clearly disproportionate to the breach or anticipatory breach.

In proceedings for breach of contract, it is a defence for a party to show that their failure to perform an obligation constitutes contractual retention.