Law of Obligations Act
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
Passed 26 September 2001
(RT1 I 2001, 81, 487),
entered into force 1 July 2002,
amended by the following Acts:
22.04.2004 entered into force 01.05.2004 - RT I 2004, 37, 255;
11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86;
19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523;
05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336.
Part 1
General Part
Chapter 1
General Provisions
§ 1. Application of Act
(1) The provisions of the General Part of this Act apply to all contracts specified in this Act or other Acts, including employment contracts and other multilateral transactions, contracts which are not regulated by law but are not in conflict with the content and spirit of the law, and obligations which do not arise from a contract.
(2) If a contract has the characteristics of two or more types of contract provided by law, the provisions of law concerning such types of contract apply simultaneously, except provisions which cannot apply simultaneously or the application of which would be contrary to the nature or purpose of the contract.
(3) The provisions of this Act concerning contracts apply to contracts entered into by more than two parties (multilateral contract) unless they are contrary to the nature or purpose of the contract.
§ 2. Definition of obligation
(1) An obligation is a legal relationship which gives rise to the obligation of one person (obligated person or obligor) to perform an act or omission (perform an obligation) for the benefit of another person (entitled person or obligee), and to the right of the obligee to demand that the obligor perform the obligation.
(2) The nature of an obligation may oblige the parties to the obligation to take the other party’s rights and interests into account in a certain manner. An obligation may also be confined thereto.
§ 3. Bases for obligation
An obligation may arise from:
1) a contract;
2) unlawful damage;
3) unjustified enrichment;
4) negotiorum gestio;
5) a public promise to pay;
6) other bases provided by law.
§ 4. Imperfect obligation
(1) An imperfect obligation is an obligation which the obligor may perform but the performance of which cannot be required by the obligee.
(2) The following are imperfect obligations:
1) an obligation arising from gambling, except for an obligation arising from a lottery or betting organised on the basis of a permit;
2) a moral obligation the performance of which complies with public mores;
3) an obligation assumed to secure performance of an imperfect obligation;
4) an obligation which is an imperfect obligation pursuant to law.
(3) Anything which has been delivered for an imperfect obligation to be performed shall not be reclaimed.
(4) The provisions of law concerning obligations apply to an imperfect obligation unless the application of such provisions is contrary to the nature of the imperfect obligation.
§ 5. Principle of party autonomy of Act
Upon agreement between the parties to an obligation or contract, the parties may derogate from the provisions of this Act unless this Act expressly provides or the nature of a provision indicates that derogation from this Act is not permitted, or unless derogation is contrary to public order or good morals or violates the fundamental rights of a person.
§ 6. Principle of good faith
(1) Obligees and obligors shall act in good faith in their relations with one another.
(2) Nothing arising from law, a usage or a transaction shall be applied to an obligation if it is contrary to the principle of good faith.
§ 7. Principle of reasonableness
(1) With regard to an obligation, reasonableness is to be judged by what persons acting in good faith would ordinarily consider to be reasonable in the same situation.
(2) In assessing what is reasonable, the nature of the obligation, the purpose of the transaction, the usages and practices in the fields of activity or professions involved and other circumstances shall be taken into account.
Chapter 2
Contract
Division 1
General Provisions
§ 8. Definition of contract
(1) A contract is a transaction between two or more persons (parties) by which one party undertakes or the parties undertake to perform an act or omission.
(2) A contract is binding on the parties.
§ 9. Entry into contract
(1) A contract is entered into by an offer being made and accepted or by the mutual exchange of declarations of intent in any other manner if it is sufficiently clear that the parties have reached an agreement.
(2) Upon acceptance of an offer, the contract is entered into when the acceptance reaches the offeror. In the case of acceptance by an act which is not an express declaration of intent, the contract is entered into as of the offeror becoming aware of the performance of the act unless, by virtue of the offer, practices which the parties have established between themselves or a usage, the contract is deemed to have been entered into as of the performance of the act.
(3) If certain terms must be agreed upon pursuant to an agreement between the parties or at the request of one party, the contract shall not be deemed to have been entered into until agreement has been reached on such terms, unless otherwise provided by law.
§ 10. Entry into contract by auction
(1) In the case of an auction, a contract is deemed to have been entered into upon acceptance of the best tender. The person conducting the auction is presumed to be authorised to accept the best tender.
(2) A tenderer shall be bound by the tender thereof until a better tender is made. In the absence of a better tender, the tenderer shall not be bound by the tender thereof if the tender is not accepted within a reasonable period of time as of it being made.
(3) If a tender is not followed by a better tender, the last tender shall be accepted. If several persons have made equal tenders at the same time and such tenders are not followed by a better tender, the person conducting the auction has the right to select the best tenderer from among the participants in the auction who made equal tenders.
(4) If the terms of an auction prescribe the right of the person conducting the auction to decide on the best tender, the best tender shall be accepted by publication of the corresponding decision within the period of time prescribed in the terms of the auction or, in the absence thereof, within a reasonable period of time. Until such time, persons who have made tenders shall be bound by their tenders.
§ 11. Format of contract
(1) A contract may be entered into orally, in writing or in any other form if no required format is provided for the contract by law.
(2) If, pursuant to law or an agreement between the parties or at the request of one party, a contract must be entered into in a specific format, the contract shall not be deemed to have been entered into until the specified format is given to the contract.
(3) If a contract must be entered into in a specific format, agreements on security, other accessory obligations, assignment of claims or assumption of obligations arising from the contract shall also be entered into in such format unless otherwise provided by law or the contract.
(4) A written contract is deemed to have been entered into when the parties have signed the contract or have exchanged contractual documents or letters signed by both parties. The law may provide that a written contract is also deemed to have been entered into when the contract has been signed by the obligated party only.
(5) If a contract must be notarially certified or notarially attested, the contract is entered into as of the notarial certification or notarial attestation of the contract. If mutual declarations of intent made for the entry into a contract are authenticated or certified separately, the contract is entered into as of certification or attestation of the last declaration of intent.
§ 12. Validity of contract
(1) The validity of a contract is not affected by the fact that, at the time of entry into the contract, performance of the contract was impossible or one of the parties did not have the right to dispose of the thing or right which is the object of the contract.
(2) A contract shall also be valid with regard to the universal successors of the parties.
§ 13. Amendment and termination of contract
(1) A contract may be amended or terminated on the agreement of the parties or on another basis prescribed by the contract or law.
(2) If a contract is entered into in a specific format pursuant to an agreement between the parties, amendment or termination of the contract need not be in such format unless the contract provides otherwise.
(3) If a contract prescribes amendment or termination of the contract in a specific format, a party cannot rely on such condition of the contract if the other party could infer from the party’s conduct that the party agreed to the amendment or termination of the contract in another format.
§ 14. Precontractual negotiations
(1) Persons who engage in precontractual negotiations or other preparations for entering into a contract shall take reasonable account of one another’s interests and rights. Information exchanged by the persons in the course of preparation for entering into the contract shall be accurate.
(2) Persons who engage in precontractual negotiations or other preparations for entering into a contract shall inform the other party of all circumstances with regard to which the other party has, based on the purpose of the contract, an identifiable essential interest. There is no obligation to inform the other party of such circumstances of which the other party could not reasonably expect to be informed.
(3) If persons who engage in precontractual negotiations do not reach an agreement, no legal consequences arise for the persons from the negotiations. A person shall not engage in negotiations in bad faith, in particular if the person has no real intention of entering into a contract, nor break off negotiations in bad faith.
(4) If information not subject to disclosure is submitted to a person in the course of precontractual negotiations, the person shall not disclose such information to other persons or use it in bad faith in the person’s own interests whether or not a contract is entered into.
§ 15. Party’s awareness of deficiencies of contract
(1) If a party has assumed the obligation to engage in preparations for the contract or to inform the other party of circumstances relating to the preparations for the contract and the contract is void due to failure to adhere to a formality, the other party shall be compensated for the damage created due to the fact that the other party believed the contract to be valid.
(2) If, upon entry into a contract, one party is or should be aware of circumstances which do not constitute a violation of formalities but render the contract void or if such circumstances are caused by the party, the party shall compensate the other party for the damage specified in subsection (1) of this section.
(3) Compensation for damage pursuant to the provisions of subsection (2) of this section shall not be demanded if the other party was also aware or should have been aware of circumstances rendering the contract void or if the contract was rendered void due to the party’s restricted active legal capacity or the unconformity of the contract with good morals.
(4) If a person was unaware of circumstances with legal effect due to gross negligence, it is deemed that the person should have been aware of the circumstances.
§ 16. Offer
(1) An offer is a proposal to enter into a contract in a manner which is sufficiently defined and which indicates the intention of the offeror to be legally bound by the contract to be entered into if the proposal is accepted.
(2) A proposal to enter into a contract is not an offer if the person making the proposal expressly indicates that the person does not consider the person to be bound by the proposal or if the nature of the proposed contract or other circumstances dictate that the person making the proposal is not bound by the proposal. Such proposal is deemed to be an invitation to make offers.
(3) A proposal which is addressed to a previously unspecified set of persons and is made by sending advertisements, price lists, rates, samples, catalogues or the like or by displaying goods or by offering goods or services to a previously unspecified set of persons on a public computer network is deemed to be an invitation to make offers, unless the person making the proposal clearly indicates that it is an offer.
§ 17. Offer with fixed term for acceptance
(1) If the term for acceptance is fixed in an offer, the offer is effective and may be accepted until the end of such term. An offer is not accepted in due time if the acceptance does not reach the offeror during the term for acceptance
(2) A term for acceptance fixed by the offeror in a letter begins to run as of the date shown in the letter. If the beginning of the term for acceptance is not shown in the letter, the term for acceptance begins to run as of the moment the letter is posted.
(3) If an offer is made in person, by telephone or by other means of instantaneous communication, the term for acceptance begins to run as of the moment the offer reaches the offeree unless otherwise indicated by the offeror.
§ 18. Offer without fixed term for acceptance
(1) An offer which is made in person without a fixed term for acceptance lapses if the offer is not accepted immediately, unless the circumstances indicate otherwise. The same applies to an offer made by telephone or other means of instantaneous communication.
(2) An offer which is not made in person and does not have a fixed term for acceptance is effective during the time which is ordinarily necessary for an acceptance to reach the offeror, with due account being taken of the circumstances relating to the entry into the contract, including the rapidity of the means of communication selected by the offeror.
§ 19. Lapse of offer
(1) An offer lapses if it is not accepted in due time or when a rejection of the offer reaches the offeror.
(2) An offer does not lapse if the offeror, after making the offer but before an acceptance reaches the offeror, is declared to have limited active legal capacity or dies or is declared a bankrupt or the property thereof is subjected to compulsory administration, unless it may be presumed that the offeror intended for the offer to lapse in such case.
§ 20. Acceptance
(1) An acceptance is assent to enter into a contract indicated by a direct declaration of intent or by an act.
(2) Silence or inactivity is deemed to be acceptance only if so provided by law, an agreement between the parties, practices which the parties have established between themselves or a usage observed in their field of activity or profession.
(3) If a person whose economic or professional activities include performance of certain transactions or supply of certain services receives an offer for the performance of such transactions or supply of such services from a person with whom the person has continuing business relations, the person shall respond to the offer within a reasonable time. In such case, silence is deemed to be acceptance.
§ 21. Modified acceptance
(1) A response to an offer which contains conditions which materially alter the conditions of the offer is a rejection of the offer and also a new offer.
(2) A response which contains conditions which do not materially alter the conditions of the offer is an acceptance unless the offeror objects to the altered conditions without delay. In such case, the conditions of the contract are the conditions of the offer with the modifications contained in the acceptance, unless some other intention is indicated in the offer or acceptance.
(3) If an offer and the acceptance refer to conflicting standard terms or conditions, the provisions of § 40 of this Act apply.
§ 22. Late acceptance
(1) If an acceptance does not reach the offeror in due time, the acceptance is deemed to have been sent in due time if it has been sent in such circumstances that, if its transmission had been normal, it would have reached the offeror in due time.
(2) If an acceptance does not reach the offeror in due time because it was not sent in due time, the offeror may deem the acceptance to have reached the offeror in due time if the offeror informs the offeree thereof without delay. If the offeror does not do so, the acceptance is deemed to be a new offer.
(3) If an acceptance does not reach the offeror in due time but it is evident to the offeror that it was sent in due time, such acceptance is deemed to be a late acceptance only if the offeror informs the offeree without delay of the late acceptance. If the offeror does so, the acceptance is deemed to be a new offer.
(4) If an acceptance does not reach the offeror or does not reach the offeror in due time but, pursuant to law, is deemed to have reached the offeror in due time, the contract is deemed to have been entered into at the time the acceptance would have reached the offeror if there had been no delay.
§ 23. Obligations of parties
(1) The obligations of the parties may be set out in the contract or provided by law. The obligations of the parties may also arise from:
1) the nature and purpose of the contract;
2) any practice the parties have established between themselves;
3) any usage observed in the profession or field of activity of the parties;
4) the principles of good faith and reasonableness.
(2) A party shall co-operate with the other party as necessary to enable performance of the obligations by the other party.
§ 24. Contents of obligations of parties
(1) A party may be obligated by a contract to achieve a specific result or to do all that is reasonably possible to achieve that result.
(2) If a party is obligated to do all that is reasonably possible to achieve a result, the party is obligated to make such efforts as reasonable persons in the same field of activity or profession would make under the same circumstances.
(3) If a contract does not expressly indicate whether a party is obligated to achieve a specific result or to do all that is reasonably possible to achieve that result, the obligations of the party shall be determined by taking primarily the following into account:
1) the nature and purpose of the contract;
2) the manner in which obligations are expressed in the contract;
3) the terms and conditions of the contract;
4) the probability of achieving the desired result;
5) the ability of the other party to influence the performance of the obligation.
§ 25. Usages and practices
(1) In the case of contracts entered into with respect to the economic or professional activities of the parties, the parties are bound by any usage they have agreed to apply and by any practice they have established between themselves.
(2) Unless the parties agree otherwise in the case of contracts entered into with respect to their economic or professional activities, they are also bound by any usage which persons who enter into contracts in the same field of activity or profession generally consider applicable and take into account, except where application of such usage would be contrary to law or would be unreasonable under the circumstances.
§ 26. Terms deliberately left open
(1) When entering into a contract, the parties may leave some of the terms open with the intention of reaching an agreement on such terms in the future or leaving the terms to be determined by one party or a third party (terms deliberately left open).
(2) If the parties do not reach an agreement on a term left open or if a party or a third party does not determine the term left open, the validity of the contract is not affected unless it can be presumed that the parties intended otherwise.
(3) If a term left open is to be determined by a party or a third party, the term must conform to the principles of good faith and reasonableness.
(4) If a term left open is to be determined on the basis of circumstances independent of the party which do not exist at the time the term is to be determined, the term shall be determined on the basis of the nearest equivalent circumstance.
(5) If a term determining the extent of a party’s obligation is left open, the other party has the right to determine the term unless otherwise provided by an agreement between the parties or dictated by the nature of the contract.
(6) If a term is to be determined by several third parties, the consent of all of them is required to determine the term. If an amount of money is to be determined by several third parties, the average amount determined by them shall be taken as the term.
(7) If a term left open is to be determined by a party but the party fails to do so during the agreed period of time or, if no such agreement exists, during a reasonable period before the time by which performance of the obligation may be required, or during a reasonable additional term established by the other party for determining the term left open, the right to determine the term transfers to the other party.
(8) If a term left open is to be determined by a party, the party shall determine the term by making a declaration to the other party. If a term is to be determined by a third party, the third party shall determine the term by making a declaration to both parties.
(9) A party may require that a term left open be determined by a court if:
1) the parties fail to reach an agreement on the term;
2) a third party fails to determine the term during the agreed period of time or, if no such agreement exists, during a reasonable period of time before the time by which performance of the obligation may be required;
3) the other party fails to determine the term left open after the right to determine the term has transferred to the other party pursuant to the provisions of subsection (7) of this section.
(10) A court shall determine the terms left open in a contract based on the nature and purpose of the contract.
(11) A party may also require that a court determine a term left open if the term determined by the other party or a third party does not conform to the principles of good faith and reasonableness.
§ 27. Absence of agreement on fundamental terms
(1) If the parties have not agreed or only believe that they have agreed on a fundamental term determining their rights and obligations, the contract shall be valid if it can be presumed that the contract would have been entered into even without an agreement on such term.
(2) In the case specified in subsection (1) of this section, a term which is reasonable based on the circumstances, the intention of the parties, the nature and purpose of the contract and the principle of good faith applies.
§ 28. Determination of price
(1) Contracts entered into in economic or professional activities are presumed to have a price.
(2) Where a contract does not determine the price or a method for determining the price and the nature of the contract or other circumstances do not dictate the price or the method of determining the price, the price to be paid shall be the price generally charged at the time of the entry into the contract at the place of performance of the contract for the performance of such contractual obligations or, if no such price can be determined, a price reasonable under the circumstances.
§ 29. Interpretation of contract
(1) A contract shall be interpreted according to the actual common intention of the parties. If such intention differs from the ordinary meaning of the words used in the contract, the common intention of the parties prevails.
(2) A contract shall not be interpreted on the basis of an incorrect denotation or expression which the parties used due to an error or from a desire to conceal their actual intention.
(3) If one party understands a term or condition of a contract to have a particular meaning and the other party was or should have been aware of such meaning at the time of entry into the contract, the term or condition shall be interpreted according the understanding of the first party.
(4) If the actual common intention of the parties cannot be determined, the contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give to it in the same circumstances.
(5) In interpreting a contract, regard shall be had, in particular, to:
1) the circumstances in which the contract was entered into, including the precontractual negotiations;
2) the interpretation which the parties have previously given to the same term or condition of the contract;
3) the conduct of the parties before and subsequent to entry into the contract;
4) the nature and purpose of the contract;
5) the meaning commonly given to terms and expressions in the field of activity or profession concerned;
6) usages and practices established between the parties.
(6) A term or condition of a contract shall be interpreted together with the other terms and conditions of the contract and shall be given the meaning to be inferred from the nature and purpose of the whole contract.
(7) If a word or expression has several meanings, the word or expression shall be understood in the meaning which best conforms to the nature and purpose of the contract.
(8) In interpreting a term or condition of a contract, an interpretation which renders the term or condition lawful or effective shall be preferred unless otherwise provided by law.
(9) Where a contract is drawn up in several languages which are equally authoritative, the interpretation according to the version in which the contract was originally drawn up shall be preferred if there is any discrepancy between the versions.
§ 30. Acknowledgement of obligation
(1) A contract in which performance of an obligation is promised in such a manner that the promise creates an independent obligation or in which the existence of an obligation is recognised is an acknowledgement of obligation.
(2) An acknowledgement of obligation shall be made by the obligated party in writing unless otherwise provided by law.
(3) An acknowledgement of obligation need not be in writing if it is made on the basis of a current account or if the obligor acknowledges an obligation which has arisen in the course of the economic or professional activities thereof.
§ 31. Merger clause
(1) If parties have agreed in a written contract that the contract prescribes all of the terms of the contract (merger clause), any prior declarations of intent or agreements of the parties which are not embodied in the contract are deemed not to form part of the contract. The prior conduct of the parties shall also not affect the contract.
(2) If a merger clause is prescribed in standard terms, it shall be presumed that the parties intended their prior declarations of intent, acts or agreements to be deemed not to form part of the contract.
(3) In the case of a merger clause, the prior declarations of intent of the parties may be used to interpret the contract.
(4) If, after entering into a contract, a party indicates to the other party by a declaration of intent or by conduct that the party considers a prior declaration of intent or agreement of the parties to form part of the contract or that the party will rely on the prior conduct of the parties, the party shall not rely on a merger clause to this extent.
§ 32. Written confirmation
(1) If a contract is entered into with respect to the economic or professional activities of the parties but is not in written form and if, within a reasonable time after entry into the contract, one party sends a written document to the other party confirming the content of the contract (written confirmation) which contains terms which do not differ materially from the terms agreed upon earlier or do not materially alter them, such terms shall become part of the contract unless the other party objects to them without delay after receipt of the written confirmation.
(2) The provisions of subsection (1) of this section do not apply if the party which sent the written confirmation knew or should have known that the contract had not been entered into or if the contents of the written confirmation differ from the terms agreed upon earlier to such extent that the person who sent the written confirmation cannot reasonably rely on the other party’s consent to the contents of the written confirmation.
§ 33. Preliminary contract
(1) A preliminary contract is an agreement under which the parties undertake to enter into a contract in the future under the terms agreed upon in the preliminary contract.
(2) If, pursuant to law, a contract is to be entered into in a specific format, the preliminary contract shall also be entered into in the same format.
§ 34. Consumer
For the purposes of this Act, a consumer is a natural person who performs a transaction not related to an independent economic or professional activity.
Division 2
Standard Terms
§ 35. Definition of standard term
(1) A contract term which is drafted in advance for use in standard contracts or which the parties have not negotiated individually for some other reason, and which the party supplying the term uses with regard to the other party who is therefore not able to influence the content of the term, is deemed to be a standard term.
(2) It is presumed that standard terms have not been negotiated individually in advance.
(3) Standard terms may be embodied in a contract or form a separate part of a contract. Standard terms may be terms of a contract regardless of the scope of the terms, the manner in which the terms are expressed in the contract or the form in which the contract is entered into.
(4) The general provisions for entering into contracts apply to entering into contracts with standard terms unless otherwise provided for in this Division.
(5) Agreements which derogate from the provisions of §§ 35–39 or 41–45 of this Act to the detriment of the party with regard to whom the standard terms were applied are void.
§ 36. Application of provisions
(1) The provisions of this Division do not apply to contracts concerning relationships under the law of succession or family law or to contracts for the foundation of companies, other legal persons and civil law partnerships, or for the management thereof, or to terms or conditions of a contract which are based on provisions of law which must not be derogated from pursuant to an agreement between the parties.
(2) If the other party to a contract with standard terms is a consumer whose residence is in Estonia or in a Member State of the European Union and the contract was entered into as a result of a public offer, advertisement or other such activity in Estonia or the contract is essentially related to the territory of Estonia for any other reason, the provisions of this Division apply even if the place of business of the party supplying the terms or, if no place of business exists, the residence or seat of such party is not in Estonia, regardless of which state’s law is applicable to the contract.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(3) If the parties to a contract with standard terms act for purposes relating to their economic or professional activities and their places of business related to the contract or the performance thereof are in Estonia, the provisions of this Division apply to the contracts entered into between them regardless of which state’s law is applicable to the contract.
§ 37. Standard terms as part of contract
(1) Standard terms are part of a contract if the party supplying the standard terms clearly refers to them as part of the contract before entering into the contract or while entering into the contract and the other party has the opportunity to examine their contents. Standard terms are also part of a contract if their existence could be presumed from the manner in which the contract was entered into and the other party was given the opportunity to examine their contents.
(2) The parties may, taking into account the provisions of subsection (1) of this section, agree in advance that standard terms apply to certain types of contracts.
(3) Standard terms the contents, wording or presentation of which are so uncommon or unintelligible that the other party cannot, based on the principle of reasonableness, have expected them to be included in the contract or which the party cannot understand without considerable effort are not deemed to be part of the contract.
§ 38. Standard terms and individual agreement
If the content of a standard term contradicts a term individually agreed upon by the parties, the term individually agreed upon applies.
§ 39. Interpretation of standard terms
(1) Standard terms shall be interpreted according to the meaning that reasonable persons of the same kind as the other party would give to them in the same circumstances. In the case of doubt, standard terms shall be interpreted to the detriment of the party supplying the standard terms.
(2) A standard term which is void shall not be interpreted such as to give it content by which the term is valid. If a term can be divided into several independent parts and one of them is void, the other parts remain valid.
§ 40. Conflicting standard terms
(1) If, upon entering into a contract, the parties each refer to their own standard terms, the contract is deemed to have been entered into under the terms which are not in conflict with each other. The provisions of law concerning the type of contract concerned apply in lieu of any conflicting terms.
(2) In the case of conflicting standard terms, the contract is not deemed to have been entered into if one party has explicitly indicated before the contract is entered into or without delay thereafter and not by way of the standard terms that the party does not deem the contract to have been entered into. A party does not have this right if the party has performed the contract in part or in full or has accepted performance by the other party.
§ 41. Validity of contract with standard terms
If a standard term is void or is deemed not to be part of the contract, the rest of the contract is valid unless the party supplying the term proves that that the party would not have entered into the contract without the standard term which is void or is deemed not to be part of the contract. The provisions of law concerning the type of contract concerned apply in lieu of such terms.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
§ 42. Invalidity of standard terms
(1) A standard term is void if, taking into account the nature, contents and manner of entry into the contract, the interests of the parties and other material circumstances, the term causes unfair harm to the other party, particularly if it causes a significant imbalance in the parties’ rights and obligations arising from the contract to the detriment of the other party or if the standard term is contrary to good morals.
(2) Unfair harm is presumed if a standard term derogates from a fundamental principle of law or restricts the rights and obligations arising for the other party from the nature of the contract such that it becomes questionable as to whether the purpose of the contract can be achieved. A standard term is not deemed to be unfair if it relates to the main subject matter of the contract or to the relationship between the price and the value of the services or goods supplied in exchange.
(3) In a contract where the other party is a consumer, a standard term is considered to be unfair if, in particular, the term:
1) precludes the liability arising from law of the party supplying the standard term or restricts such liability in the case where the death of the other party or damage to the health of the other party is caused or in other cases where damage is caused intentionally or due to gross negligence;
2) precludes or unreasonably restricts the claims of the other party vis a vis the party supplying the terms or another party, including the opportunity to set off claims against the claims of the party supplying the terms in the event of total or partial non-performance of any of the contractual obligations by the party supplying the terms;
3) precludes or unreasonably restricts the other party’s right arising from law to refuse acceptance of performance of an obligation and to refuse performance of the party’s obligations in the case of a mutual contract, especially if the right to refuse is made subject to admittance of a deficiency by the party supplying the term;
4) precludes the right of the other party to claim compensation from the party supplying the term for damage caused by total non-performance of the contract or the right to terminate the contract if the party supplying the term performs an obligation in part and the other party has no reasonable interest in partial performance;
5) prescribes that the other party shall, in the event of non-performance of the party’s obligations, pay an unreasonably high contractual penalty to the party supplying the term or an unreasonably high predetermined amount of compensation for damage or other compensation, or the other party is deprived of the opportunity to prove the actual size of the damage;
6) restricts the obligation of the party supplying the term to perform obligations undertaken by a representative of the party or makes performance of the obligations of such party subject to compliance with a particular formality on unreasonable grounds;
7) prescribes that a third party is liable for non-performance of the obligations of the party supplying the term;
8) precludes or restricts rights which the other party could exercise pursuant to law with regard to a third party if the rights arising from the contract to the party supplying the term transfer to such third party;
9) prescribes an unreasonably short term for the other party to submit claims, including an unreasonably short limitation period for claims arising from the contract or law;
10) deprives the other party of the opportunity to protect the party’s rights in court or unreasonably hinders such opportunity from being exercised;
11) unreasonably restricts the other party’s right to use evidence or imposes on the party a burden of proof which, according to law, should lie with the party supplying the term;
12) prescribes that, in the event of a breach of the contract by the party supplying the term, the other party may exercise the party’s legal remedies against the party supplying the term only if the other party has previously filed a claim against a third party with a court;
13) prescribes that performance of the obligations of the party supplying the term is made subject to a circumstance the occurrence of which depends on the party’s will alone, at the same time as the other party undertakes an obligation which is binding on the party regardless of such circumstance;
14) prescribes the right of the person supplying the term to alter the terms or conditions of the contract unilaterally for a reason or in a manner not provided by law or specified in the contract;
15) prescribes that the party supplying the term has the right to determine or increase the price of a movable or service at the time of delivery of the movable or provision of the service without the other party having the right to terminate the contract, except in cases where such terms are lawful terms for price indexation and expressly prescribe the method of adjusting the price;
16) provides the party supplying the term with a unilateral right to deliver a movable without good reason or provide a service with characteristics other than those agreed upon;
17) provides the party supplying the term with the right to unilaterally determine whether the movable delivered or service supplied or the performance of any other obligation is in conformity with the terms and conditions of the contract;
18) provides the party supplying the term with the exclusive right to interpret the contract terms;
19) provides the party supplying the term with the right to unilaterally determine the term for the performance of the party’s obligations or prescribes an unreasonably long or unspecified term for the performance of the obligations of the party supplying the term;
20) prescribes that the other party must perform the obligations thereof even if the party supplying the term does not perform the obligations thereof, or if the other party is deprived of the right to require the party supplying the term to perform the obligations thereof;
21) prescribes the obligation of the other party to make an unreasonably large advance payment before the party supplying the term performs the obligations thereof;
22) provides the party supplying the term with the right to require security of unreasonably high value;
23) prescribes the obligation of the other party to accept goods or services which were not ordered in addition to the goods and services agreed upon;
24) prescribes the obligation of the other party to enter into another contract with the party supplying the term or a third party, unless entry into such other contract is reasonable taking into account the relationship between such contract and the contract with standard terms;
25) provides the party supplying the term with the right to transfer the rights and obligations thereof arising from the contract to a third party without the consent of the other party where this may serve to reduce the likelihood of the contract being performed;
26) precludes or unreasonably restricts the right of the other party to assign claims;
27) prescribes that, at the end of the term of a contract for a specified term, the contract is automatically extended for a period exceeding one year without the other party making a corresponding request;
28) prescribes that a contract for a specified term is extended at the end of the term if the other party does not give notice of the opinion of the party with regard to the extension of the contract at an unreasonably early time before the end of the term;
29) provides the party supplying the term with the right to terminate the contract without giving reasons for the termination if the same right is not provided to the other party;
30) prescribes that, upon unilateral termination of the contract by the party supplying the term, the party may refuse to refund the sums paid by the other party for obligations which the party supplying the term has not yet performed;
31) prescribes an unreasonably long term of advance notice for the other party to terminate the contract;
32) prescribes an unreasonably short term of advance notice for the party supplying the term to terminate the contract;
33) provides the party supplying the term with the right to terminate a contract entered into for an unspecified term without good reason and without a reasonable period of advance notice;
34) precludes or unreasonably restricts the right of the other party to terminate the contract where the party supplying the term fails to perform a fundamental obligation thereof arising from the contract;
35) prescribes that declarations of intent are to be made in a manner other than that provided by law and this causes harm to the other party, except where such specification applies to the format of the declaration of intent of the other party or unless it is prescribed that the party supplying the term may deem the address given thereto by the other party to be correct until the party supplying the term is notified of a new address;
36) enables the party supplying the term to make use of an unreasonably long or insufficiently determined term for acceptance or refusal of an offer;
37) prescribes that, upon performance or non-performance of a particular act, a declaration of intent of a party is deemed to have been made or not to have been made, unless the party supplying the term undertakes to specifically notify the other party of the consequences of the other party’s conduct and gives the other party a reasonable term for confirming the declaration of intent.
§ 43. Specifications concerning credit institutions
(1) The terms specified in clause 42 (3) 14) of this Act is not deemed to be unfair for the other party if a credit institution or other supplier of financial services reserves the right under the standard terms to alter, with good reason and without advance notice, the rate of interest or other charge for financial services to be paid by the other party or to the other party, on the condition that the credit institution or other supplier of financial services is required to immediately inform the other party or other parties of such alteration and that the other parties have the right to terminate the contract immediately.
(2) The terms specified in clause 42 (3) 14) of this Act is not deemed to cause unfair harm to the other party if a credit institution or other supplier of financial services reserves the right under the standard terms to unilaterally alter the terms of a contract entered into for an indefinite period without a good reason specified in the contract if alteration of the terms is not unfair with regard to the other party and if the credit institution or other supplier of financial services undertakes to give advance notice to the other party of any alteration of the terms and to grant the other party the right to terminate the contract immediately.
§ 44. Contracts relating to economic or professional activities
If a standard term specified in subsection 42 (3) of this Act is used in a contract where the other party to the contract is a person who entered into the contract for the purposes of the economic or professional activities of the person, the term is presumed to be unfair.
§ 45. Requirement to terminate application of unfair standard terms
A person or body provided by law may, pursuant to the procedure provided by law, require that a party supplying an unfair standard term terminates application of the term and that the person recommending application of the term terminates and withdraws such recommendation.
Division 3
Contracts Negotiated Away From Business Premises
§ 46. Definition of contracts negotiated away from business premises
(1) A contract negotiated away from business premises is a contract for the delivery of movables or the provision of services where a person engaged in economic or professional activities (supplier) makes an offer to a consumer or makes a proposal to negotiate entry into a contract:
1) in the dwelling or place of work of the consumer or in close proximity thereto, except where the visit to the consumer’s dwelling or place of work in order to make the offer or proposal takes place at the express prior request of the consumer;
2) by addressing the consumer unexpectedly in a public transport vehicle or in the street;
3) outside the business premises of the supplier at a recreational event organised by the offeror or a third party.
(2) The provisions concerning contracts negotiated away from business premises do not apply to contracts where the consumer pays the charge prescribed by the contract upon entry into the contract and the amount of the charge does not exceed 15 euro.
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
§ 47. Application of provisions
(1) The provisions of this Division also apply if the supplier visited the place of work or dwelling of the consumer at the express prior request of the consumer but the consumer, while requesting contractual negotiations, did not know and did not have to know that the offer of movables or services regarding which the contract was entered into was part of the supplier’s economic or professional activities.
(2) (Repealed - 19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(3) If a contract negotiated away from business premises is entered into in Estonia with a consumer whose residence is in Estonia or in a member state of the European Union, the provisions of this Division apply regardless of which state’s law applies to the contract.
§ 48. Informing consumer of right of withdrawal
(1) A supplier shall inform a consumer in writing or by means of any other durable medium accessible by the consumer of the consumer’s right to withdraw from the contract and of the manner and term for exercising such right, setting out the name and address of the supplier and the time of sending or giving the notice.
(2) A notice specified in subsection (1) of this section shall enable identification of the contract regarding which the notice is given. The notice shall be given to the consumer in a manner which enables the consumer to understand his or her rights. Receipt of a notice by a consumer shall be proved by the supplier.
§ 49. Right of withdrawal
(1) A consumer may withdraw from a contract negotiated away from business premises within fourteen days as of receipt of a notice specified in § 48 of this Act. If the consumer receives the notice before the contract is entered into, the term of fourteen days shall be deemed to commence as of the contract being entered into.
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
(2) A consumer is deemed to have used the right of withdrawal within the specified term if he or she has sent a corresponding notice to the supplier within the term specified in subsection (1) of this section.
(3) (Repealed - 19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(4) “If a consumer withdraws from a contract, the sums paid by the consumer shall be refunded to him or her immediately but not later than within thirty days as of the withdrawal from the contract.
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
§ 50. Prohibition on violation of provisions
A person or body provided by law may, pursuant to the procedure provided by law, require a supplier who has violated the provisions of this Division to terminate such violation and refrain from future violation.
§ 51. Mandatory nature of provisions
Agreements which derogate from the provisions of this Division to the detriment of the consumer are void.
Division 4
Distance Contracts for Delivery of Goods or Provision of Services
§ 52. Definition of distance contract
(1) A contract for the delivery of goods or the provision of services entered into between a consumer and the person supplying the object or service for the purposes of the economic or professional activities thereof (supplier) is deemed to be a long distance contract if:
1) the contract is entered into under a marketing or service-provision scheme used by the supplier for the entry into of such contracts, and
2) the contract is entered into after the supplier has made an offer or has made a proposal to the consumer to make an offer, and
3) the supplier and the consumer are not present simultaneously at the same place upon entry into the contract, and
4) the offer and the declaration of intent of the consumer to undertake contractual obligations (order) are made by a means of communication.
(2) Any method which enables a consumer and a supplier who are not in the same place at the same time as one another to organise the exchange of information necessary for negotiations and entry into a contract, in particular the use of telephone, radio, computer, facsimile or television or the delivery of addressed or unaddressed printed matter, including a catalogue or a standard letter, to a consumer, or press advertising with an order form, is deemed to be use of a means of distance communication.
§ 53. Application of provisions
(1) The provisions of this Division apply to a distance contract entered into with a consumer whose residence is in Estonia or in a Member State of the European Union if the contract was entered into as a result of a public offer, advertisement or other such activity in Estonia or is essentially related to the territory of Estonia for any other reason, regardless of which state’s law applies to the contract.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) The provisions of this Division do not apply to contracts which are entered into:
1) by using automatic vending machines;
2) by means of a public telephone with a provider of telecommunications services if the object of the contract is use of a public telephone;
3) for construction work or the transfer of an immovable, or with regard to a real right in an immovable.
(3) The provisions of §§ 54–59 of this Act do not apply to contracts which are entered into:
1) with regard to foodstuffs, beverages or other goods intended for everyday consumption which are delivered to the residence or workplace of the consumer on a frequent and regular basis;
2) with regard to transport, accommodation, catering or leisure services if, upon entry into the contract, the supplier undertakes to provide such services by a specified date or within a specified term.
(4) The provisions of clause 54 (1) 7) and § 56 of this Act do not apply to contracts entered into:
1) for performance of authorisation agreements relating to the issue of instruments the price of which on the money market varies regardless of the supplier, such as securities, money-market instruments, investment instruments, transactions with derivative instruments and exchange and interest rate instruments;
2) for delivery of goods manufactured taking into account the personal needs of the consumer who is a party to the contract;
3) for delivery of goods manufactured according to the conditions established by the consumer;
4) for delivery of goods which due to their nature cannot be returned or are highly perishable or the use-by date of which has expired;
5) for delivery of newspapers, journals or other periodicals;
6) for betting or lottery services;
7) for delivery of audio or video recordings or computer software if the consumer has opened the package;
8) at an auction.
(5) If a distance contract also conforms to the provisions concerning package travel contracts or contracts relating to purchase of right to use buildings on timeshare basis, the provisions of this Division apply together with the specifications provided for such types of contract.
(6) The provisions of this Division shall not preclude or restrict application of other provisions provided by law for the protection of consumers.
§ 54. Informing consumer
(1) Within a reasonable period of time before a contract is entered into, the consumer shall be provided with the following information:
1) the name and address of the supplier;
2) the main characteristics of the goods or services;
3) the estimated time of entry into force of the contract;
4) the price of the goods or services, including taxes and other components of the price and the size thereof;
5) the size of the postal charges, transport costs and taxes which are not included in the price and the costs of using postal services or means of communication if such costs exceed the basic rate;
6) the procedure for payment for the goods or services and the circumstances relating to delivery of the goods or provision of the services and to performance of the contract;
7) the consumer's right of withdrawal pursuant to § 56 of this Act;
8) the term of validity of the offer and the offered price;
9) the minimum term of the contract if the contract is performed continuously or recurrently during a specific term;
10) whether the supplier has the right to deliver goods or provide services other than those ordered or to refuse to deliver the goods or provide the services;
11) if the object is acquired or the service is used on credit, the right of the consumer to withdraw from the credit contract pursuant to the provisions of § 57 of this Act.
(2) The information specified in subsection (1) of this section shall, taking into account the means of communication used, be provided in good faith, in a clear and comprehensible manner, in compliance with good morals and in a manner indicating the commercial purpose of the offer. In the case of communication by telephone, the name of the supplier and the commercial purpose of the telephone call shall be made clearly known to the consumer at the beginning of the conversation.
§ 55. Confirmation of information
(1) If the information specified in subsection 54 (1) of this Act is not communicated to the consumer in writing or by means of any other durable medium accessible by him or her, such information shall be confirmed in writing or by means of any other durable data medium accessible by the consumer not later than during the time of the performance of the contract or, in the case of movables, not later than at the time of delivery thereof.
(2) The following shall be communicated to a consumer in any event:
1) information on the conditions of the right of withdrawal and the details of exercising such right, pursuant to § 56 of this Act;
2) the address of the supplier's place of business to which complaints may be submitted;
3) information on after-sales servicing;
4) information on preconditions for the liability of the supplier and on the existence and conditions of warranty;
5) the conditions for cancellation of a contract if the contract is entered into for an unspecified term or for a term exceeding one year.
(3) The provisions of subsections (1) and (2) of this section do not apply to services which are provided directly by a means of communication and on one occasion only and the charge for which is calculated by the provider of the telecommunications service. The consumer shall also in this case have the opportunity to obtain the address of the supplier's place of business to which complaints can be submitted.
§ 56. Right of withdrawal from contract
(1) A consumer may withdraw from a distance contract within fourteen days. In the case of goods, the term shall commence as of the day on which the consumer receives the goods or, in the case of delivery of goods of the same type, the first part of the goods and on which the obligations provided for in § 55 of this Act are performed. In the case of services, the term shall commence as of the date of entry into the contract if the obligations provided for in § 55 of this Act have been performed.
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
(2) If the supplier has failed to perform the obligations provided for in § 55 of this Act, the consumer may withdraw from the contract within three months as of the date on which the consumer receives the goods or, in the case of services, as of the date of entry into the contract. If information specified in § 55 of this Act is communicated during this three-month term, the consumer may withdraw from the contract within the term specified in subsection (1) of this section. The right to withdraw from a contract for the provision of services expires if the supplier has commenced provision of the service before the expiry of the term for withdrawal with the consent or on the initiative of the consumer.
(3) If a consumer withdraws from a contract, the sums paid by the consumer shall be refunded to him or her immediately but not later than within thirty days as of the withdrawal from the contract. The provisions of §§ 188–194 of this Act apply to other consequences of withdrawal.
§ 57. Withdrawal from credit contract
(1) If goods or services are acquired on credit, the consumer may, in the case of withdrawal under the conditions provided for in § 56 of this Act, also withdraw from the credit contract if:
1) the credit for acquisition of the goods or consumption of the services was provided by the supplier;
2) the credit was provided by a third party on the basis of a prior agreement with the supplier;
3) the credit contract can be regarded as economically uniform with a distance contract for reasons other than those specified in clauses 1) and 2) of this subsection, particularly if a third party used the assistance of the supplier in the preparation of or entry into the contract.
(2) In the case provided for in subsection (1) of this section, the consumer shall not be required to pay interest or expenses. The provisions of §§ 188–194 of this Act apply to other consequences of withdrawal.
(3) If credit is provided by a third party and the amount of the credit has already been paid to the supplier, the rights and obligations of the supplier with regard to the consumer transfer to the creditor in the case of withdrawal by the consumer.
§ 58. Withdrawal from contract for provision of financial services
In the case of withdrawal from a contract for the provision of financial services, particularly investment, banking, insurance and securities transactions and services, the consumer may be required to compensate for the price of the financial services actually provided by the supplier if the price was predetermined by the supplier before entry into the contract. If the price was not predetermined by the supplier before entry into the contract, the consumer may be required to pay such part of the price of the financial services which were the object of the contract which corresponds to the period of time between entry into the contract and withdrawal from the contract.
§ 59. Performance of contract
(1) Unless the parties have agreed otherwise, the supplier shall execute an order of the consumer not later than within thirty days as of communication of the order.
(2) If a supplier is unable to execute an order, the supplier shall give corresponding notice to the consumer and shall refund all amounts paid by the consumer immediately but not later than within thirty days.
(3) In lieu of the goods or services ordered, the supplier may provide the consumer with goods or services of at least equivalent quality and price if this possibility was agreed on by the parties beforehand. In the case of withdrawal by the consumer, the costs relating to the return of the goods shall be borne by the supplier.
§ 60. Restrictions on use of means of communication
An offer may be communicated to the consumer by facsimile, telephone answering machine or electronic mail only with the prior consent of the consumer. Other means of communication which allow individual communication may be used for communicating an order only if the consumer has not expressly forbidden the use thereof.
§ 61. Prohibition to violate provisions
A person or body provided by law may, pursuant to the procedure provided by law, require a supplier who has violated the provisions of this Division to terminate such violation and refrain from future violation.
§ 62. Mandatory nature of provisions
Agreements which derogate from the provisions of this Division to the detriment of the consumer are void.
Division 5
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
Contracts Entered into through Computer Network
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
§ 621. Specifications for entry into contract through computer network
(1) A person engaging in economic or professional activities who enters into contracts through a computer network when selling goods or providing services shall make available to customers suitable and efficient technical means which are accessible and by which customers are able to identify and correct typing errors before transmitting their orders.
(2) Before transmission of an order specified in subsection (1) of this section, the supplier shall notify the customer of:
1) the technical stages involved in entering into the contract;
2) whether the supplier will preserve the text of the contract after entry into the contract and whether the text will remain available to the customer;
3) the technical means for identifying and correcting typing errors;
4) the languages in which the contract may be entered into;
5) the rules observed by the supplier, and the electronic means for examining the rules.
(3) The supplier shall confirm receipt of an order immediately in electronic form.
(4) The order and the confirmation of receipt of the order are deemed to have been received when the person to whom the order or confirmation is addressed has had the opportunity to examine it.
(5) The terms of the contract, including the standard terms, shall be presented to the customer in a manner which enables them to be saved and reproduced.
(6) The provisions of subsections (1)–(3) of this section do not apply if the contract is entered into by electronic mail or any other similar personal means of communication.
(7) Agreements derogating from the provisions of subsections (1)–(5) of this section may be entered into only by persons engaging in economic or professional activities. Derogating agreements do not affect the validity of the contract entered into.
(8) The provisions of this section do not preclude or restrict any obligations of a supplier to provide customers with any other information prescribed by law.
(11.02.2004 entered into force 15.04.2004 - RT I 2004, 13, 86)
Chapter 3
Plurality of Persons in Obligations
Division 1
Plurality of Obligors
§ 63. Joint obligors
(1) If several persons are to perform a divisible obligation, they shall perform the obligation in equal shares. The law or a transaction may prescribe that several obligors shall perform an obligation in unequal shares.
(2) The provisions of subsection (1) of this section do not apply if several persons are to perform an obligation as solidary obligors.
§ 64. Collective obligors
If several persons are to perform the same obligation and they can perform such obligation only collectively, the obligee shall require them to perform the obligation collectively.
§ 65. Solidary obligors
(1) If several persons are to perform an obligation solidarily (solidary obligors), the obligee may require full or partial performance of the obligation from all the obligors collectively, from any one obligor or from some of the obligors separately.
(2) A solidary obligation arises if several persons are to perform an obligation with the same content and performance of the obligation may be required by the obligee only once, and in other cases provided by law or on the basis of a transaction.
(3) A solidary obligation also arises if an obligation is indivisible.
(4) If several persons undertake by a contract to perform an obligation collectively, it is presumed that they are solidary obligors.
§ 66. Waiver of claim
(1) If an obligee wholly or partially waives a claim against a solidary obligor, the other solidary obligors are nevertheless required to perform the obligation in full.
(2) If an obligee reaches an agreement with a solidary obligor that the obligee will waive the obligee’s claim against all of the solidary obligors, the other solidary obligors are also released from the obligation. A solidary obligor may, on behalf of the other solidary obligors, accept a proposal from the obligee that the obligee will waive the obligee’s claim against all the solidary obligors free of charge.
(3) The provisions of subsections (1) and (2) of this section also apply if an obligee waives the obligee’s claim against a solidary obligor before the solidary obligation arises.
§ 67. Defences of solidary obligors
(1) If any one solidary obligor has performed an obligation in full, the other solidary obligors are not liable for the performance of the obligation. The same applies in the case of substituted performance, deposit or set off. A solidary obligor may only set off the obligee’s claim against the obligor’s claim.
(2) Any solidary obligor may set up defences against the claim of the obligee which arise from the solidary obligation or from the obligor’s own legal relationship with the obligee.
(3) If a solidary obligor does not set up a defence against a claim of the obligee which could have been set up by any of the solidary obligors, the solidary obligor does not have a right of recourse against the other solidary obligors to the extent by which the solidary obligation would have diminished as a result of such defence, unless the solidary obligor did not know and did not have to know of the circumstances underlying the defence.
§ 68. Applicability of circumstances with regard to solidary obligors
(1) A solidary obligor shall not be liable for non-performance of the solidary obligation by another solidary obligor.
(2) Consequences arising to one solidary obligor from a delay in acceptance by an obligee or from postponement of the due date for the performance of the obligation also apply to the other solidary obligors.
(3) Circumstances not specified by law which affect the liability of solidary obligors, in particular defences regarding limitation periods, apply only to the solidary obligor concerned unless otherwise dictated by the solidary obligation.
§ 69. Relations between solidary obligors
(1) In relations between themselves, solidary obligors are liable for the performance of the obligation in equal shares unless otherwise provided by law, the contract or the nature of the obligation.
(2) If a solidary obligor has performed the solidary obligation, the claim of the obligee against the other obligors transfers to the solidary obligor (right of recourse of solidary obligor) except to the extent of the solidary obligor’s own share of the obligation.
(3) In the case provided for in subsection 66 (1) of this Act, the other obligors have the right of recourse against the obligor who is released from the solidary obligation to the extent of the obligor’s share of the obligation in relations between the solidary obligors. This does not apply if the obligee reduces the claim thereof to the extent of the share which the obligor with regard to whom the obligee waived the claim is to bear in relations between the solidary obligors.
(4) If a solidary obligation involves performance of acts other than payment of money, the solidary obligor who has performed the obligation may only claim compensation in money from the other solidary obligors.
(5) A solidary obligor may claim compensation for reasonable expenses made by the obligor upon performance of the obligation from the other solidary obligors according to their shares in the obligation. Compensation for expenses shall not be claimed if the expenses are exclusively related to the solidary obligor.
(6) If a solidary obligor fails to perform the share thereof in the obligation with regard to the solidary obligor who performed the obligation, the solidary obligor who performed the obligation and the other solidary obligors shall be liable for the performance of such share proportionally to their shares in the obligation. The claim against the solidary obligor who fails to perform the obligation transfers to the solidary obligor who performed the obligation and to the other obligors.
(7) The provisions of subsections (1)–(6) of this section apply correspondingly to relations between the persons who have secured performance of an obligation by an obligor with securities.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
§ 70. Limitation period for right of recourse by solidary obligor
(1) The limitation period for the right of recourse by a solidary obligor who has performed the solidary obligation expires at the time when the claim of the obligee against the solidary obligor against whom the right of recourse is exercised would expire.
(2) The limitation period for the right of recourse by a solidary obligor shall not expire earlier than six months as of the date on which the solidary obligor performed the obligation or the obligee filed an action with a court against the obligor for the performance of the obligation.
(3) The provisions of subsection (2) of this section do not apply if a solidary obligor performs the obligation after the limitation period for the claim against the obligor or the solidary obligor against whom the obligor exercised the right of recourse has expired.
(4) Claims for compensation for reasonable expenses provided for in subsection 69 (5) of this Act and claims arising from negotiorum gestio or unjustified enrichment which can be filed in lieu of exercising the right of recourse shall expire together with the right of recourse.
Division 2
Plurality of Obligees
§ 71. Joint obligees
If a divisible obligation must be performed for the benefit of several obligees, each of the obligees has the right to require performance of the obligation for the benefit thereof in a share equal to the shares of the other obligees unless law or a transaction provides that the obligees may require performance of the obligation in unequal shares, for their collective benefit or solidarily.
§ 72. Collective obligees
(1) If, pursuant to law, a transaction or the nature of an obligation, several obligees may only require performance of the obligation for their collective benefit, the obligor has the right to perform the obligation only for the benefit of all the obligees collectively.
(2) If an indivisible obligation must be performed for the benefit of several obligees, each obligee may only require performance of the obligation for the benefit of all the obligees collectively unless the obligees are solidary obligees.
(3) Each collective obligee may require performance of the obligation, including the deposit or sale of the thing owed, only for the benefit of all the obligees collectively. Other circumstances which pertain to one collective obligee only do not apply with regard to the other collective obligees.
§ 73. Solidary obligees
(1) If, pursuant to law, a transaction or the nature of an obligation, the obligation must be performed for the benefit of several persons such that each of the persons may require full performance of the obligation, such persons are solidary obligees.
(2) An obligor may perform an obligation for the benefit of all or some of the solidary obligees, even if one of the solidary obligees has already filed an action to claim the performance of the obligation.
(3) Performance of an obligation for the benefit of one of the solidary obligees, including a set-off against a claim of a solidary obligee or deposit for the benefit of a solidary obligee, releases the obligor from performance of the obligation for the benefit of the other solidary obligees.
(4) An obligor shall only set up such defences against the claim of a solidary obligee which the obligor has against the solidary obligee concerned.
§ 74. Applicability of circumstances with regard to solidary obligees
(1) If one solidary obligee delays acceptance of the performance of an obligation, the other solidary obligees are also deemed to have delayed acceptance of the performance of the obligation.
(2) If a solidary obligee becomes an obligor with regard to the same obligation, the obligation terminates. Such solidary obligee shall nevertheless pay the shares of the other obligees thereto pursuant to the provisions of § 75 of this Act.
(3) If a solidary obligee waives the claim thereof or assigns the claim to another person, the rights of the other solidary obligees remain unaffected.
(4) Circumstances not specified in subsections (1)–(3) of this section apply only with regard to the solidary obligee concerned.
§ 75. Relations between solidary obligees
(1) A solidary obligee who accepts the performance of an obligation by an obligor shall pay the other solidary obligees their shares. The shares of solidary obligees shall be equal unless otherwise provided by law, a transaction or the nature of the obligation.
(2) The limitation period for a claim by the other solidary obligees against the solidary obligee who accepts performance of the obligation expires at the time when the claim of the solidary obligees against the obligor would have expired but not before six months as of the date on which the obligor performed the obligation.
Chapter 4
Performance of Obligation
§ 76. Performance of obligation
(1) An obligation shall be performed pursuant to the contract or to law.
(2) An obligation shall be performed pursuant to the principles of good faith and reasonableness, taking into account usages and practices.
(3) Performance of an obligation is deemed to be conforming if the obligation is performed at the right time, at the right place and in the right manner for the benefit of the person who is entitled to accept performance.
(4) If an obligee accepts that which is offered to the obligee as performance of the obligation, the performance is deemed to be full, that which is offered as performance is deemed to be that which was owed and the performance to be conforming.
§ 77. Quality of performance of obligation
(1) An obligor shall perform an obligation with the quality prescribed by the contract or by law. Where the quality of the performance of a contractual obligation is not determinable from the contract or from law, the party shall perform the obligation with a quality not less than average in the circumstances.
(2) If a thing with specific characteristics is owed for performance of an obligation and if things with the specific characteristics may be of different quality, the obligor shall perform the obligation with a quality not less than average.
(3) If a thing with specific characteristics is owed for performance of an obligation and the obligor has done all that is possible on the part of the obligor to perform the obligation, including acquiring the thing with such specific characteristics or separation of the thing from other things with the same specific characteristics, the thing acquired or separated is deemed to be the object of the obligation.
(4) If a person is required to deliver a specific thing, the person shall take reasonable care of the thing until delivery.
§ 78. Performance of obligation by third party
(1) Except where an obligor must, pursuant to law or a contract or due to the nature of an obligation, perform an obligation in person, a third party may perform the obligation in part or in full. If a third party performs an obligation, the obligor is released from the duty to perform.
(2) An obligee may refuse to accept performance of an obligation by a third party if the obligor objects to the performance of the obligation by a third party.
(3) If an obligor has objected to the performance of the obligation by a third party, the obligee shall not refuse to accept performance if the third party performs the obligation in order to avoid compulsory execution with regard to an object which belongs to the obligor but is in the lawful possession of the third party or for which the third party has some other right and if, in the case of compulsory execution, such possession or right would terminate.
(4) A third party who has performed an obligation may exercise the right of recourse or right to claim compensation for the expenses relating to the performance only if such right is determinable from law or the relationship between the obligor and the third party, including unjustified enrichment or negotiorum gestio.
§ 79. Performance of obligation for benefit of unentitled person
(1) If an obligation is performed for the benefit of a person other than the obligee or for the benefit of a person who is not entitled to accept performance in lieu of the obligee, the obligation is deemed to have been performed if the obligation is performed for the benefit of such other person with the consent of the person entitled to accept performance or if performance for the benefit of such person is later approved by the person entitled to accept performance. The obligation is also deemed to have been performed in the case specified in subsection 169 (1) of this Act.
(2) Upon performance of an obligation for the benefit of an obligee with restricted active legal capacity, the obligation is deemed to have been performed if the obligation is performed for the benefit of the obligee with the consent of his or her legal representative or if his or her legal representative approves of the performance. An obligor may perform an obligation for the benefit of the legal representative of an obligee with restricted active legal capacity if the representative has not granted consent to the performance of the obligation for the benefit of the obligee.
(3) If an obligation is performed for the benefit of an obligee who does not have the right to dispose of the claim thereof due to compulsory execution or bankruptcy, the obligation is deemed to have been performed if the person who has the right to dispose of the claim consents to or approves of the performance.
§ 80. Contract for benefit of third party
(1) A contract may prescribe or the nature of an obligation may indicate that the obligation is to be performed for the benefit of a third party in lieu of the obligee (contract for the benefit of a third party).
(2) A third party may require performance of a contract if so prescribed by the contract or determined from law.
(3) If a life insurance contract or life annuity contract prescribes payment of life annuity to or performance of the obligations of an insurer for the benefit of a third party, the third party may require performance of the contract unless otherwise provided by the contract. The same applies to gratuitous contracts if the contract prescribes performance of an obligation by the donee for the benefit of a third party.
(4) A third party for whose benefit a contract is entered into need not be personally identifiable at the time of entry into the contract.
(5) If an obligor must perform an obligation for the benefit of a third party after the death of the obligee, the third party may require performance of the obligation as of the death of the obligee unless the contract or the nature of the obligation indicates that the obligation must be performed later.
(6) The parties may amend or terminate a contract entered into for the benefit of a third party without the consent of the third party unless otherwise provided by law or the contract.
(7) An obligor may set up the same defences against a third party as against the obligee.
(8) If a third party waives a right granted thereto by a contract or if the right expires or is no longer in force, it is presumed that the obligee may designate another third party for the benefit of whom the obligation must be performed or that the obligee may require performance of the obligation for the obligee’s own benefit.
(9) If a third party waives a right granted thereto by a contract, it is deemed that the third party has not had such right. A waiver is valid if a declaration of intent to that effect reaches both parties to the contract.
§ 81. Contract with protective effect for third party
(1) A contract may prescribe the obligation to take into account the interests or rights of a third party to the same extent as the interests or rights of the obligee. Such obligation shall be presumed if:
1) in the course of performance of the contract, the interests and rights of the third party are at risk to the same extent as the interests and rights of the obligee, and
2) the intent of the obligee to protect the interests and rights of the third party can be presumed, and
3) the third party and the intent of the obligee to protect the interests and rights of the third party are identifiable by the obligor.
(2) In the case of non-performance of the obligation specified in subsection (1) of this section, the third party may claim compensation for damage caused thereto.
§ 82. Time of performance of obligation and time when obligation falls due
(1) If the due date for the performance of an obligation is set by or determinable from the nature of the obligation, the obligation shall be performed on such date.
(2) If the term for the performance of an obligation is prescribed by or determinable from the contract, the obligation shall be performed during such term unless the contract or the circumstances indicate that the obligee may determine the due date for performance of the obligation.
(3) If the time for the performance of an obligation is not set and is not determinable from the nature of the obligation, the obligor shall perform the obligation within a reasonable period of time after the entry into the contract or after an obligation has arisen on some other basis, taking into particular account the place, manner and nature of the performance of the obligation.
(4) An obligor shall perform the entire obligation at one time if such performance can be rendered at one time and the contract or the nature of the obligation does not indicate otherwise.
(5) The parties shall perform their mutual contractual obligations simultaneously if such performance can be rendered simultaneously and the contract or the nature of the obligation does not indicate otherwise. If one party is obliged to perform certain acts during a certain period of time and the other party may perform its obligation at one time, such other party shall perform the obligation thereof after the first party has performed the obligation thereof unless otherwise provided by the contract.
(6) An obligor may perform an obligation arising from a contract entered into for the purposes of the economic or professional activities of the obligee during regular working hours and the performance shall be accepted during regular working hours, unless otherwise provided by the contract.
(7) An obligation falls due at the time when the obligee is entitled to require performance of the obligation. Unless otherwise provided by the contract, the obligee may require performance of an obligation upon expiry of the due date or term prescribed for the performance of the obligation. If the time for performance of the obligation is not set and is not determinable from the nature of the obligation, the obligee may require performance of the obligation after a reasonable period of time specified in subsection (3) of this section which is necessary for the performance of the obligation.
§ 83. Performance of obligation in parts
(1) If an obligation must be performed at one time, the obligee may refuse to accept performance of the obligation in parts unless this is contrary to the principle of good faith.
(2) An obligee may refuse to accept performance of an obligation in parts regardless of whether the obligor, upon making the proposal to perform the obligation in parts, offers security for performance of the remaining part of the obligation or confirms performance of the obligation in full.
(3) Additional expenses arising for an obligee from acceptance of the performance of an obligation in parts shall be borne by the obligor.
§ 84. Earlier performance of obligation
(1) An obligee shall not require performance of an obligation before the due date for performance but shall not refuse to accept performance of the obligation before the due date unless the obligee has a legitimate interest in such refusal.
(2) Acceptance by a party of performance of an obligation before the due date shall not affect the time for performance of the party’s own obligation if such time has been set irrespective of the performance of the other party’s obligations.
(3) Additional expenses arising for an obligee from performance of an obligation before the due date shall be borne by the obligor.
(4) If, before the due date for performance, an obligor performs an obligation which involves the duty to pay interest, the obligee may claim interest until the due date prescribed for performance of the obligation. If an obligation performed before the due date does not involve the duty to pay interest, the obligor shall not claim interest from the obligee for the period of time between the performance of the obligation and the due date prescribed for performance.
§ 85. Place of performance of obligation
(1) An obligor shall perform an obligation at the place determined by the contract or by law. If the place of performance of an obligation is not prescribed by the contract or by law, the obligation shall be performed at a place determined on the basis of the nature of the contract.
(2) If the place of performance of an obligation cannot be determined on the bases specified in subsection (1) of this section:
1) a monetary obligation shall be performed at the obligee’s place of business which was most closely related to the obligation at the time when the obligation arose or, if no such place exists, at the residence or seat of the obligee;
2) an obligation to deliver a specific thing or a thing from a specific group of things shall be performed at the place where the thing or group of things was located at the time when the obligation arose;
3) an obligation to deliver a thing which must be produced or prepared after the contract is entered into shall be performed at the place where the thing is produced or prepared;
4) an obligation not specified in clauses 1)–3) of this subsection shall be performed at the obligor’s place of business which was most closely related to the obligation at the time when the obligation arose or, if no such place exists, at the residence or seat of the obligor.
(3) If an obligation must be performed at the place of business, residence or seat of the obligee and the obligee changes the place of business, residence or seat thereof after the obligation has arisen, the obligee may require performance of the obligation at the new place of business, residence or seat on the condition that the obligee bears any related additional expenses and risks.
(4) If an obligation must be performed at the place of business, residence or seat of the obligor and the obligor changes the place of business, residence or seat thereof after the obligation has arisen, the obligor may perform the obligation at the new place of business, residence or seat on the condition that the obligor bears any related additional expenses and risks.
(5) If several alternative places have been determined for the performance of an obligation, the obligor has the right to choose the place of performance unless law provides or the nature of the obligation indicates that such right rests with the obligee or a third party.
§ 86. Alternative obligations
(1) If an obligor is required to perform one of several obligations, the choice shall be made by the obligor unless law or the contract provides or the nature of the obligation indicates that such right rests with the obligee or a third party.
(2) An obligor or an obligee who has the right to choose shall make the choice by informing the other party of the choice. If a third party has the right to choose, the choice shall be made by informing both the obligor and the obligee. After a choice has been made, it is deemed that performance of the chosen obligation only was required from the outset.
§ 87. Transfer of right to choose in case of alternative obligation
(1) If, in the case of an alternative obligation, the right to choose belongs to the obligor or the obligee and the choice is not made during the time period agreed upon or, if no agreement exists, within a reasonable period of time before the obligation falls due, the right to choose transfers to the other party to the obligation.
(2) If the right to choose belongs to a third party and the third party fails to make the choice during the term specified in subsection (1) of this section, the right to choose transfers to the obligor.
§ 88. Performance discharging different obligations
(1) If an obligor is required to transfer money, or objects with specific characteristics, or to provide services of the same type to the obligee for the discharge of different obligations and if the money or objects transferred or the services provided do not suffice to discharge all the obligations, the obligor may specify the obligation for the discharge of which the money or objects are transferred or the services are provided.
(2) If the obligations of an obligor do not have equal security, the obligor shall not resolve to perform an obligation with more security.
(3) An obligor shall not resolve to perform an obligation the performance of which cannot yet be required by the obligee and with regard to which the obligee has a legitimate interest in refusing early performance.
(4) If an obligor, before performance or during a reasonable period of time thereafter, does not specify the obligation discharged by the performance, the obligee may do so if:
1) the obligee informs the obligor of the choice within a reasonable period of time after the performance, and
2) performance of the obligation is lawful, and
3) the obligation has fallen due, and
4) the obligation has not been disputed.
(5) If, under the circumstances specified in subsection (4) of this section, an obligee has chosen which obligation is deemed to have been performed by the obligor but the obligor has objected to the choice without delay, the obligor may choose which obligation is deemed to have been discharged by the performance. In such case, the obligation specified by the obligor is deemed to have been performed.
(6) If neither the obligor nor the obligee has chosen which obligation the money, objects or services are deemed to have discharged, the performance is deemed to discharge:
1) firstly, the obligation which is the first to fall due;
2) secondly, the obligation for which the obligee has the least security;
3) thirdly, the obligation which is the most burdensome for the obligor;
4) fourthly, the obligation which arose first.
(7) If the obligation deemed to have been discharged cannot be specified on the basis of the provisions of subsection (6) of this section, the performance is deemed to discharge all the obligations in proportion.
(8) If an obligor is required to pay expenses and interest in addition to the principal monetary obligation, the performance is deemed to discharge first the expenses, then the interest due and finally the principal obligation.
(9) An obligor shall not specify an order different from the order provided for in subsection (8) of this section for the performance of obligations without the consent of the obligee.
§ 89. Substituted performance of obligation
(1) An obligor may substitute performance of an act necessary for the performance of an obligation with the performance of another act (substituted performance) only with the consent of the obligee, even if the value of the other act is the same as or greater than the value of the act necessary for the performance. If the obligee accepts the performance of the other act as the performance of the obligation, the obligation is deemed to have been performed.
(2) Assumption by an obligor of a new obligation for the benefit of the obligee in order to satisfy the claim of the obligee is not deemed to be substituted performance unless otherwise provided by law or the contract. If the obligee accepts the performance of the new obligation, the initial obligation is also deemed to have been performed.
(3) In the case of substituted performance, the obligor shall be liable for the substituted performance on the same bases as if performance had not been substituted.
§ 90. Costs of performance of obligation
An obligor shall bear the costs of performance of the obligor’s obligations.
§ 91. Manner of performance of monetary obligations
(1) A monetary obligation may be performed in cash. A monetary obligation may also be performed in some other form if so agreed by the parties or if such form is used in the ordinary course of business at the place of payment.
(2) If an obligee has a settlement account in a credit institution in the state in which a monetary obligation is to be performed, the obligor may perform the obligation by transferring the amount due to the account unless the obligee has expressly prohibited this option.
(3) In the case of performance of a monetary obligation by transferring the amount due to the account of the obligee, the obligation is deemed to have been performed when the account of the obligee is credited with the amount due.
(4) If an obligee accepts a cheque, bill of exchange or other similar means of payment as performance of a monetary obligation and the means of payment is later redeemed, the obligation is deemed to have been performed as of acceptance of the means of payment.
(5) If an obligee has accepted a means of payment specified in subsection (4) of this section as performance of a monetary obligation, the obligee may only require performance of the obligation in money if the means of payment is not redeemed.
(6) If an obligee has the right to withhold performance of the obligee’s obligation until performance of a monetary obligation by the obligor and if the obligee has accepted a means of payment specified in subsection (4) of this section as performance of the monetary obligation, the obligee may withhold the performance of the obligee’s obligation until the means of payment is redeemed.
(7) Upon performance of a monetary obligation by post, the obligation is deemed to have been performed as of payment of the money to the obligee.
§ 92. Payment of money at nominal value
A monetary obligation shall be performed at the nominal value of the money unless otherwise provided by the law or the contract.
§ 93. Currency of monetary obligation
(1) The money paid to perform a monetary obligation shall be valid at the time of payment in the state in whose currency the payment is made.
(2) If a monetary obligation is not expressed in a particular currency, it shall be performed in the currency of the place of performance of the obligation (place of payment).
(3) If an obligation is expressed in a currency other than that of the place of payment, the obligor may also perform the obligation in the currency of the place of payment unless the currency is not freely convertible or the parties have agreed that payment in a currency other than that in which the monetary obligation is expressed is prohibited. Regardless of such agreement, the obligee may require performance of the monetary obligation in the currency of the place of payment if it is impossible for the obligor to make payment in the currency in which the monetary obligation is expressed.
(4) If a monetary obligation expressed in a currency other than that of the place of payment is performed in the currency of the place of payment, the obligation shall be converted into the currency of the place of payment on the basis of the average rate of exchange at which the obligee can, at the place of payment and at the time when the obligation falls due, immediately purchase the currency in which the obligation was expressed. If an obligor does not perform a monetary obligation in a timely manner, the obligee may require payment according to the applicable rate of exchange prevailing either at the time when payment is due or at the time of actual payment.
§ 94. Interest on obligations
(1) If interest is to be paid on an obligation pursuant to law or the contract, the interest rate shall be applied on a half-year basis and shall be equal to the last interest rate applicable to the main refinancing operations of the European Central Bank before 1 January or 1 July of each year, unless otherwise provided by the law or the contract.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) The Bank of Estonia shall organise timely publication of the interest rates specified in subsection (1) of this section in the official publication Ametlikud Teadaanded2.
§ 95. Receipt for performance
(1) Upon accepting the performance of an obligation, an obligee shall issue written evidence of acceptance (receipt for performance) to the obligor at the request of the obligor. An obligor may also require issue of a receipt in some other form if the obligor has a legitimate interest therein.
(2) If a third party performs an obligation in lieu of an obligor, a receipt for the performance may be required by both the obligor and the third party.
(3) If an obligation is to be performed for the benefit of a third party, the obligor may require issue of a receipt for the performance from both the third party and the obligee.
(4) If a receipt for performance issued by an obligee is handed over to the obligor by a person other than the obligee, the person is deemed to be authorised to accept the performance of the obligation from the obligor. The person handing over the receipt is not deemed to be authorised to accept the performance of the obligation if the obligor knew or should have known that the person is not authorised to accept the performance or if the receipt has been removed from the obligee’s possession against the obligee’s will.
(5) If a receipt is issued for the performance of a principal obligation, the expenses and interest are also presumed to have been paid.
(6) If an obligee or a third party for the benefit of whom an obligation is to be performed refuses to issue a receipt, the obligor may withhold performance of the obligation until the obligor has obtained the receipt. In such case, the obligee is deemed to have delayed acceptance of the performance of the obligation.
§ 96. Return of debt instrument
(1) If an obligor issues a document certifying the existence of an obligation (debt instrument), the obligor may, upon performance of the obligation demand the return of the debt instrument in addition to or in lieu of a receipt. If the obligee does not return the debt instrument, the obligor may require written confirmation of the termination of the obligation from the obligee.
(2) If an obligation is performed in part or if a debt instrument also sets out other rights of the obligee or if the obligee has some other legitimate interest in not returning the debt instrument, the obligee may refuse to return the debt instrument on the condition that the obligee make an inscription certifying performance of the obligation on the debt instrument.
(3) If a debt instrument has been returned to the obligor, it is presumed that the obligation has been performed.
(4) If an obligee refuses to return a debt instrument or to make an inscription on a debt instrument or to issue confirmation of the termination of an obligation, the obligor may withhold performance of the obligation until the debt instrument is received, the inscription is made or the confirmation is issued. In such case, the obligee is deemed to have delayed acceptance of the performance of the obligation.
§ 97. Alteration of balance of contractual obligations
(1) If the circumstances under which a contract is entered into change after the entry into the contract and this results in a material change in the balance of the obligations of the parties due to which the costs of one party for the performance of an obligation increase significantly or the value of that which is to be received from the other party under the contract decreases significantly, the injured party may demand amendment of the contract from the other party in order to restore the original balance of the obligations.
(2) Amendment of a contract under the circumstances specified in subsection (1) of this section may be demanded if:
1) at the time of entry into the contract, the injured party could not have reasonably expected that the circumstances might change, and
2) the injured party could not influence the change in the circumstances, and
3) the risk of a change in the circumstances is not borne by the injured party pursuant to the law or the contract, and
4) the injured party would not have entered into the contract or would have entered into the contract under significantly different terms if the party had known of the change in the circumstances.
(3) Amendment of a contract may also be demanded if the circumstances under which the contract was entered into had already changed before the contract was entered into but became known to the injured party after the contract was entered into.
(4) The injured party may also demand amendment of the contract retroactively, but not as of a time earlier than the time when the balance of the obligations changed.
(5) If the bases for amendment of a contract exist but, due to the circumstances, amendment of the contract pursuant to subsection (1) of this section is not possible or would not be reasonable with respect to the other party, the party aggrieved by alteration of the balance of the obligations may withdraw from the contract or, in the case of a contract entered into for an indefinite period , cancel the contract pursuant to the procedure provided for in § 196 of this Act.
§ 98. Obligation to provide security and confirm performance of obligations
(1) If a person is required to provide security for the performance of an obligation but the type of the security is not exactly defined or if the provision of security is a condition for the creation of legal consequences, the person who provides security may choose the type of security. Security shall be sufficient to secure performance of the obligation and, if necessary, payment of interest and expenses, and the obligee shall be able to convert the security into money without difficulties.
(2) If security provided under the circumstances specified in subsection (1) of this section is no longer sufficient for reasons independent of the obligee, the obligor shall supplement or replace the security.
(3) If a person is required to confirm performance of an obligation but the method of confirmation has not been determined or confirmation of the performance of the obligation gives rise to certain legal consequences, the person shall provide sufficient evidence of the person’s ability to perform the obligation.
§ 99. Provision of goods or services not ordered
(1) A person engaged in economic or professional activities shall not have the right of claim against a consumer to whom the person dispatches goods or provides services which the consumer did not order.
(2) The provisions of subsection (1) of this section shall not preclude the filing of claims arising from the law if:
1) the goods or services were not intended for the consumer;
2) the person who dispatched the goods or provided the services erroneously believed that the consumer ordered the goods or services and the consumer was or should have been aware of the error.
(3) The provisions of subsections (1) and (2) of this section do not apply if goods or services of a quality and price at least equal to that of the goods or services ordered are offered to the consumer in lieu of the goods or services ordered and if the consumer is notified that there is no obligation to accept the goods or services nor bear the expenses relating to their return.
Chapter 5
Non-performance
Division 1
General Provisions
§ 100. Definition of non-performance
Non-performance is failure to perform or defective performance of a prestation, including a delay in performance.
§ 101. Legal remedies in case of non-performance
(1) In the case of non-performance by an obligor, the obligee may:
1) require performance of the obligation;
2) withhold performance of an obligation which is due from the obligee;
3) demand compensation for damage;
4) withdraw from or cancel the contract;
5) reduce the price;
6) in the case of a delay in the performance of a monetary obligation, demand payment of a penalty for late payment.
(2) In the case of non-performance, the obligee may resort to any legal remedy separately or resort simultaneously to all legal remedies which arise from law or the contract and can be invoked simultaneously unless otherwise provided by law or the contract. In particular, invoking a legal remedy arising from non-performance shall not deprive the obligee of the right to demand compensation for damage caused by non-performance.
(3) An obligee shall not rely on non-performance by an obligor nor resort to legal remedies arising therefrom insofar as such non-performance was caused by an act of the obligee or by circumstances dependent on the obligee or by an event the risk of which is borne by the obligee.
§ 102. Notification obligation
An obligor shall notify the obligee of an impediment to performance by the obligor and of the effect of such impediment on the performance of the obligation immediately after the obligor becomes aware of the impediment.
§ 103. Excused non-performance
(1) An obligor shall be liable for non-performance unless the non-performance is excused. It is presumed that non-performance is not excused.
(2) Non-performance by an obligor is excused if it is caused by force majeure. Force majeure are circumstances which are beyond the control of the obligor and which, at the time the contract was entered into or the noncontractual obligation arose, the obligor could not reasonably have been expected to take into account, avoid or overcome the impediment or the consequences thereof which the obligor could not reasonably have been expected to overcome.
(3) If the effect of force majeure is temporary, non-performance is excused only for the period during which force majeure impeded performance of the obligation.
(4) In the cases provided by law or the contract, a person shall be liable for non-performance regardless of whether the non-performance is excused.
§ 104. Liability in case of culpability
(1) In the cases provided by law or contract, a person shall be liable for non-performance only if the person is culpable of the non-performance.
(2) The types of culpability are carelessness, gross negligence and intent.
(3) Carelessness is failure to exercise necessary care.
(4) Gross negligence is failure to exercise necessary care to a material extent.
(5) Intent is the will to bring about an unlawful consequence upon the creation, performance or termination of an obligation.
(6) If, pursuant to law or a contract, a person is required only to exercise such care as the person would exercise in the person’s own affairs, the person shall nevertheless also be liable in the case of intent and gross negligence.
§ 105. Legal remedies independent of liability of obligor
In the case of non-performance by an obligor, the obligee has the right to withhold performance of the obligation of the obligee, withdraw from or cancel the contract or reduce the price regardless of whether the obligor is liable for the non-performance. If the obligor and the obligee are engaged in economic or professional activities, the obligee may require payment of a penalty for late payment regardless of whether the obligor is liable for the non-performance.
§ 106. Agreement to release person from liability or to restrict liability
(1) An obligor and an obligee may agree in advance to preclude or restrict liability in the case of non-performance of an obligation.
(2) Agreements under which liability is precluded or restricted in the case of intentional non-performance or which allow the obligor to perform an obligation in a manner materially different from that which could be reasonably expected by the obligee or which unreasonably exclude or restrict liability in some other manner are void.
§ 107. Cure
(1) A party who fails to perform a contractual obligation may, at the party’s own expense, cure the non-performance, including improving or replacing defective performance, as long as the other party has not withdrawn from or cancelled the contract or demanded compensation for damage in lieu of performance, provided that:
1) cure is reasonable in the circumstances, and
2) cure does not cause unreasonable inconvenience or expenses to the injured party, and
3) the injured party has no legitimate interest in refusing cure.
(2) A non-performing party may cure non-performance within a reasonable period of time after the party has given notice to the injured party of the intention to cure and of the proposed manner and timing of the cure and if the injured party with a legitimate interest in refusing cure has not given notice of such refusal within a reasonable period of time.
(3) The injured party may withhold performance as of receipt of the notice of cure until completion or failure of the cure. During the time for cure, the injured party may use other legal remedies only if these are not inconsistent with the cure.
(4) Cure shall not deprive the injured party of the right to claim compensation for damage caused by a delay in performance or by the cure, including the right to claim payment of a penalty for late payment or a contractual penalty.
Division 2
Legal Remedies
§ 108. Requiring performance of obligation
(1) In the case of non-performance by an obligor of an obligation to pay money, the obligee may require performance of the obligation.
(2) In the case of non-performance by an obligor of an obligation other than one to pay money, the obligee may require performance of the obligation. Performance of the obligation shall not be required if:
1) performance is impossible;
2) performance is unreasonably burdensome or expensive for the obligor;
3) the obligee may reasonably achieve the desired result of the performance in another manner;
4) performance involves provision of services of a personal nature.
(3) An obligee may require performance of an obligation specified in subsection (2) of this section only within a reasonable period of time after the obligee has or should have become aware of the non-performance.
(4) An obligor may determine beforehand a reasonable term within which the obligee may require performance. If the obligor determines an unreasonably short term within which the obligee may require performance, the term is deemed to have been extended to a reasonable length.
(5) If an obligee does not require performance during a term specified in subsection (3) or (4) of this section, the obligee may no longer require performance of the obligation but may resort to other legal remedies.
(6) The right to require performance of an obligation includes the right of the obligee to require repair, replacement or other cure of a defective performance in so far as this may be reasonably expected from the obligor.
(7) If, pursuant to subsection (2) of this section, an obligee does not have the right to require performance of an obligation from the obligor and the obligor receives compensation in lieu of the object of the obligation due or acquires the claim for payment of such compensation (claim for compensation), the obligee may require transfer of the compensation or assignment of the claim for compensation.
(8) An obligee shall not require performance of an obligation if, at the request thereof, the obligee has in lieu of performance received compensation for the damage incurred due to non-performance.
§ 109. Specifications concerning requirement to perform mutual contract
(1) In the case of a mutual contract, the non-performing party may require the other party to perform its obligations even if performance by the non-performing party cannot be required for reasons specified in subsection 108 (2) of this Act and if the reason arises due to circumstances dependent on the other party or if the reason arises at the time when the other party delays acceptance.
(2) In the case specified in subsection (1) of this section, the non-performing party shall nevertheless deduct from the party’s claim whatever the party saves as a result of non-performance or obtains as a result of applying the party’s labour or other resources elsewhere or fails to obtain in bad faith despite having a reasonable opportunity to do so.
§ 110. Withholding performance of obligation
(1) An obligor may withhold performance of an obligation until the obligee has satisfied a claim which is due for the benefit of the obligor against the obligee if the claim is not sufficiently secured and there is a sufficient link between the claim and the obligation of the obligor and unless indicated otherwise by law, the contract or the nature of the obligation. A sufficient link exists between a claim and an obligation primarily if the obligations of the obligor and the obligee arise from the same legal relationship, a prior regular relationship between the obligor and the obligee or from another sufficient economic or temporal relationship.
(2) An obligor does not have the right to withhold performance on the bases specified in subsection (1) of this section if:
1) satisfaction of the obligor’s claim against the obligee is impossible;
2) the obligee has failed to perform due to circumstances dependent on the obligor, including where performance has been impeded by a delay in acceptance by the obligor;
3) the claim of the obligee arises from the obligation of the obligor to provide maintenance to the obligee;
4) the claim of the obligee against the obligor arises from the obligation to compensate for damage resulting from health damage or from damage caused by death;
5) pursuant to law, the claim cannot be subject to a claim for payment.
(3) The right of an obligor to withhold performance terminates when the obligee performs or secures the performance of the obligee’s obligation.
(4) If the claim of an obligor against the obligee has expired, the obligor may withhold performance if the right to withhold performance arose before the expiry of the limitation period.
§ 111. Withholding performance in case of mutual contract
(1) If the parties have mutual obligations arising from a contract (mutual contract), a party may withhold performance until the other party has performed, offered to perform, secured or confirmed the performance.
(2) If an obligation is to be performed for the benefit of several persons, the obligated party may, in the case specified in subsection (1) of this section, withhold performance for the benefit of all such persons until the obligation due for the benefit of the obligated party has been performed in full.
(3) A party shall not withhold performance if this would be unreasonable in the circumstances or contrary to the principle of good faith, in particular if the other party has performed the obligations thereof for the most part or without significant deficiencies.
(4) A party required to perform an obligation before performance by the other party may withhold performance of the contract if circumstances which become evident to the party after the entry into the contract give sufficient reason to believe that the other party will not be able to perform the obligation thereof due to insolvency, or if the other party’s conduct in preparing for performance or during performance or any other good reason gives reason to believe that the party will not perform the obligation thereof.
(5) In the case specified in subsection (4) of this section, the party entitled to withhold performance may require the other party to perform the obligation thereof at the same time as the first party and may set a reasonable term for the performance of the obligation, for confirmation of the performance or for the provision of security. If the other party fails to perform or to secure or confirm performance of the obligation during the term, the party entitled to withhold performance may withdraw from the contract pursuant to the provisions of § 117 of this Act.
(6) If a party who is to perform before performance by the other party has sufficient reason to believe that the other party’s performance will be partial or in any other manner defective, the first party may withhold performance on the bases provided for in subsection (4) of this section only if it can be presumed that there will be a fundamental breach of the contract by the other party.
§ 112. Reduction of price
(1) If a party accepts defective performance, the party may reduce the price payable by the party by the proportion of the ratio of the value of defective performance to the value of conforming performance. The values of conforming and defective performances shall be determined as at the time of performance of the obligation. If the values of conforming and defective performances cannot be precisely determined, a court shall decide the values taking into account the circumstances.
(2) In order to reduce a price, a corresponding declaration shall be made to the other party. If several persons participate in a contract as one party, the price may be reduced only jointly by all persons acting as one party and with regard to all persons. If the right to reduce the price terminates for one entitled person, it shall also terminate for the other persons acting as one party with the entitled person.
(3) A party which is entitled to reduce the price but has already paid a sum exceeding the reduced price may, in the case of a price reduction, claim a refund of the sum paid in excess pursuant to the provisions of subsections 189 (1) and 191 (1) of this Act.
(4) A price may also be reduced before the obligation of the other party falls due under the same conditions as provided for in § 117 of this Act for withdrawal from a contract before an obligation falls due.
(5) A party shall not reduce the price to the extent to which the other party cured the non-performance of the other party’s obligation.
§ 113. Penalty for late payment
(1) Upon a delay in the performance of a monetary obligation, the obligee may require the obligor to pay interest on the delay (penalty for late payment) for the period as of the time the obligation falls due until conforming performance is rendered. The interest rate specified in § 94 of this Act plus seven per cent per year shall be the rate of penalty for late payment. If a contract prescribes payment of interest exceeding the rate provided for in § 94 of this Act, the interest rate prescribed by the contract plus seven per cent per year shall be the rate of penalty for late payment.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) If compensation for damage is required for reasons other than non-performance of an obligation to pay money, the penalty for late payment on the sum of the compensation shall be calculated as of the moment when the person required to compensate for the damage became or should have become aware of the damage caused.
(3) If a person is to be compensated for expenses incurred by the person, payment of a penalty for late payment on such expenses may be required as of the time the expenses were incurred. If expenses are related to a thing to be delivered to a person who is required to compensate for such expenses, the person is not required to pay a penalty for late payment for the time for which the person entitled to receive compensation retains the fruits of the thing or other benefit arising therefrom.
(4) An obligor is not required to pay a penalty for late payment for the time the obligor is unable to perform the obligation thereof due to a delay in acceptance by the obligee or for the time the obligor legitimately withholds performance of the obligation.
(5) If the damage caused by a delay in performance exceeds the fine for the delay, compensation for the sum which exceeds the penalty for late payment may be claimed if a claim for compensation for damage exists.
(6) A penalty for late payment shall not be required for a delay in the payment of interest. Agreements which derogate from such requirement to the detriment of the obligor are void.
(7) The provisions of subsection (6) of this section shall not preclude or restrict the right of the obligee to claim compensation for damage caused by a delay in the payment of interest.
(8) A person required to pay a penalty for late payment may claim for a reduction of the fine pursuant to the provisions of § 162 of this Act.
§ 114. Additional term for performance
(1) In the case of non-performance of an obligation by an obligor, the obligee may grant a reasonable additional term for the obligor to perform the obligation. If the obligee requires performance of an obligation but does not grant an additional term therefor, a reasonable additional term shall be presumed to have been granted. If the obligee grants an unreasonably short additional term for performance, the term shall be extended to a reasonable length.
(2) The grant of an additional term shall not release the obligor from liability for non-performance.
(3) If an additional term is granted in the case of non-performance of a contractual obligation, the obligee may withhold performance of the obligations thereof during the term, claim compensation for damage caused by the non-performance and claim payment of a penalty for late payment but shall not resort to any other legal remedies.
(4) If an obligor gives notice that the obligor will not perform an obligation or if the obligor fails to render a conforming performance during an additional term, the obligee may, after receipt of such notice or upon expiry of the term, resort to other legal remedies, including claiming compensation for damage in lieu of performance, withdrawing from the contract or cancelling the contract.
§ 115. Compensation for damage
(1) In the case of non-performance of an obligation by an obligor, the obligee may together with or in lieu of performance claim compensation for damage caused by the non-performance from the obligor except in cases where the obligor is not liable for the non-performance or the damage is not subject to compensation for any other reason provided by law.
(2) Compensation for damage in lieu of performance may be required upon the expiry of the additional term provided for in § 114 of this Act. If performance of an obligation involves return of a particular object, compensation for damage in lieu of performance may be required only if the obligee has lost interest in the return of the object due to the delay.
(3) Compensation for damage in lieu of performance may also be required without granting an additional term if it is evident that the grant of the additional term would not have any effect or, in the cases specified in clauses 116 (2) 1)–4) of this Act or under the circumstances, if immediate compensation for the damage is reasonable for any other reason.
(4) If an obligor performs an obligation in part, the obligee may claim compensation for damage in lieu of full performance only if the obligee does not have a reasonable interest in partial performance. In such case, that which was delivered as partial performance shall be returned pursuant to the provisions of §§ 189–191 of this Act.
(5) (Repealed - 19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
§ 116. Withdrawal and cancellation as legal remedies
(1) A party may withdraw from the contract in the case of fundamental non-performance of a contractual obligation by the other party (fundamental breach of contract).
(2) A breach of contract is fundamental if:
1) non-performance of an obligation substantially deprives the injured party of what the party was entitled to expect under the contract, except in cases where the other party did not foresee such consequences of the non-performance and a reasonable person of the same kind as the other party could not have foreseen such consequences under the same circumstances;
2) pursuant to the contract, strict compliance with the obligation which has not been performed is the precondition for the other party’s continued interest in the performance of the contract;
3) non-performance of an obligation was intentional or due to gross negligence;
4) non-performance of an obligation gives the injured party reasonable reason to believe that the party cannot rely on the other party’s future performance;
5) the other party fails to perform any obligation thereof during an additional term for performance specified in § 114 of this Act or gives notice that the party will not perform the obligation during such term.
(3) If contractual obligations are to be performed in parts and fundamental breach of contract is committed only with regard to one obligation or some obligations or one part or some parts thereof, the injured party may withdraw from the contract only with regard to such obligation or part of an obligation. In such case, the injured party may withdraw from the entire contract only if the party is justifiably not interested in partial performance or if the non-performance is fundamental with regard to the contract as a whole.
(4) Withdrawal from a contract without granting an additional term for performance specified in § 114 of this Act is prohibited if the damage suffered by the non-performing party in the case of the withdrawal would be disproportionate in relation to the expenses incurred in the performance or preparation for the performance of the obligation. However, withdrawal from a contract without granting an additional term is permitted in the case of non-performance of an obligation specified in clause (2) 2) of this section or if the other party gives notice that the party will not perform the obligation thereof.
(5) Upon granting an additional term specified in § 114 of this Act, the injured party may prescribe withdrawal from the contract on the occasion where the other party fails to perform the other party’s obligation during the additional term. The injured party shall not withdraw from the contract in such manner if the obligation which the non-performing party fails to perform during the additional term is only a minor part of the non-performing party’s contractual obligations.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(6) In the case of a fundamental breach of a contract entered into for an indefinite period , the injured party may cancel the contract pursuant to the provisions of § 196 of this Act.
§ 117. Withdrawal before obligation falls due
(1) If it is evident before the obligation of a party falls due that such party will commit a fundamental breach of the contract, primarily if the party gives notice that the party does not intend to perform the contract, the other party may withdraw from the contract before the obligation falls due.
(2) A party which intends to withdraw from the contract before an obligation falls due shall give notice of such intention to the other party in order to give the other party an opportunity to secure or confirm the performance of the obligation. The party which intends to withdraw may withhold performance of the obligations thereof until security or confirmation is received. If the performance is not secured or confirmed during a reasonable period after notice of the intention to withdraw is given, the party which gave notice of the intention thereof may withdraw from the contract.
(3) Notice to the other party of an intention to withdraw from a contract need not be given if the other party has given notice that the party will not perform the obligation thereof.
§ 118. Prohibition on withdrawal
(1) A party entitled to withdraw from a contract loses the right to withdraw if the party does not a make a declaration of withdrawal within a reasonable period of time after:
1) the party becomes or should have become aware of a fundamental breach of the contract;
2) the additional term for performance granted pursuant to § 114 of this Act expires.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) Withdrawal from a contract due to a breach of the contract is void if the claim for the performance of the obligation has expired and the obligor relies on such claim or if the obligor legitimately refuses to perform the obligation.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
Chapter 6
Impediments to Performance of Obligation
§ 119. Definition and consequences of delay in acceptance
(1) Acceptance by an obligee is delayed if the obligor cannot perform the obligation thereof due to circumstances dependent on the obligee, in particular if the obligee unjustifiably refuses to accept a conforming performance actually offered to the obligee or to perform an obligation which is the precondition for performance by the obligor or to perform any other act necessary for performance by the obligor or to co-operate with the obligor.
(2) In the case of a delay in acceptance by an obligee, the obligor shall be liable for non-performance of the obligation thereof only if the obligor causes such non-performance intentionally or due to gross negligence.
§ 120. Deposit of money, securities, other documents and valuables
(1) If an obligee delays acceptance or if the obligor does not know and does not have to know the identity of the obligee, the obligor may deposit the money, securities, other documents or valuables owed with a notary for the purposes of transfer to the obligee. The procedure for depositing shall be established by the Minister of Justice.
(2) An obligor may deposit money, securities, other documents or valuables owed at the place of performance of the obligation. If the obligor deposits such objects at another place, the obligor shall compensate the obligee for any expenses and damage arising therefrom.
(3) An obligor shall give immediate notice of a deposit to the obligee or the person presenting himself or herself as the obligee.
(4) If an obligor and an obligee are required to perform their obligations simultaneously, the obligor may make the transfer of deposited property to the obligee conditional on the performance of the obligation of the obligee.
(5) The person with whom property is deposited may refuse to transfer the deposited property to the obligee if the obligee does not pay all of the person’s expenses relating to the deposit. After the deposited property has been transferred, the person with whom the property was deposited shall refund the sums paid by the obligor for depositing regardless of whether the obligee has paid the expenses relating to the deposit. If an obligor reclaims the deposited property, the obligor shall bear the expenses relating to the deposit.
§ 121. Reclamation of deposited property
(1) An obligor may reclaim deposited property from the depositary only if, upon depositing the property, the obligor notifies the depositary of the intention to retain the right to reclaim the property (right of reclamation of deposited property).
(2) The right of reclamation of deposited property extinguishes if:
1) the obligor gives notice to the depositary that the obligor waives the right to reclaim the property;
2) the obligee gives notice to the depositary that the obligee will accept the deposited property;
3) a court judgment which has entered into force and which recognises the right of the obligee to the deposited property is presented to the depositary;
4) a court declares the bankruptcy of the obligor.
(3) A right of reclamation of deposited property shall not be subject to a claim nor seized.
(4) If an obligor reclaims deposited property, the property is deemed not to have been deposited and the claim against the obligor is restored together with all rights arising from accessory obligations.
§ 122. Legal consequences of deposit
(1) If property is deposited without the obligor having the right of reclamation, it is deemed that by depositing the property the obligor has performed the obligation at the time of the deposit. If the obligor has retained the right to reclaim the deposited property, the obligation is deemed to have been performed upon expiry of the right of reclamation.
(2) If property is deposited with the right of reclamation, the obligor may set up a defence against an obligee’s claim concerning performance of the obligation, indicating that the obligor has deposited the money, securities, documents or valuables owed under the obligation. In such case, the obligee shall not require performance of the obligation in any other manner than out of the deposited property.
(3) During the period for which property is deposited with the right of reclamation, the risk of accidental loss of or damage to the property shall be borne by the obligee. The obligor is not required to pay interest for the period of the deposit nor compensate the obligee for loss of profit incurred during such period.
(4) The right of an obligee to receive deposited property extinguishes when seven years have passed from receipt of the notice of the deposit if, within that term, the obligee fails to give notice to the depositary of the intention to accept the deposited property. If the term has expired and the obligee has not given notice of the intention to accept the deposited property, the obligor may reclaim the deposited property even if the obligor has not retained the right of reclamation.
(5) The claim of an obligee against an obligor expires upon expiry of the term specified in subsection (4) of this section unless the claim has expired earlier.
§ 123. Declaration for receipt of deposited property
If a declaration from an obligor certifying the right of the obligee to receive deposited property is necessary for the receipt of the property, the obligee may require the obligor to issue the declaration under the same conditions as the obligee could require performance of the obligation if the property were not deposited. If an action filed by the obligee is satisfied, the obligor is deemed to have granted consent upon the entry into force of the judgment.
§ 124. Depositing other things
(1) In the case specified in subsection 120 (1) of this Act, an obligor may deposit movables other than money, securities, other documents or valuables with a reasonably chosen third party whose economic activities include the deposit of movables of the corresponding type, unless such deposits involve unreasonably high costs.
(2) The provisions of subsections 120 (2)–(5) and §§ 121–123 of this Act apply as appropriate upon depositing movables specified in subsection (1) of this section.
§ 125. Sale of moveable owed
(1) In the case specified in subsection 120 (1) of this Act and in the case where a movable cannot be transferred to the obligee for reasons independent of the obligor, the obligor may, instead of depositing the movable, sell the movable in a reasonable manner if:
1) the movable cannot be deposited due to its nature or because there is no reasonable opportunity to deposit the thing;
2) the movable is highly perishable;
3) the preservation or storage of the movable would involve unreasonable costs;
4) the period of deposit may be of unpredictable length because the obligor does not know and does not have to know the identity of the obligee.
(2) A movable may be sold at the place of performance of the obligation. If a reasonable result cannot be expected at the place of performance, the movable may be sold in another place suitable therefor.
(3) An obligor shall sell a movable if sale is clearly in the interests of the obligee or if the obligee gives notice that the obligee requires the movable to be sold.
(4) A movable shall be sold by auction. If the movable is highly perishable or has a current exchange or market price or if the price which could be expected at an auction would be unreasonably low in comparison to the costs of the auction, the obligor may sell the movable in some other reasonable manner.
(5) Within a reasonable period before the intended sale of a movable, the obligor shall give notice to the obligee of the intention to sell the movable. Notice need not be given if the movable is highly perishable or if notification is impossible.
(6) An obligee shall bear the reasonable costs of the sale of a movable and the costs shall be deducted from the money received from the sale of the movable. The remainder of the money shall be paid to the obligee by the obligor.
(7) Upon the sale of a movable, the obligee shall retain the rights arising from defective performance.
§ 126. Performance by third party
The provisions of this Chapter concerning the rights and obligations of obligors apply also to third parties who perform an obligation in order to avoid compulsory execution with regard to an object belonging to the obligor which is in the lawful possession of the third party or with regard to which the third party has some other right and such right or possession would terminate in the case of compulsory execution.
Chapter 7
Compensation for Damage
§ 127. Purpose and extent of compensation for damage
(1) The purpose of compensation for damage is to place the aggrieved person in a situation as near as possible to that in which the person would have been if the circumstances which are the basis for the compensation obligation had not occurred.
(2) Damage shall not be compensated for to the extent that prevention of damage was not the purpose of the obligation or provision due to the non-performance of which the compensation obligation arose.
(3) A non-conforming party shall only compensate for such damage which the party foresaw or should have foreseen as a possible consequence of non-performance at the time of entering into the contract unless the damage is caused intentionally or due to gross negligence.
(4) A person shall compensate for damage only if the circumstances on which the liability of the person is based and the damage caused are related in such a manner that the damage is a consequence of the circumstances (causation).
(5) Any gain received by the injured party as a result of the damage caused, particularly the costs avoided by the injured party, shall be deducted from the compensation for the damage unless deduction is contrary to the purpose of the compensation.
(6) If damage is established but the exact extent of the damage cannot be established, including in the event of non-patrimonial damage or future damage, the amount of compensation shall be determined by the court.
(7) If future damage is established but the extent of the damage cannot be established, the court may determine the amount of the compensation later.
§ 128. Types of damage subject to compensation
(1) Damage subject to compensation may be patrimonial or non-patrimonial.
(2) Patrimonial damage includes, primarily, direct patrimonial damage and loss of profit.
(3) Direct patrimonial damage includes, primarily, the value of the lost or destroyed property or the decrease in the value of property due to deterioration even if such decrease occurs in the future, and reasonable expenses which have been incurred or will be incurred in the future due to the damage, including reasonable expenses relating to prevention or reduction of damage and receipt of compensation, including expenses relating to establishment of the damage and submission of claims relating to compensation for the damage.
(4) Loss of profit is loss of the gain which a person would have been likely to receive in the circumstances, in particular as a result of the preparations made by the person, if the circumstances on which compensation for damage is based would not have occurred. Loss of profit may also include the loss of an opportunity to receive gain.
(5) Non-patrimonial damage involves primarily the physical and emotional distress and suffering caused to the aggrieved person.
§ 129. Compensation for patrimonial damage upon causing death
(1) In the case of an obligation to compensate for the damage arising from the death of a person, the obligated person shall compensate for the expenses arising from the death of the deceased person, in particular for reasonable funeral expenses, reasonable medical expenses relating to the health damage or bodily injury which caused the death of the person, and the damage arising from the aggrieved person’s interim incapacity for work.
(2) Compensation for funeral expenses shall be paid to the person who is obligated to bear the expenses. If funeral expenses are borne by another person, compensation for the expenses shall be paid to the other person.
(3) If a person whose death is caused bears, at the time of his or her death, an obligation arising from law to maintain another person, the person obligated to compensate for the damage shall pay the person reasonable monetary compensation corresponding to the maintenance payments which the deceased person would have paid to the person during the deceased person’s presumed life-span.
(4) A person obligated to compensate for damage shall also pay compensation to a third party on the basis and to the extent specified in subsection (3) of this section if the obligation to maintain such person would have arisen pursuant to law in the future and during the presumed life-span of the deceased.
(5) A person obligated to compensate for damage shall also bear the obligation provided for in subsections (3) and (4) of this section with regard to a person who, by the time of the death of the deceased person, had been conceived but not yet born.
(6) If a person whose death is caused maintained, on a continuous basis up to the death of the person, another person with whom the deceased lived together as a family or whom the deceased person maintained on the basis of a moral obligation, the person obligated to compensate for the damage shall pay compensation to the person to the extent specified in subsection (3) of this section if:
1) the person needs maintenance, and
2) the person cannot receive maintenance in any other manner, and
3) the person whose death was caused would presumably have continued to maintain the person in the future.
(7) A person obligated to compensate for damage may set up the same defences against claims for compensation for damage by persons specified in subsections (2)–(6) of this section as the person could have set up against the person whose death the obligated person caused.
§ 130. Compensation for damage in case of health damage or bodily injury
(1) In the case of an obligation to compensate for damage arising from health damage or bodily injury caused to a person, the obligated person shall compensate the aggrieved person for expenses arising from such damage or injury, including expenses arising from the increased needs of the aggrieved person, and damage arising from total or partial incapacity to work, including damage arising from a decrease in income or deterioration of the future economic potential of the aggrieved person.
(2) In the case of an obligation to compensate for damage arising from a bodily injury or health damage caused to a person, the obligated person shall pay the aggrieved person a reasonable amount of money as compensation for non-patrimonial damage caused to the person by such damage or injury.
§ 131. Compensation for patrimonial damage in case of deprivation of liberty or violation of personality rights
In the case of an obligation to compensate for damage caused by unlawfully depriving a person of liberty, by defamation or by violation of any other personality right, the obligated person shall compensate the aggrieved person for the expenses caused to the person and for damage arising from a decrease in income or deterioration of the future economic potential of the aggrieved person.
§ 132. Compensation for damage in case of destruction, loss of and or damage to thing
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(1) In the case of an obligation to compensate for damage arising from destruction or loss of a thing, compensation shall be paid in an amount covering the reasonable expenses made to acquire a new thing of equal value. If by the time of the destruction or loss of a thing the value of the thing has considerably decreased in comparison to the value of an equivalent new thing, the decrease shall be taken into account in a reasonable manner when determining the amount of compensation for the damage.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) If acquisition of a new thing of equal value is not possible, the value of the thing which was destroyed or lost shall be compensated for.
(3) If damage is caused to a thing, compensation for the damage shall cover, in particular, the reasonable costs of repairing the thing and the potential decrease in the value of the thing. If repairing the thing is unreasonably expensive in comparison to the value of the thing, compensation shall be paid pursuant to subsection (1) of this section.
(4) If a thing damaged was necessary or useful for the aggrieved person, in particular, for the person’s economic or professional activities or work, compensation for the damage shall also cover the costs of using a thing of equal value during the time in which the damaged thing is being repaired or a new thing is being acquired. If the person does not use a thing of equal value, the person may claim compensation for loss of the advantages of use which the person could have benefited from during the time in which the thing is repaired or a new thing is being acquired.
§ 133. Compensation for damage caused by environmentally hazardous activities
(1) If damage is caused by environmentally hazardous activities, damage related to a deterioration in environmental quality shall also be compensated for in addition to the damage caused to persons or the property thereof. Expenses relating to preventing an increase in the damage and to applying reasonable measures for mitigating the consequences of the damage, and the damage arising from the application of such measures shall also be compensated for.
(2) Damage and expenses specified in subsection (1) of this section shall be compensated for to the extent and pursuant to the procedure provided by law.
§ 134. Specifications for compensation for non-patrimonial damage
(1) Compensation for non-patrimonial damage arising from non-performance of a contractual obligation may only be claimed if the purpose of the obligation was to pursue a non-patrimonial interest and, under the circumstances relating to entry into the contract or to the non-performance, the obligor was aware or should have been aware that non-performance could cause non-patrimonial damage.
(2) In the case of an obligation to compensate for damage arising from deprivation of liberty or violation of a personality right, in particular from defamation, the obligated person shall compensate the aggrieved person for non-patrimonial damage only if this is justified by the gravity of the violation, in particular by physical or emotional distress.
(3) In the case of an obligation to compensate for damage arising from the death of a person or a serious bodily injury or health damage caused to the person, the persons close to the deceased or the aggrieved person may also claim compensation for non-patrimonial damage if payment of such compensation is justified by exceptional circumstances.
(4) In the case of destruction or loss of a thing, the aggrieved person has, taking into account exceptional circumstances, the right to claim a reasonable amount of money as compensation for non-patrimonial damage in addition to compensation for patrimonial damage regardless of the usefulness of the thing if the person had a special interest in the destroyed or lost thing primarily for personal reasons.
§ 135. Offsetting price differences
(1) If, after withdrawing from a contract, an injured party performs a transaction within a reasonable time and in a reasonable manner with which the injured party achieves the same purpose which was to be achieved by the contract from which the party withdrew (substitute transaction), the injured party may claim for the non-conforming party to offset the difference between the contractual price and the price arising from the substitute transaction as compensation for damage.
(2) If an injured party withdraws from a contract, the party may claim for the difference between the contractual price and the current market price of the contractual obligation of the non-conforming party at the time of withdrawal from the contract to be offset as compensation for damage if there is a market price for the object of the contractual obligation at the place of performance or at any other place which appears reasonable to take as a reference, even if the injured party does not perform a substitute transaction.
(3) The provisions of subsections (1) and (2) of this section shall not preclude or restrict the right to make a claim for compensation for damage exceeding the price difference.
§ 136. Manner of compensation for damage
(1) Damage shall be compensated for in a lump sum unless the nature of the damage makes it reasonable to pay the compensation in instalments.
(2) In the event that death, a bodily injury or health damage is caused, the damage shall be compensated for in money and in instalments unless the nature of the damage makes it reasonable for the compensation to be paid as a lump sum.
(3) If damage is to be compensated for in instalments, payments shall be made in advance for each three month period unless otherwise decided by a court taking into account the circumstances. If the person entitled to receive compensation dies before the end of the period for which an instalment is or should have been paid, the obligation to pay compensation for such period remains in effect.
(4) If a court orders an obligor to pay compensation in instalments, the court may alter the period and amount of the instalments on the application of either party if, after the judgment is made, circumstances become evident which are relevant to the determination of the period and amount of the instalments and the occurrence of which was not taken into account in the determination of the instalments.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(5) In the cases provided by law or a contract and in other cases where this is reasonable under the circumstances, the aggrieved person may claim compensation for damage in a manner other than monetary compensation.
§ 137. Compensation for damage paid by several persons
(1) If several persons are liable, on the same or different grounds, to a third party for the same damage caused to the third party, they shall be solidarily liable for payment of compensation.
(2) In relations between the persons specified in subsection (1) of this section, liability shall be divided taking into account all circumstances, in particular the gravity of the non-performance or the unlawful character of other conduct and the degree of risk borne by each person.
(3) If one of the persons obligated to compensate for damage has the right to set up defences which would preclude or restrict the person’s liability to the person requiring the compensation, the claim for compensation against other obligors shall be reduced to the extent of the share of the obligation which the person entitled to set up the defences bears in relations between the persons obligated to compensate for the damage.
§ 138. Common liability for damage
(1) If several persons may be liable for damage caused and it has been established that any of the persons could have caused the damage, compensation for the damage may be claimed from all such persons.
(2) A person obligated to compensate for damage shall be released from liability if the person proves that the damage was not caused thereby.
(3) In the case specified in subsection (1) of this section, compensation for damage may be claimed from each person to an extent in proportion to the probability that the damage was caused by the person concerned.
§ 139. Damage due in part to aggrieved person
(1) If damage is caused in part by circumstances dependent on the injured party or due to a risk borne by the injured party, the amount of compensation for the damage shall be reduced to the extent that such circumstances or risk contributed to the damage.
(2) The provisions of subsection (1) of this section also apply if the aggrieved person failed to draw the attention of the person causing the damage to an unusually high risk of damage or to prevent the risk of damage or to perform any act which would have reduced the damage caused if the aggrieved person could have reasonably been expected to do so.
(3) In the event that the death of a person or damage to the health of a person is caused, the compensation for damage may be reduced on the grounds specified in subsection (1) of this section only if the aggrieved person contributed to the damage intentionally or through gross negligence.
(4) The restriction on reducing compensation for damage provided for in subsection (3) of this section shall not be applied to the extent that the injured party is compensated for the damage by an insurer.
§ 140. Limits on compensation for damage
(1) The court may reduce the amount of compensation for damage if compensation in full would be grossly unfair with regard to the obligated person or not reasonably acceptable for any other reason. In such case, all circumstances, in particular the nature of the liability, relationships between the persons and their economic situations, including insurance coverage, shall be taken into account.
(2) Limits on the extent of the liability of a person who causes damage, or a fixed amount of compensation for damage may be provided by law.
Chapter 8
Accessory Obligations
§ 141. Accessory obligations
Accessory obligations are, primarily:
1) obligations arising from a suretyship or from granting a guarantee;
2) obligations arising from payment of earnest money;
3) obligations arising from an agreement on a contractual penalty.
Division 1
Suretyship and Grant of Guarantee
§ 142. Definition of suretyship
(1) Under a contract of suretyship, the surety undertakes to be liable to the obligee of a third party (principal obligor) for the performance of the principal obligor’s obligation.
(2) A conditional obligation may also be secured with a suretyship. A future obligation may be secured with a suretyship only if the obligation is sufficiently defined.
(3) Suretyship may be of a limited term or amount or related to another condition.
(4) The validity of a suretyship shall not depend on the relationship between the principal obligor and the surety.
(5) If a suretyship applies to an obligation against which defences regarding limitation periods may be set up or which may be annulled due to an error of the principal obligor or which is based on a transaction which is invalid due to the restricted active legal capacity of the principal obligor, and if the surety is aware of such circumstances at the time the contract is entered into, the surety shall be liable for the performance of the obligation under the same conditions as in the case of granting a guarantee.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(6) Agreements derogating from the provisions of this Chapter to the detriment of a surety shall be void unless otherwise provided by law.
§ 143. Contract of consumer surety
(1) A contract of consumer surety is a contract of suretyship where the surety is a consumer.
(2) A contract of consumer surety is void if the maximum amount of money covered by the liability of the surety is not agreed upon.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
§ 144. Entry into and format of contract of suretyship
(1) An obligee is presumed to consent to a contract of suretyship being entered into.
(2) In the case of a contract of consumer surety, the application of the surety by which the surety undertakes to assume the obligations arising from the suretyship shall be made in writing.
(3) A contract of suretyship is valid even upon non-compliance with formal requirements arising from law or a transaction if the surety performs the obligation of the principal obligor arising from the contract.
§ 145. Liability of surety
(1) In the case of non-performance, the principal obligor and the surety shall be solidarily liable to the obligee unless the contract of suretyship prescribes that the surety is liable only if the claim of the obligee against the principal obligor cannot be satisfied.
(2) A surety shall be liable for the obligation secured by the suretyship in full. The surety shall also be liable for the consequences arising from non-performance, in particular for payment of fines for delay, contractual penalties and compensation for damage, and for compensation for expenses relating to withdrawal from or cancellation of the contract. The surety shall be liable for payment of compensation for costs relating to the collection of the debt from the principal obligor if the surety had been notified of the intention to collect on time and therefore the surety could have avoided the costs.
(3) If a suretyship pertains to an obligation other than the payment of money, the suretyship is deemed to pertain to the obligation to pay compensation for damage in the case of non-performance of the obligation. In other aspects, the provisions of subsection (2) of this section apply.
(4) Transactions concluded by a principal obligor after a contract of suretyship is entered into shall not extend the liability of the surety.
(5) If the activities of an obligee reduce other security which exists at the time a contract of suretyship is entered into and which is given to secure the claim to which the suretyship applies, the liability of the surety shall be reduced by the amount corresponding to the reduction in security unless the obligee proves that the damage incurred by the surety is smaller.
§ 146. Notification obligation of obligee
(1) At the request of a surety, the obligee shall provide the surety with information concerning performance of the obligation of the principal obligor.
(2) In the event of the bankruptcy of a principal obligor, the obligee shall file the claim thereof in a bankruptcy proceeding pursuant to the procedure prescribed in the Bankruptcy Act (RT 1992, 31, 403; RT I 1997, 18, 302, 1998, 2, 46; 36/37, 552; 1999, 10, 155; 2000, 13, 93; 54, 353; 2001, 56, 336). Upon receiving notification of a bankruptcy proceeding, the obligee shall immediately inform the surety of the proceeding.
(3) If an obligee fails to perform the obligations specified in subsections (1) and (2) of this section, the claim of the obligee against the surety shall be reduced by the amount of damage caused to the surety by such non-performance.
§ 147. Notice of performance of obligation
(1) If a surety performs an obligation of the principal obligor in part or in full, the surety shall notify the principal obligor of the performance.
(2) If a surety fails to notify the principal obligor of the performance of an obligation and the principal obligor performs the same obligation, the surety shall not have a right of recourse against the principal obligor if the principal obligor did not know and did not have to know that the surety has performed the obligation. This shall not preclude nor restrict the right of the surety to make a claim arising from unjustified enrichment against the obligee.
§ 148. Right of surety to require security or performance
(1) A surety may require the principal obligor to provide security or, once the obligation has fallen due, to perform the obligation for the benefit of the obligee if:
1) the principal obligor changes the place of business, residence or seat thereof and this renders the filing of a claim for payment against the obligor more complicated;
2) the risk borne by the surety has increased significantly due to deterioration of the principal obligor’s economic situation, a decrease in the value of an item given as security, or an intentional act or gross negligence on the part of the principal obligor;
3) the principal obligor fails to perform an obligation arising from a contract entered into with the surety;
4) the principal obligor fails to perform the obligation thereof in due time.
(2) A surety may also require the principal obligor to perform an obligation for the benefit of the obligee also if the court has made a judgment by which an action of the obligee against the surety is satisfied.
§ 149. Defences by surety
(1) A surety may set up all such defences against a claim of the obligee which could have been set up by the principal obligor, except defences which are directly related to the person of the principal obligor. The surety has the right to set up such defences even if the principal obligor waived the defences.
(2) A defence which a principal obligor may set up against a claim secured by suretyship shall not be set up by the surety if the purpose of the contract of suretyship is also to provide security to the obligee for the occasion that a defence is set up by the principal obligee. In such case, the surety shall not, above all, set up a defence concerning the limited liability of a successor or a defence concerning termination or reduction of the obligation of the principal obligor in the case of liquidation or bankruptcy proceedings of the obligor or termination of a civil law partnership without legal succession.
(3) A surety may withhold satisfaction of a claim of the obligee until the end of the term during which the principal obligor may annul the transaction on which the principal obligor’s obligation is based or withdraw from the contract. The surety shall retain such right even if the principal obligor may set off the claim arising from the transaction on which the principal obligor’s obligation is based.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(4) (Repealed - 19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(5) If an obligation subject to suretyship is secured by a right of security established with regard to the property of the principal obligor or if the obligee may exercise a right of security arising from law with regard to the property of the principal obligor, the surety may, until the principal obligor is declared bankrupt, require the obligee to satisfy the claim thereof out of the pledged property to the extent of the pledge.
(6) If a surety establishes a right of security in order to secure performance of an obligation of the principal obligor, the surety may require suspension of the compulsory execution initiated against the surety until the pledged object is sold.
§ 150. Co-sureties
If one and the same obligation is secured by several persons (co-sureties), such persons shall be solidarily liable to the obligee even if they do not undertake the suretyship together.
§ 151. Performance of obligation by surety
(1) If a surety performs an obligation in lieu of the principal obligor before the obligation has fallen due, the surety shall not make the claims arising from the suretyship against the principal obligor before the due date for the performance of the obligation of the principal obligor.
(2) Once the obligation of a principal obligor has fallen due, the surety may perform the obligation in lieu of the principal obligor at any time.
§ 152. Surety’s right of recourse against principal obligor
(1) If a surety performs an obligation of the principal obligor, the claim of the obligee against the principal obligor transfers to the surety to the extent that the claim is satisfied. Against such claim, the principal obligor may set up all such defences which the principal obligor had against the obligee as well as defences arising from the legal relationship between the principal obligor and the surety. The provisions of § 70 of this Act apply mutatis mutandis to the limitation period for the right of recourse of the surety.
(2) If a surety performs an obligation without setting up the defences which the principal obligor had against the obligee, the claim of the obligee shall not transfer to the surety to the extent that the liability of the surety would have been reduced as a result of such defences unless the surety proves that the surety was not and did not have to be aware of such defences.
§ 153. Termination of suretyship
(1) A suretyship terminates:
1) upon termination of the obligation secured by the suretyship;
2) upon a transfer of the obligation unless the surety consents to be liable for the new obligor;
3) in the case of a suretyship for a specified term, upon the expiry of the term.
(2) In the case of a contract of consumer surety, the consent specified in clause (1) 2) of this section shall be granted in writing.
(3) Upon termination of a suretyship for a specified term, it is presumed that the liability of the surety extends to the obligations which arose before the expiry of the term.
(4) If a situation arises where the principal obligor and the surety are one and the same person, the obligee shall retain the security and other rights arising from the suretyship.
§ 154. Specifications for termination of contract of consumer surety
(1) A contract of consumer surety entered into for an unspecified term in order to secure a future obligation may be cancelled by the surety at any time. If such contract is entered into for a specified term, the contract may be cancelled after five years have passed from the contract being entered into.
(2) Upon cancellation of a contract of consumer surety, the suretyship remains in force with regard to obligations which arose before the cancellation.
§ 155. Provision of guarantee
(1) A person engaged in an economic or professional activity (guarantor) may, by a contract, assume an obligation (guarantee) before an obligee, according to which the person undertakes to perform obligations arising from the guarantee on the demand of the obligee.
(11) It is presumed that the obligee consents to the guarantee.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) The obligation of a guarantor before the obligee which arises from the guarantee shall not be affected by the obligation of the obligor secured by the guarantee nor the validity of the obligation even if the guarantee contains a reference to the obligation.
(3) A guarantor may only set up such defences against the obligee which arise from the guarantee.
(4) The obligation of a guarantor arising from the guarantee terminates:
1) when the guarantor has paid the obligee the amount of money for the payment of which the guarantor was obligated pursuant to the guarantee;
2) upon expiry of the term for which the guarantee is provided;
3) if the obligee waives the rights arising from the guarantee, including cases where the obligee returns the document on which the guarantee was based to the guarantor.
(5) If a guarantor performs an obligation arising from the guarantee, the guarantor shall have a right of recourse against the obligor only if such right arises from the relationship between the guarantor and the obligor.
Division 2
Earnest Money
§ 156. Definition of earnest money
(1) Earnest money is a sum of money given by one party to a contract to the other party to certify the that the contract has been entered into and to secure the performance thereof.
(2) Upon performance of a contract secured with earnest money, it is presumed that the earnest money will be used towards performance of the obligation or, if performance is impossible, that the earnest money will be refunded.
§ 157. Consequences of non-performance of contract secured with earnest money
(1) If the non-performance of a contract secured with earnest money is the fault of the party which gave the earnest money, the other party shall retain the earnest money. If the party which receives the earnest money requires compensation for the damage incurred by the party due to non-performance of the contract, the earnest money shall be used towards such compensation.
(2) If a contract secured with earnest money is not performed for a reason other than the fault of the party which gave the earnest money, the party may require the earnest money to be refunded.
Division 3
Contractual Penalty
§ 158. Definition of contractual penalty
(1) A contractual penalty is an obligation which is prescribed in the contract and under which the party which fails to perform the contract undertakes to pay an amount of money determined by the contract to the injured party.
(2) The provisions concerning contractual penalties also apply to acts which a non-performing party must perform in the interests of the injured party.
(3) The provisions of this Division apply mutatis mutandis in cases where the parties have agreed in advance on the amount of the damage to be compensated for by the non-performing party.
§ 159. Contractual penalty and claim for performance of obligation
(1) If a contractual penalty is agreed upon for the occasion of non-performance of an obligation, the injured party may claim performance of the obligation in addition to payment of the contractual penalty. Performance of the obligation in addition to payment of a contractual penalty shall not be claimed if the contractual penalty was agreed upon as a substituted performance and not as a measure for achieving performance.
(2) An injured party loses the right to claim payment of a contractual penalty if the party fails to notify the other party during a reasonable period after becoming aware of the non-performance that the party is claiming payment of the contractual penalty.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
§ 160. Contractual penalty in case of excused non-performance
If non-performance of an obligation is excused, payment of a contractual penalty shall not be claimed unless otherwise prescribed by the contract.
§ 161. Contractual penalty and damage
(1) In the case of non-performance of a contract, the injured party may claim payment of a contractual penalty regardless of the actual damage.
(2) If an injured party has the right to claim compensation for damage incurred due to non-performance of the contract, compensation shall be paid to the extent not covered by the contractual penalty.
§ 162. Reduction of contractual penalty
(1) If a contractual penalty to be paid is unreasonably high, the court may reduce the penalty to a reasonable amount at the request of the party obligated to pay the penalty, taking into particular account the extent to which the obligation has been performed by the party, the legitimate interests of the other party and the economic situation of the parties.
(2) Agreements which derogate from the provisions of subsection (1) of this section to the detriment of the party obligated to pay a contractual penalty are void.
(3) A party obligated to pay a contractual penalty does not have the right to require a reduction of the penalty after the party has paid the penalty.
§ 163. Contractual penalty if contract is void
If a contract is void, agreements concerning the payment of contractual penalties are also void.
Chapter 9
Transfer of Claims and Obligations
Division 1
Transfer of Claims
§ 164. Assignment of claim
(1) An obligee may transfer the claim thereof to another person on the basis of a contract in part or in full regardless of the consent of the obligor (assignment of claim). A claim shall not be assigned if assignment is prohibited by law or if the obligation cannot be performed for the benefit of any other person but the original obligee without altering the content of the obligation.
(2) Upon assignment of a claim, the new obligee assumes the position of the original obligee.
(3) If an obligee assigns one and the same claim more than once, the earliest assignment is deemed to be valid.
§ 165. Assignment of contingent claims and future claims
Future claims and contingent claims may also be assigned if they are sufficiently defined at the time of the assignment.
§ 166. Restrictions on assignment
(1) Claims for maintenance, claims for compensation for damage arising from a bodily injury, health damage or the death of a person and any other claims which cannot be subject to a claim pursuant to law shall not be assigned. Such claims may be assigned if counter-performance of equal economic value is received in exchange for the assignment.
(2) Agreements concluded between an obligor and an obligee whereby assignment of the claim is precluded or the right to assign the claim is restricted have no effect against third parties.
(3) The provisions of subsection (2) of this section shall not preclude or restrict the liability arising from agreements entered into between the original obligee and the obligor for violation of the prohibition to preclude or restrict the right to assign the claim. The person to whom the claim is assigned shall not be liable for violation of such agreement.
§ 167. Transfer of security and other rights
(1) Security given to secure a claim and rights arising from accessory obligations which are related to the claim, including pre-emptive rights for the occasion of bankruptcy or compulsory execution, which are not inseparably bound to the person assigning the claim and which are transferable shall transfer to the new obligee upon assignment of the claim. The obligation of the person assigning the claim also to transfer the security and the rights arising from accessory obligations which are not related to the claim is presumed.
(2) Security and rights arising from accessory obligations are related to the claim if the security and the rights extinguish upon termination of the claim secured thereby. Security and rights arising from accessory obligations are not related to the claim if the security and the rights do not extinguish upon termination of the claim secured thereby.
(3) Upon assignment of a claim, the rights of the original obligee to interest and contractual penalties also transfer to the new obligee.
(4) Upon assignment of a claim, the right to exercise rights arising from execution documents existing with respect to the claim also transfers to the new obligee.
(5) If a claim is assigned in part, the original obligee shall retain the pre-emptive right before the new obligee to the satisfaction of the claim to the extent that the claim is not assigned to the new obligee and the pre-emptive right to rights and security arising from accessory obligations.
(6) Upon transfer of security and rights arising from accessory obligations, the original obligee shall do all that is necessary to enable the new obligee to exercise the rights arising from the security and accessory obligations, including handing over the pledged objects held by the original obligee to the new obligee. Upon transfer of a claim secured by a mortgage or by a registered security over a moveable, the obligee assigning the claim shall provide assistance in registering the transfer of the right of security.
(7) Upon assignment of a claim for which another claim is assigned or another right is transferred to the obligee as security, it is presumed that they shall be transferred to the new obligee.
(8) The provisions of this section shall not preclude or restrict the validity of agreements to preclude or restrict the transfer of security which are entered into between an obligee assigning a claim and an obligor or a person providing the security.
§ 168. Evidence of assignment of claim
(1) An obligee who assigns a claim shall hand over documents certifying the claim and rights arising from accessory obligations, including execution documents specified in subsection 167 (4) of this Act, to the new obligee and provide the obligee with information necessary for filing the claim. If the original obligee has further use for a document, the new obligee may, in lieu of the document, require a copy of or extract from the document or performance of other acts which would enable the new obligee to exercise the rights thereof.
(2) At the request of the new obligee, the original obligee shall provide the new obligee with a document certifying the assignment of the claim.
§ 169. Performance of obligation for benefit of original obligee
(1) If an obligor performs an obligation for the benefit of an obligee who has assigned the claim and, at the time of performance of the obligation, the obligor is not and does not need to be aware of the assignment of the claim, the obligor is deemed to have performed the obligation for the benefit of the correct person.
(2) If an obligor performs a transaction or other act relating to the claim with the obligee after the obligee has assigned the claim but, at the time of performance of the transaction or other act, the obligor is not and does not need to be aware of the assignment of the claim, the transaction or other act is deemed to be valid.
(3) If a court judgment concerning a claim has entered into force in a court proceeding between the obligor and the original obligee, the judgment shall also apply to the new obligee unless the obligor was or should have been aware of the assignment of the claim upon initiation of the court proceeding.
§ 170. Notice of assignment
If an obligee notifies an obligor of assignment of the claim to a new obligee, the assignment is deemed to have occurred in respect of the obligor even if the claim was actually not assigned or the assignment is invalid. The same applies if the obligee has issued a document concerning assignment of the claim and the new obligee submits the document to the obligor.
§ 171. Defences of obligor against claim of new obligee and set-off against assigned claim
(1) In addition to defences which an obligor has against the claim of a new obligee, the obligor may set up all such defences which the obligor had against the original obligee at the time of assignment of the claim.
(2) An obligor shall not set up such defences against a new obligee which arise from non-performance of a contract which precluded or restricted the right of the obligee to assign the claim and the obligor shall not set off the claim on such basis.
(3) An obligor may also set off a claim against the original obligee against the claim of the new obligee unless:
1) the obligor has acquired the claim thereof from a third party and, at the time of acquiring the claim, the obligor knew or should have known that the claim against the obligor had been assigned;
2) the claim of the obligee falls due later than the assigned claim and after the obligor became or should have become aware of the assignment.
§ 172. Document certifying assignment
An obligor may withhold performance of an obligation to a new obligee if the original obligee fails to provide the obligor with a document certifying assignment of the claim unless the original obligee has given written notice to the obligor of the assignment of the claim.
§ 173. Transfer of claim on basis of law
(1) If a claim transfers from an obligee to another person (acquirer of claim) on the basis of law, the transfer of the claim shall be valid without a declaration of intent from the original obligee.
(2) The provisions concerning assignment of claims apply to the transfer of a claim on the basis of law.
(3) A claim transfers on the basis of law:
1) to a person whose assets are sold in an execution proceeding in order to satisfy a claim against an obligor;
2) to a person who performs an obligation because satisfaction of the claim against the obligor is secured with the assets of the person;
3) to a person who performs an obligation in order to avoid compulsory execution in the cases specified in subsection 78 (3) of this Act;
4) in other cases provided by law.
(4) In the cases provided for in clauses (3) 1)–3) of this section, the obligation to satisfy the claim shall not transfer to the extent that the obligation is borne by the acquirer of the claim in the legal relationship between the acquirer and the obligor.
(5) Upon transfer of a claim on the basis of law, the acquirer of the claim acquires the right to the interest and contractual penalties agreed upon only to the extent that such interest or penalties have arisen after the transfer of the claim.
§ 174. Transfer of other rights
The provisions of this Division concerning transfer of claims apply mutatis mutandis to the transfer of other rights unless otherwise prescribed by law or the nature of the rights.
Division 2
Transfer of Obligations
§ 175. Assumption of obligation
(1) A third party may assume the obligation of an obligor on the basis of a contract entered into with the obligee whereby the third party assumes the position of the original obligor.
(2) A third party may also assume the obligation of an obligor on the basis of a contract entered into with the obligor, but the obligation transfers only on the condition that the obligee consents to such transfer.
(3) If an obligor has entered into a contract with a third party for the assumption of an obligation, the obligor or the third party may make a proposal to the obligee to give notice within the term set by the obligee as to whether the obligee consents to the transfer of the obligation. If the obligee does not grant consent within such term, the obligee is deemed to have refused to grant consent.
(4) If a third party assumes an obligation on the basis of a contract entered into with the obligor and the obligee has not yet granted consent or refuses such consent, the obligor is deemed to have the right to require timely satisfaction of the obligee’s claim from the transferee of the obligation. If the obligee refuses to grant consent to the assumption of the obligation, the obligor may require the transferee of the obligation to secure performance of the contract on the basis of which the obligation is assumed.
(5) If an obligee has granted advance consent to the assumption of an obligation, the obligation is deemed to have been assumed by entry into the contract for the assumption of the obligation and notification of the obligee of the entry into the contract. An obligee shall not revoke advance consent unless the obligee has reserved the corresponding right upon granting the consent.
(6) If a person acquires an immovable and, by an agreement with the transferor, assumes the transferor’s obligation secured by a mortgage over the immovable, the transferor shall give written notice of the assumption of the obligation to the obligee after the new owner has been entered in the land register. If the obligee does not refuse to grant consent to the assumption of the obligation within three months as of receipt of the notice, the obligee is deemed to have granted consent. After the obligee has granted or refused to grant consent to the assumption of the obligation, the transferor of the immovable shall notify the transferee of the grant or refusal to grant consent.
(7) (Repealed - 19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(8) If one and the same obligation transfers to several persons, the persons are presumed to be solidarily liable for the performance of the obligation.
§ 176. Defences of transferee of obligation
(1) In addition to the defences which the transferee of an obligation has against the obligee, the transferee may set up such defences against the claim of the obligee which arise from the legal relationship between the obligee and the original obligor, except the defences which the original obligor personally has against the obligee. Also, the transferee shall not set off the claim of the original obligor against the claim of the obligee.
(2) The transferee of an obligation shall not set up such defences against the claim of the obligee which the transferee has against the original obligor pursuant to the legal relationship on which the assumption of the obligation is based.
(3) If an obligation is assumed with the consent of the obligee on the basis of a contract entered into with the obligor, the transferee of the obligation may set up defences arising from the invalidity of the assumption of the obligation against the obligee only if the obligee was or should have been aware of the reason for such invalidity upon granting the consent.
§ 177. Accessory obligations and security upon assumption of obligation
(1) Upon assumption of an obligation, accessory obligations related to the claim shall transfer to the new obligor unless they are of a personal nature or inseparably bound to the person of the original obligor for any other reason. The obligation to pay the interest and contractual penalties agreed upon transfers to the new obligor even if these fall due after the assumption of the obligation.
(2) Upon assumption of an obligation, the security given for and related to the obligation shall terminate. If security given for the performance of the obligation is not related to the obligation, the security shall be returned to the person who provided the security pursuant to the agreement on the basis of which the security was provided.
(3) The provisions of subsection (2) of this section do not apply if the person who provided security consents to be liable for the performance of the obligation by the new obligor.
§ 178. Joining in obligation
(1) An obligation may also be assumed by a third party joining in the obligation as a new obligor in addition to the original obligor (joining in obligation).
(2) A third party may enter into an agreement joining in an obligation with the obligee or the obligor.
(3) If a person joins in an obligation in order to secure the claim of the obligee, the formalities provided for in § 144 of this Act apply mutatis mutandis.
(4) Joining in an obligation creates solidary obligation. If a person joins in an obligation in order to secure the claim of the obligee, the provisions of §§ 145, 149 and 152 of this Act also apply.
Division 3
Assumption of Contract
§ 179. Definition of assumption of contract
(1) A party to a contract may, with the consent of the other party, transfer the party’s rights and obligations arising from the contract to a third party on the basis of a contract entered into with the third party unless otherwise provided by law.
(2) Upon assumption of a contract, all rights and obligations arising from the contract are deemed to have transferred to the transferee of the contract.
(3) The provisions of §§ 167, 168, 171, 176 and 177 of this Act apply mutatis mutandis to the assumption of contracts.
Division 4
Transfer of Enterprise
§ 180. Transfer of enterprise
(1) The transferor of an enterprise may undertake to transfer the enterprise to the transferee on the basis of a contract entered into with the transferee. An enterprise may also be transferred to a transferee pursuant to law.
(2) An enterprise comprises the things, rights and obligations relating to and in the service of the management of the enterprise, including contracts relating to the enterprise.
§ 181. Restrictions on application
The provisions of this Division do not apply to the transfer of an enterprise in the event of the merger, division or transformation of legal persons or if an enterprise is taken over pursuant to law, in particular in the case of compulsory execution or bankruptcy proceeding.
§ 182. Acquisition of enterprise
(1) Things belonging to an enterprise are transferred to the transferee pursuant to the provisions concerning the transfer of such things, the rights pursuant to the provisions concerning the transfer of such rights and contracts pursuant to the provisions concerning the transfer of such contracts. The transferor of an enterprise is required to transfer possession of things to the transferee and, in the case of property subject to registration, to ensure that the corresponding entries are made in the registers.
(2) By taking over the things and rights belonging to an enterprise, the transferee takes over all of the transferor’s obligations related to the enterprise, including obligations with regard to the employees of the enterprise which arise from employment contracts, unless otherwise provided by law. The consent of the obligee or the other party is not required for the assumption of an obligation or the transfer of the contract unless otherwise provided by law.
(3) Agreements derogating from the provisions of subsection (2) of this section have no effect against third parties. Such agreements apply to obligees who have consented to the agreements in a format which can be reproduced in writing.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(4) The transferee of an enterprise shall promptly notify the obligees of the acquisition of obligations and the transferor of the enterprise shall promptly notify obligors of the assignment of the claims to the transferee.
(5) The provisions of this section apply mutatis mutandis to the grant of the use of an enterprise.
§ 183. Liability of transferor of enterprise
(1) A transferor and the transferee shall be solidarily liable to the obligee for obligations which have arisen before the transfer of the enterprise and which, by the time of the transfer, have fallen due or will fall due within five years after the transfer. It is presumed that, in relations with the transferor, the transferee of the enterprise is the obligated person.
(2) Agreements derogating from the provisions of subsection (1) of this section have no effect against third parties, except to obligees who have consented to such agreements in a format which can be reproduced in writing.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(3) The limitation period for claims arising from obligations specified in subsection (1) of this section shall be five years as of the transfer of the enterprise unless a shorter limitation period applies to some of the claims.
(4) The provisions of this section apply mutatis mutandis to the grant of the use of an enterprise.
§ 184. Right to business name
(1) The right to use the existing business name of an enterprise subject to transfer transfers to the transferee unless this is contrary to law, the rights of a third party or an agreement between the parties. The fact that the activities of the transferee continue in a legal form other than that of the transferor shall not hinder the transfer of the business name if the transferee adheres to the requirements for business names provided by law.
(2) If the transferor of an enterprise is a natural person, the right to use the existing business name transfers to the transferee with the written consent of the transferor of the enterprise.
§ 185. Transfer of part of enterprise
The provisions of this Division also apply to contracts under which a part of an enterprise which is an organisational whole (an installation) is transferred.
Chapter 10
Termination of Obligation
Division 1
General Provisions
§ 186. Bases for extinction of obligation
An obligation extinguishes:
1) upon a conforming performance;
2) upon a set-off;
3) upon merger;
4) by an agreement to terminate the obligation;
5) upon withdrawal from the contract;
6) upon cancellation of the contract;
7) upon the death of an obligor who is a natural person if the obligation cannot be performed without his or her personal participation;
8) upon the death of an obligee who is a natural person if the obligation is to be performed personally for the benefit of the obligee;
9) in other cases prescribed by the law or the contract.
§ 187. Termination of accessory obligations and security
(1) Upon termination of an obligation, the security and accessory obligations relating to the obligation also terminate unless otherwise provided by law.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) If the security provided to secure a claim is not related to the claim and the obligation terminates, the security shall be returned, pursuant to the agreement on the basis of which the security was provided, to the person who provided the security.
Division 2
Withdrawal from Contract
§ 188. Declaration of and consequences of withdrawal
(1) A party withdraws from a contract by submitting a declaration of withdrawal to the other party.
(2) If a party may withdraw from a contract pursuant to law or the contract, withdrawal from the contract shall release both parties from the performance of their contractual obligations. Withdrawal shall not affect the validity of rights and obligations which have arisen from the contract before the withdrawal.
(3) Withdrawal shall not affect agreements on the resolution of disputes arising from the contract or other contract terms concerning the rights and obligations of the parties after withdrawal from the contract.
§ 189. Return of and compensation for that which was delivered under contract
(1) In the event of withdrawal from a contract, each party may claim return of that which was delivered by the party under the contract and delivery of the fruits and other gain received if the party returns all property that has been delivered to the party. Obligations arising from withdrawal shall be performed by the parties simultaneously, and the provisions of § 111 of this Act apply mutatis mutandis. Interest shall be paid on money refunded as of the moment of receipt of the money.
(2) In lieu of return or delivery, a party shall compensate for the value of that which was received by the party if:
1) return or delivery is impossible due to the nature of that which was received, including in the case of the provision of a service or the use of a thing;
2) the party has consumed or transferred the object received, encumbered it with the right of a third party or processed it;
3) that which was received has been destroyed.
(3) If the price of that which was received is set in the contract, the price is deemed to be the value of that which was received for the purposes of subsection (2) of this section.
(4) If a thing subject to return or delivery has deteriorated and such deterioration is not the result of the regular use of the thing, the decrease in the value of the thing shall be compensated for.
(5) A party who, under the circumstances, should reasonably be able to foresee the possibility of withdrawal from the contract shall ensure that it is possible to return that which was received in the case of withdrawal from the contract.
§ 190. Preclusion of compensation
(1) A party is not required to compensate for the value of that which was received by the party in lieu of return or delivery thereof if:
1) the circumstances on which withdrawal is based become evident only upon processing the thing;
2) deterioration or destruction occurred due to circumstances dependent on the other party or due to circumstances the risk of which is borne by the other party, or if the damage would also have occurred if that which was received had been in the possession of the other party;
3) upon exercising the right of withdrawal arising from the law, that which was received has deteriorated or been destroyed although the party exercised such care as the party would exercise in the party’s own affairs.
(2) In the case of unjustified enrichment of a party under the circumstances specified in subsection (1) of this section, the party shall return that which was received pursuant to the provisions concerning unjustified enrichment.
§ 191. Gains and expenses
(1) In the case of withdrawal by a party who does not receive fruits or other gain which the party could have received upon adherence to the requirements for regular management, the party shall compensate the other party for the value of such fruits or other gain. If the right of withdrawal arises from the law, the party entitled to withdrawal shall be liable only for the exercise of such care in the receipt of fruits and gain as the party would exercise in the party’s own affairs.
(2) If a party returns an object or compensates for the value of the object or if the obligation to compensate for the value of the object is precluded pursuant to clause 190 (1) 1) or 2) of this Act, the other party shall compensate the first party for the necessary expenses incurred with respect to the object. In the case of unjustified enrichment of the other party through other expenses incurred by the first party, the first party shall be compensated for such other expenses pursuant to the provisions concerning unjustified enrichment.
§ 192. Indivisibility of right of withdrawal
(1) If several persons participate in a contract as one party, the persons may only exercise the right of withdrawal collectively. If the right of withdrawal extinguishes for any one person entitled to withdrawal, the right shall also extinguish for all the other persons.
(2) If a party withdraws from a contract where several persons participate as the other party, the first party may exercise the right of withdrawal only with regard to all such persons collectively.
(3) In the case of a multilateral contract, a party may withdraw from the contract only if the other party or parties fail to perform an obligation assumed with regard to the first party.
§ 193. Set-off after fundamental breach of contract
Withdrawal from a contract due to a fundamental breach of the contract is void if the party with regard to whom the right of withdrawal is to be exercised may terminate the obligation by a set-off and gives notice of the set-off immediately after the other party has given notice of withdrawal from the contract.
§ 194. Specifications for withdrawal from consumer contracts
(1) If a consumer withdraws from a contract on the grounds specified in §§ 49, 56, 383, 409, 433 or 874 of this Act, the provisions of §§ 188–193 of this Act apply together with the specifications provided for in this section.
(2) A consumer may withdraw from a contract on the grounds specified in subsection (1) of this section without specifying the reason for withdrawal. Return of a thing by a consumer within the term prescribed for the return is also deemed to be withdrawal. Dispatch of the thing within the specified term is sufficient for adherence to the term.
(3) Contract terms which, in comparison to the provisions of this Act, impede the right of withdrawal from being exercised, in particular agreements pursuant to which withdrawal is bound to payment of earnest money or a contractual penalty, are void.
(4) In the case of withdrawal on the grounds specified in subsection (1) of this section, the expenses relating to the return of the thing or compensation for services and the related risks shall be borne by the other party to the contract unless otherwise provided by law. The parties may agree that the consumer will bear the regular expenses relating to the return of the thing to the extent of a sum corresponding to 10 euro, except in cases where the thing delivered or service provided is not that which was ordered.
(5) If a consumer is not notified of the right of withdrawal, the consumer shall, in the case of withdrawal, be liable only for any damage caused to the thing intentionally or through gross negligence.
(6) If a consumer withdraws from a contract the object of which is performance of an obligation other than the delivery of a thing, the consumer shall compensate for the value of that which was received until withdrawal from the contract. In such case, the decrease in the value of the thing resulting from its proper use shall not be taken into consideration.
(7) In the cases specified in subsections (4)–(6) of this section, the other party to the contract shall not make claims not specified in the same subsections against the consumer.
(8) The provisions of this section shall not preclude or restrict the use of legal remedies arising from a breach of contract.
(9) Agreements which derogate from the provisions of this section to the detriment of the consumer are void.
Division 3
Cancellation of Contract
§ 195. Ordinary cancellation of contract
(1) A party cancels a contract by making a declaration of cancellation to the other party.
(2) If a party may cancel the contract pursuant to law or the contract, cancellation of the contract shall release both parties from the performance of their contractual obligations. The rights and obligations which arise from the contract before cancellation remain valid.
(3) A contract for the performance of a continuing obligation or recurring obligations (contract entered into for an indefinite period ) which is entered into for an unspecified term may be cancelled by either party by giving reasonable advance notice unless otherwise prescribed by law or the contract (ordinary cancellation).
(4) If several persons participate in a contract as one party, the persons may only exercise the right of cancellation collectively. If a party cancels a contract where several persons participate as the other party, the first party may cancel the contract only with regard to all such persons collectively.
(5) Upon cancellation of a contract, the parties are only required to return that which has been delivered in advance with respect to the time of cancellation of the contract. The provisions of §§ 189–191 of this Act apply mutatis mutandis to the return.
§ 196. Extraordinary cancellation of contract
(1) Either party to a contract entered into for an indefinite period may cancel the contract with good reason without giving advance notice, in particular if the party cancelling the contract cannot reasonably be expected to continue performing the contract until the due date agreed upon or until expiry of the term for advance notice taking into account all the circumstances and the mutual interests of the parties (extraordinary cancellation).
(2) If non-performance of a contractual obligation by the other party provides good reason for cancelling the contract, the contract may only be cancelled if the other party fails to render a conforming performance within the term granted therefor. Such term need not be granted in the cases provided for in clauses 116 (2) 2)–4) of this Act.
(3) A person entitled to cancel a contract may cancel the contract only during a reasonable period of time after the person becomes aware of the circumstances substantiating the cancellation.
(4) If a person entitled to cancel a contract is, due to the cancellation, no longer interested in the obligations which have already been performed, the person may also extend the cancellation to such obligations. The provisions of §§ 189–191 of this Act apply mutatis mutandis to the return of that which was delivered.
Division 4
Set-off
§ 197. Definition of set-off
(1) If two persons (parties to a set-off) are required to pay each other a sum of money or perform another obligation of the same type, either party (the party requesting set-off) may set off the claim thereof against the claim of the other party if the party requesting set-off has the right to perform the obligation thereof and to require performance from the other party.
(2) As a result of a set-off, the claims of the parties to the set-off extinguish as of the time they could be set off and to the extent that they overlap unless the parties agree otherwise. If interest has already been paid on one or both of the claims, the set-off shall have retroactive effect only for the last period for which interest was paid.
(3) Monetary claims expressed in different currencies may be set off at an exchange rate calculated as at the date of the set-off at the place of business of the party requesting set-off or, in the absence of a place of business, at the location of the residence or seat of the party. Set-off is not permitted if the exchange rates have not freely developed in the market.
§ 198. Declaration of set-off
A claim is set off by making a declaration of set-off to the other party. A declaration which is made conditionally or by setting a term is void.
§ 199. Set-off in case of different places of performance
If claims with different places of performance are set off, the party requesting set-off shall compensate the other party for damage caused by the fact that due to the set-off the other party cannot accept performance at the place prescribed or perform the obligation thereof at the place prescribed.
§ 200. Restrictions on set-off
(1) The following claims shall not be set off:
1) claims for maintenance, claims for compensation for damage arising from health damage or the death of a person and claims arising from unlawful or intentional causing of damage which the other party has against the party requesting set-off;
2) claims of the other party which pursuant to law cannot be subject to a claim;
3) claims of the other party the set-off of which is prohibited by law.
(2) A party requesting set-off may also set off the claim thereof against the claim of the other party if the claim of the other party has expired, on the condition that the right to set off the claim arose before the expiry of the claim.
(3) A party requesting set-off shall not set off a seized claim against the party’s claim against the other party if the party requesting set-off acquired the claim after the seizure or if the claim thereof fell due after the seizure and later than the seized claim.
(4) A party requesting set-off shall not set off a claim against which the other party may set up defences.
§ 201. Set-off in event of several claims
(1) If the parties to a set-off have several claims suitable for set-off, the party requesting set-off may determine the claims to be set off. If the claims to be set off are not specified in the declaration of set-off or if the other party immediately objects to the choice of the claims specified in the declaration, the following claims are deemed to be set off:
1) firstly, the obligation which is the first to fall due;
2) secondly, the obligation for which the obligee has the least security;
3) thirdly, the obligation which is the most burdensome for the obligor;
4) fourthly, the obligation which arose first.
(2) If a party requesting set-off is required to pay interest to the other party or compensate the other party for expenses in addition to the performance of the principal obligation, the set-off is deemed to discharge first the expenses, then the interest due and finally the principal obligation. The party requesting set-off shall not determine a different order for the performance of the obligations without the consent of the other party.
(3) The provisions of this section do not apply to set-offs effected under the circumstances specified in § 203 of this Act.
§ 202. Restrictions on set-off in event of contract entered into for benefit of third party
In the case of a contract entered into for the benefit of a third party, the party which is to perform an obligation for the benefit of the third party shall not set off a claim filed against such party for the performance of the obligation.
§ 203. Current account
(1) If monetary claims and obligations arising for both parties from contracts entered into in the continuing business relationship between the parties are to be calculated in total (current account), the claims and obligations are deemed to be set off by such calculation. In such case, the balance of the claims and obligations is the amount due.
(2) Claims not related to a continuing relationship between the parties shall not be set off pursuant to the procedure specified in subsection (1) of this section.
(3) Claims which may not be set off shall not be entered in a current account.
(4) The entry of a claim in a current account shall not deprive a party of the right to resort to legal remedies with regard to transactions from which the claim arose.
(5) If a claim entered in a current account is secured, the obligee may use the security to the extent of the secured claim in order to secure a claim for payment of the balance for the benefit of the obligee.
(6) The entry of a claim in a current account shall not preclude or restrict the liability of third parties for claims entered in the current account.
(7) Claims entered in a current account shall not be seized or be subject to a claim. Only claims for payment of the balance may be seized or be subject to a claim.
(8) If a claim for payment of the balance is seized for the benefit of the obligee of the party requesting set-off, the entry into a current account of obligations which arise from transactions concluded after the seizure does not apply with regard to the obligee.
§ 204. Acts relating to current account
(1) A party requesting set-off who organises the maintenance of a current account shall notify the other party of the balance of the account at the end of each calculation period, indicating the claims which have been entered in the account and of which the other party has not yet been notified. The duration of a calculation period is presumed to be one year.
(2) If the other party does not contest the balance sent to the party within a reasonable period of time, the balance is deemed to be correct. In such case, a negative balance is deemed to be an acknowledgement of an obligation.
(3) Interest shall be paid on the balance as of the receipt of the balance to the party for whom the balance is positive even if interest has already been paid on claims entered in the current account.
(4) A claim for payment of the balance falls due upon notification of the balance.
(5) The limitation period for a claim for payment of the balance shall be five years as of the date when the balance falls due.
§ 205. Termination of contract on current account
(1) If a contract on a current account is entered into for an unspecified term, either party may cancel the contract at the end of each calculation period by giving at least ten days’ notice of the cancellation.
(2) Upon the death of a party to a contract on a current account, the other party and the successors of the deceased party may cancel the contract at any time.
(3) Regardless of the termination of a contract on a current account, payment of the balance may be required only after the end of the calculation period.
Division 5
Merger
§ 206. Termination of obligation by merger
(1) If an obligor and an obligee are consolidated in one and the same person, the obligation terminates. If an obligor and an obligee are consolidated in an obligation but the person has legitimate interest in the continuation of the obligation, the obligation shall not terminate.
(2) If merger is partial, the obligation terminates with respect to the consolidated part.
(3) If a pledge or other real right is established with regard to a claim, the claim remains in force with regard to the pledgee or the person holding the real right regardless of merger.
(4) The provisions of this section do not apply to claims arising from securities.
Division 6
Agreement on Termination of Obligation
§ 207. Termination of obligation by agreement
(1) An obligation terminates if the obligee and the obligor have agreed on the termination of the obligation due to the obligee waiving the claim.
(2) The provisions concerning termination of obligations apply if the parties to an obligation have agreed or the obligee admits that the obligation no longer exists.
Part 2
Transfer Deeds
Chapter 11
Contract of Sale
Division 1
General Provisions
§ 208. Definition of contract of sale
(1) By a contract of sale of a thing, a seller undertakes to deliver an existing thing, a thing to be manufactured or produced or a thing to be acquired in the future by the seller to the purchaser and to allow the transfer of ownership to the purchaser, and the purchaser undertakes to pay the purchase price for the thing to the seller in cash and to take delivery of the thing.
(2) The provisions of this Chapter also apply to contracts which are entered into to order a thing to be manufactured or produced, unless the party who orders the thing supplies the other party with a substantial part of the materials necessary for such manufacture or production. The provisions of this Chapter do not apply to contracts in which the preponderant part of the obligations of the party who furnishes the things consists of the supply of labour or other services.
(3) The provisions of this Act concerning the sale of things apply to the sale of rights and other objects, including the sale of energy, water and heat through a network, unless otherwise provided for in this Act and if this is not contrary to the nature of the object. The seller of a right shall allow the purchaser to acquire the right which is the object of the contract of sale.
(4) Consumer sale is the sale of a thing on the basis of a contract of sale where a consumer is sold a movable by a seller who enters into the contract in the course of his or her economic or professional activities.
§ 209. Obligation to deliver
(1) If a thing is to be delivered to a purchaser at a particular place, the seller shall make the thing ready to be placed at the disposal of the purchaser at the particular place and notify the purchaser that it is ready. If things with specific characteristics are the object of a contract, the things are not deemed to have been made ready to be placed at the disposal of the purchaser before the things have been clearly identified for delivery pursuant to the contract by use of markings, shipping documents or otherwise.
(2) The obligation to deliver a thing to the purchaser is deemed to have been performed if the seller has made the thing ready to be placed at the disposal of the purchaser at the particular place and has notified the purchaser thereof.
(3) If a thing is to be delivered to a purchaser at a particular place and the characteristics of the thing do not allow its separation by the seller before the purchaser takes delivery thereof, the thing is deemed to have been delivered to the purchaser if the seller has done all that is necessary to allow the purchaser to take delivery of the thing.
(4) If a seller is required to bring a thing to the purchaser, the seller shall deliver the thing to the purchaser. If a contract prescribes the carriage of things but the obligation of the seller to bring the thing to the purchaser does not relate thereto, the obligation to deliver the thing to the purchaser is deemed to be performed upon delivery of the thing to a carrier who is required to carry the thing from the place of dispatch.
(5) Failure of the seller to deliver a thing to the purchaser in time in the event of consumer sale is deemed to be a fundamental breach of contract.
§ 210. Additional obligations of seller in event of carriage of things
(1) If a seller is required to hand over things to a carrier and the things are not clearly identified by markings, by shipping documents or otherwise, the seller shall notify the purchaser that the things have been handed over to the carrier and provide a detailed description of the things.
(2) If a seller is required to organise the carriage of things, the seller shall enter into such contracts as are necessary for carriage of the things to the destination according to the usual terms and by means of transport which are appropriate in the circumstances.
(3) If a seller is not required to enter into an insurance contract in respect of the carriage of the goods, then the seller shall, at the request of the purchaser, provide the purchaser with all available information necessary for the insurance contract to be entered into.
§ 211. Handing over of documents
(1) A seller shall hand over documents required for taking delivery of the thing and for the possession, use and disposal thereof (documents relating to the thing) to the purchaser in the form prescribed in the contract at the place and time of delivery. If a seller has a legitimate interest in retaining the original of a document relating to a thing, the seller shall, at the request of the purchaser, give the purchaser a transcript or an extract instead of the original document.
(2) Documents relating to things which are subject to carriage shall be handed over to the purchaser at the purchaser's place of business which has the closest relationship to the contract or, if the purchaser does not have a place of business, at the residence or seat of the seller. If documents are to be handed over against payment of the purchase price, the documents shall be handed over at the place of payment of the purchase price.
(3) The documents relating to things shall be handed over to the purchaser such that the purchaser has sufficient time to take delivery of the things at their destination without unreasonable delay or to dispose of the things freely.
§ 212. Notification obligation of seller
If the purchaser is required to transport the thing from the place of delivery and the seller has the right to specify the time of delivery of things, the seller shall notify the purchaser timely of when the thing is ready to be placed at the disposal of the purchaser.
§ 213. Obligation to pay purchase price
(1) If the purchase price of a thing is to be calculated on the basis of the amount, measurement or weight of the thing, the calculation shall be based on the amount, measurement or weight of the thing at the time when the risk of accidental loss of or damage to the thing passes to the purchaser. If the purchase price of a thing is to be determined by the weight of the thing, it shall be presumed that the price is to be determined by the net weight of the thing.
(2) If a purchaser is required to pay the purchase price against the delivery of the thing or the handing over of a document, the purchaser shall pay at the place of delivery of the thing or the place where the documents are handed over.
(3) A purchaser is not required to pay the purchase price before being granted the opportunity to examine the things unless this is not possible due to the agreed manner of delivery or payment.
(4) In the event of consumer sale, a purchaser shall not be required to make advance payments to an extent greater than half of the purchase price.
§ 214. Obligation to pay purchase price when risk of accidental loss of or damage to thing passes to purchaser
(1) A purchaser shall pay the purchase price even if the purchased thing is accidentally lost or damaged after the risk of accidental loss of or damage to the thing has passed to the purchaser.
(2) The risk of accidental loss of or damage to a thing passes to the purchaser upon delivery of the thing.
(3) The risk of accidental loss of or damage to a thing also passes to the purchaser at the time when the purchaser is in delay with the performance of an act by which he or she is to facilitate the delivery of the thing, in particular if the purchaser fails to take delivery of the thing. If things with specific characteristics are sold and in the case where the purchaser is in delay, the risk of accidental loss of or damage to the things does not pass to the purchaser until the things which are the object of the contract are separated and the purchaser is notified thereof.
(4) The risk of accidental loss of or damage to a thing sold in transit passes to the purchaser retroactively as of the thing being handed over to the first carrier. This does not apply when a seller, at the time of entry into a contract of sale, is aware or ought to be aware that the thing is lost or has been damaged and does not notify the purchaser thereof.
(5) If, in the event of consumer sale, the seller is required to deliver a thing to the purchaser, the risk of accidental loss or damage does not pass to the purchaser before the delivery of the thing to the purchaser or before the purchaser is in delay in taking delivery of the thing.
(6) The right of a seller to withhold documents relating to a thing does not affect the passing of the risk of accidental loss or damage.
§ 215. Costs of entry into and performance of contracts
(1) The seller shall incur the delivery costs of a thing, in particular the measurement and weighting costs, and the purchaser shall incur the costs of taking delivery of the thing and costs relating to payment of the purchase price, as well as possible costs of preparing or attesting the contract of sale and costs relating to the making of an entry in a public register on the basis of the contract.
(2) If, at the request of the purchaser, a thing sold is to be dispatched to a place other than the contractual place of performance of the obligation, the purchaser shall incur the additional costs relating thereto.
(3) If, in the event of consumer sale, a thing is delivered to the purchaser by the seller or by a carrier authorised by the seller on the basis of a contract, the reimbursement of transport costs may be claimed from the purchaser only if the size of the costs or the information on the basis of which such costs are calculated was communicated to the purchaser not later than on entry into the contract. This also applies to costs which are related to the provision by the seller of other services to the purchaser with the consent of the purchaser in connection with the sale.
(4) Upon the sale of a right, the seller shall incur the costs of the acquisition and transfer of the right.
§ 216. Benefit, costs and duties relating to thing
(1) Benefit which is received from a thing before it is to be delivered belongs to the seller, unless the receipt of such benefit may reasonably have been expected after the thing is to have been delivered. Benefit which is received from a thing after it is to have been delivered belongs to the purchaser, unless the receipt of benefit may reasonably have been expected before the thing is to have been delivered.
(2) The seller shall incur all costs and duties relating to a thing until delivery of the thing or until the purchaser is in delay in taking delivery of the thing, except for costs which are caused by any circumstance arising from the purchaser.
§ 217. Conformity of thing
(1) Things delivered to a purchaser shall conform to the contract, in particular in respect of the quantity, quality, type, description and packaging. Documents relating to a thing shall also conform to the contract.
(2) A thing does not conform to a contract if:
1) the thing does not have the agreed characteristics;
2) failing an agreement concerning the characteristics of the thing, the thing is not fit for the particular purpose for which the purchaser needs it and of which the seller was or ought to have been aware at the time of entry into the contract if the purchaser could reasonably expect to rely on the professional skills or expertise of the seller, and in other cases for purposes for which such things would ordinarily be used;
3) the use of the thing is hindered by provisions of legislation of which the seller was aware or ought to have been aware at the time of entry into the contract;
4) third parties have claims or other rights which they may submit with respect to the thing;
5) the movable is not packaged in the manner usual for such things or, where there is no such manner, in a manner adequate to preserve and protect the thing;
6) in the event of consumer sale, the thing does not possess the quality usual for that type of thing which the purchaser may have reasonably expected based on the nature of the thing and considering the statements made publicly with respect to particular characteristics of the thing by the seller, producer or previous seller of the thing or by another retailer, in particular in the advertising of the thing or on labels.
(3) The liability of a seller in the case of statements made by the seller, producer or previous seller of the thing or another retailer specified in clause (2) 6 of this section does not apply if the seller was not aware or did not need to have been aware of the statement or if the seller proves that the statement had been withdrawn or changed by the time of entry into the contract or that the statement did not affect the purchase of the thing.
(4) In the case of an immovable or a movable entered in a public register, the rights which are entered in the land register or another public register but are not valid are also deemed to be third party rights encumbering a thing within the meaning of clause (2) 4) of this section.
(5) The lack of conformity of a purchased thing arising from the incorrect installation of the thing is deemed to be equal to the lack of conformity arising from the thing if the installation was carried out by the seller or at the responsibility of the seller. This also applies if the thing is installed by the purchaser and the incorrect installation is the result of insufficient information provided by the seller with respect to installation of the thing.
(6) Upon sale of the right to possess a thing, the seller shall deliver the thing to the purchaser without any lack of conformity, including being free from any right or claim of a third party.
(7) For the purposes of this Division, a producer is a person specified in § 1062 of this Act and also a person who operates as a distributor or a supplier of services on the basis of a contract entered into with a producer.
§ 218. Liability of seller in event of lack of conformity of thing
(1) The seller is liable for any lack of conformity of a thing which exists at the time when the risk of accidental loss of or damage to the thing passes to the purchaser even if the lack of conformity becomes apparent after that time. In the event of consumer sale, the seller is liable for any lack of conformity of a thing which exists at the time when the thing is delivered to the purchaser even if the passing of the risk of accidental loss of or damage to the thing is agreed for an earlier date.
(2) In the event of consumer sale, the seller is liable for any lack of conformity of a thing which becomes apparent within two years as of the date of delivery of the thing to the purchaser. In the event of consumer sale, it is presumed that any lack of conformity which becomes apparent within six months as of the date of delivery of a thing to the purchaser already existed before the delivery of the thing, unless such presumption is contrary to the nature of the thing or the deficiency.
(3) The seller is also liable for any lack of conformity of a thing which becomes apparent after the risk of accidental loss of or damage to the thing passes to the purchaser if the lack of conformity of the thing arises from a violation of obligations by the seller.
(4) The seller is not liable for any lack of conformity of a thing if the purchaser was or ought to have been aware of the lack of conformity of the thing upon entry into the contract.
(5) Upon sale of an immovable or of a ship entered in the ship register, the seller shall have the notation concerning the right entered in the corresponding register or the claim securing the establishment of such right deleted even if the purchaser is aware of the right or the notation.
(6) The seller of an immovable shall not be held liable for the fact that the thing is subject to public taxes or non-monetary obligations.
§ 219. Obligation to examine things
(1) If a purchaser has entered into a contract of sale in the course of the purchaser's professional or economic activities, the purchaser shall promptly examine the purchased thing or have the purchased thing examined.
(2) If a contract of sale involves carriage of the thing, the purchaser may examine the thing upon its arrival at its destination.
(3) If a thing is redirected in transit or redispatched to another destination by the purchaser without a reasonable opportunity for examination of the thing by the purchaser, examination of the thing may be deferred until the thing has arrived at its new destination if, at the time of entry into the contract, the seller was aware or ought to have been aware of the possibility of such redirection or redispatch.
§ 220. Notification of lack of conformity of things
(1) The purchaser shall notify the seller of any lack of conformity of a thing after he or she becomes or should become aware of the lack of conformity. In the event of consumer sale, the consumer shall notify the seller of any lack of conformity of a thing within two months after becoming aware of the lack of conformity.
(2) A purchaser who enters into a contract of sale in the course of the professional or economic activity thereof shall provide a detailed description of the lack of conformity when giving notification thereof.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(3) The purchaser shall not rely on the lack of conformity of a thing if the purchaser does not notify the seller thereof on time or, in the case of a contract entered into by the purchaser in the course of the professional or economic activity thereof, if the purchaser does not provide a sufficiently detailed description of the lack of conformity. If a purchaser has a reasonable excuse for the failure to give notice, the purchaser may, relying on the lack of conformity, reduce the purchase price or claim compensation for damages from the seller, except for any loss of profit.
§ 221. Specifications for relying on lack of conformity of things
(1) A purchaser may rely on the lack of conformity regardless of the purchaser's failure to examine a thing or give notification of the lack of conformity of the thing on time if:
1) the lack of conformity of the thing has been caused by the intent or gross negligence of the seller;
2) the seller is aware or ought to be aware of the lack of conformity of the thing or the circumstances related thereto and does not disclose such information to the purchaser.
(2) The seller shall not rely on an agreement which precludes or restricts the rights of the purchaser in connection with the lack of conformity of a thing if the seller is aware or ought to be aware that the thing does not conform to the contract and fails to notify the purchaser thereof.
§ 222. Requirement to perform contract as legal remedy
(1) If a thing does not conform to the contract, the purchaser may demand the repair of the thing or delivery of a substitute thing from the seller if this is possible and does not cause the seller unreasonable costs or unreasonable inconvenience considering, inter alia, the value of the thing, the significance of the lack of conformity and the opportunity for the purchaser to acquire a thing which conforms to the contract from elsewhere without inconvenience. The seller may, instead of repairing the thing, deliver a substitute thing which conforms to the contract.
(2) In the case specified in the first sentence of subsection (1) of this section, the purchaser may, upon the lack of conformity of a thing, demand the delivery of a substitute thing only if the lack of conformity of the thing constitutes a fundamental breach of contract and provided that the given contract of sale is not a contract of customer sale.
(3) If a seller replaces a non-conforming thing with a thing which conforms to the contract, the seller may require the return of the non-conforming thing from the purchaser. In such case, the provisions of §§ 189-191 of this Act apply.
(4) The seller shall incur the costs relating to the repair of the thing or delivery of a substitute thing, in particular costs relating to transport, postage, work, travel and materials.
(5) If the purchaser legitimately requires the repair of a thing and the seller fails to repair the thing within a reasonable period of time, the purchaser may repair the thing or have the thing repaired, and claim compensation for any reasonable costs incurred thereupon from the seller.
(6) The purchaser loses the right to require the repair of a thing or delivery of a substitute thing from a seller if the purchaser does not submit a corresponding claim to the seller at the same time as a notice concerning the lack of conformity of the thing or within a reasonable period of time after submission of the notice, unless the behaviour of the seller is contrary to the principle of good faith.
(7) The provisions of subsection (6) of this section do not apply to customer sale.
§ 223. Fundamental breach of contract of sale by seller
(1) The seller is deemed to be in fundamental breach of a sales contract also if, inter alia, the repair or substitution of a thing is not possible or fails, or if the seller refuses to repair or substitute a thing without good reason or fails to repair or substitute a thing within a reasonable period of time after the seller is notified of the lack of conformity.
(2) In the event of customer sale, any unreasonable inconvenience caused to the purchaser by the repair or substitution of a thing is also deemed to be a fundamental breach of contract by the seller.
(3) In the cases specified in subsections (1) and (2) of this section, the purchaser is not required to determine an additional term specified in § 114 of this Act and has the right, inter alia, to withdraw from the contract.
§ 224. Restrictions on reduction of purchase price
The purchaser shall not reduce the purchase price:
1) if the seller repairs the thing or delivers a substitute thing which conforms to the contract;
2) if the purchaser unreasonably refuses to accept the proposal of the seller concerning the repair of the thing or delivery of a substitute thing;
3) upon the purchase of a used thing which is sold by public auction.
§ 225. Specifications for compensation for damage
The purchaser may also claim compensation from the seller for such damage as is caused due to use of the thing for purposes other than those intended if the damage arises from the seller providing insufficient information to the purchaser, and compensation for damage which is caused to the thing due to the lack of conformity thereof.
§ 226. Specifications regarding liability of seller upon sale according to sample, description or model
(1) In the event of sale according to a sample, description or model, it is presumed that the sample, description or model is the only standard for assessing the conformity of a thing. In such case, any deviation from the sample, description or model gives the purchaser the right to withdraw from the contract or use other rights which arise from the lack of conformity of the thing.
(2) If, based on an agreement or generally accepted practice, the sample, description or model is to be used only to assess approximate quality, the purchaser may withdraw from the contract only if the deviation from the sample, description or model is material.
§ 227. Beginning of expiry of claims arising from lack of conformity of purchased thing
The limitation period of a claim arising from the lack of conformity of a purchased thing begins as of the delivery of the thing to the purchaser. Upon delivery of a substitute thing by the seller, the limitation period begins as of the delivery of the substitute thing to the purchaser. Upon repair of a thing by the seller, the limitation period of claims against the eliminated deficiency begins anew as of the repair of the thing.
§ 228. Liability of producer, previous seller or other retailer to purchaser
If, in the event of consumer sale, the seller who sells a thing to a consumer is liable for any lack of conformity of the thing to the purchaser as a result of a statement made by the producer, previous seller or other retailer with respect to particular characteristics of the thing, it is presumed that the seller may claim compensation for damage caused thereto from the corresponding person in accordance with the relationship between them and to the extent of the liability of the seller to the consumer.
§ 229. Obligation of purchaser to take possession of and preserve things
(1) If a purchaser has taken possession of a thing but intends to withdraw from the contract or requires the delivery of a substitute thing or exercises another right as a result of which the thing is to be returned, the purchaser shall take reasonable measures to preserve and protect the thing. The purchaser has the right to refuse to deliver the thing until the seller reimburses the reasonable costs incurred in the preservation and protection of the thing.
(2) If a thing dispatched to a purchaser is placed at the disposal of the purchaser at its destination and the purchaser legitimately refuses to take delivery of the thing, the purchaser shall nevertheless take possession of the thing on behalf of the seller if this is possible without payment of the purchase price and without unreasonable inconvenience or expense to the purchaser. The purchaser is not required to take possession of the thing if the seller or the person who has the right to take possession of the thing on behalf of the seller is present at the destination.
(3) If the purchaser takes possession of a thing according to subsection (2) of this section, he or she has the rights specified in subsection (1) of this section.
(4) In the cases specified in subsections (1) and (2) of this section, the purchaser may deposit the thing with a third party pursuant to § 124 of this Act or sell the thing pursuant to § 125 of this Act.
§ 230. Warranty against defects
(1) Within the meaning of this Chapter, a warranty against defects is a promise made by a seller, previous seller or producer (warrantor) to replace or repair a sold thing without charge or for a charge and under the conditions prescribed in the warranty, or to ensure in other ways the compliance of the thing with the conditions prescribed in the warranty whereby the purchaser is given a broader warranty than that provided by law.
(2) A warranty period begins to run as of the delivery of the thing to the purchaser unless a later time for the beginning of the warranty period is prescribed in the contract or letter of guarantee. If the seller is required to dispatch the thing to the purchaser, the warranty period does not begin to run before the thing is delivered to the purchaser. The running of the warranty period is suspended for the time when the purchaser cannot use the thing due to a lack of conformity for which the warrantor is liable.
(3) It is presumed that a warranty against defects covers all defects of a thing which become apparent appear during the warranty period.
(4) The procedure for exercising rights arising from a warranty against defects shall not be unreasonably cumbersome to the purchaser.
(5) A warranty against defects does not preclude or restrict the right of the purchaser to use other legal remedies arising from law or the contract.
§ 231. Specifications for warranty against defects in event of consumer sale
(1) In the event of consumer sale, a warranty against defects shall set out, in a manner understandable to the consumer, information concerning the subject matter of the warranty and the procedure for exercising the rights arising from the warranty. A warranty shall set out, inter alia, the following:
1) the name and address of the warrantor;
2) the person to address to exercise the rights arising from the warranty;
3) the rights granted to the consumer by the warranty;
4) the procedure for exercising the rights arising from the warranty;
5) the warranty period;
6) the scope of the warranty;
7) an explanation that, in addition to the rights arising from the warranty, the consumer has other rights arising from law.
(2) A consumer shall be given the opportunity to freely examine the conditions of the warranty before entering into a contract of sale. At the request of the consumer, the warranty shall be presented to the consumer in writing or by other durable medium which the consumer is able to use.
(3) Failure by the warrantor to present the information specified in subsections (1) or (2) of this section does not preclude or restrict the validity of the warranty.
(4) In the event of consumer sale, it is presumed that:
1) the warranty grants the purchaser the right to demand the repair of the thing or delivery of a substitute thing without charge during the warranty period;
2) a new warranty with the same duration as the original warranty will be granted for things replaced during the warranty period;
3) if a thing is repaired during the warranty period, the warranty is automatically extended by the length of the period of repair.
§ 232. Services provided in event of consumer sale
If, in the event of consumer sale, the purchaser may reasonably expect that services related to the use, maintenance or repair of the thing will be provided but the seller does not provide such services, the seller shall provide sufficient information to the purchaser at the time of delivery and, at the request of the consumer, after the delivery of the thing regarding the possibilities of using such services.
§ 233. Reservation of ownership
(1) If, upon the sale of a movable, it is agreed that the ownership of a thing remains with the seller until payment of the purchase price, ownership is presumed to transfer to the purchaser upon payment of the full purchase price (reservation of ownership).
(2) On the basis of a reservation on ownership, a seller may demand the purchaser to deliver the thing only if the seller has withdrawn from the contract. If the claim of the seller which is secured by the agreement on a reservation of ownership expires, the seller may demand the transfer of the thing pursuant to the provisions concerning protection of ownership.
§ 234. Extension and expiry of contract of sale of energy
(1) A contract to supply electric or thermal energy through a connection network entered into for a specified term is deemed to be extended for the same term and under the same conditions if at least one month before the expiry of the term of the contract neither party has notified the other of any desire to do otherwise.
(2) The provisions of subsection (1) of this section apply to contracts to supply gas, petroleum, water or other similar supplies through a connection network which are entered into for a specified term.
(3) Purchasers who are consumers may cancel contracts specified in subsections (1) and (2) of this section with one month's notice regardless of whether the contracts were entered into for a specified or unspecified term. Agreements which derogate from this to the prejudice of the consumer are void.
§ 235. Sale on approval
(1) Sale on approval is the sale of a thing on the basis of a conditional contract of sale upon which the thing is dispatched to the purchaser.
(2) A contract of sale on approval shall be entered into by the purchaser with a suspensive condition of approval or a resolutive condition of non-approval. It is presumed that a contract of sale with a suspensive condition is entered into in the case of sale on approval.
(3) In the case of a contract of sale on approval with a suspensive condition, the seller shall bear the risk of accidental loss of or damage to the thing until approval by the purchaser. In the case of a contract of sale on approval with a resolutive condition, the purchaser shall bear the risk of accidental loss of or damage to the thing until the contract fails to be approved.
§ 236. Prohibition on violation of provisions
In the event of consumer sale, persons and agencies specified in law may, pursuant to the procedure provided by law, demand a seller who is in breach of provisions concerning a contract of sale specified in this Division and in the General Part of this Act to terminate such violation and refrain from violating the provisions.
§ 237. Mandatory nature of provisions concerning consumer sale
(1) In the event of consumer sale, agreements which are related to the legal remedies to be used in the case of a breach of contract and which derogate from the provisions of this Division and the General Part of this Act to the prejudice of the purchaser are void.
(2) If a contract is entered into as a result of a public tender, advertising or other similar economic activities taking place in Estonia, the provisions of this Division apply to contracts of consumer sale entered into with a purchaser residing in Estonia or in a Member State of the European Union regardless of the country whose law is applied to the contract.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
Division 2
Sale with Right of Repurchase
§ 238. Sale with right of repurchase
(1) Parties may agree in a contract of sale or after entry into a contract of sale that the seller has the right to repurchase the thing (sale with the right of repurchase).
(2) In the event of sale with the right of repurchase, the thing is deemed to have been repurchased by the seller when the seller submits corresponding notification to the purchaser.
(3) The notification specified in subsection (2) of this section shall be made in the same format as the contract of sale. In the case of a written contract of sale, the submission of a notarially attested or verified statement is sufficient.
(4) Upon repurchase, it is presumed that the price for which the object was sold is the repurchase price.
§ 239. Term for exercise of right of repurchase
The right of repurchase may be exercised in the case of immovables within ten years and in the case of other things within three years as of agreement on the conditions of the right of repurchase.
§ 240. Liability of purchaser
(1) If a purchased thing has perished or deteriorated before the right of repurchase has been exercised or if it cannot be transferred for any other reason due to circumstances arising from the purchaser, or if the purchaser has materially altered the thing, the purchaser shall compensate the seller for the damage arising therefrom. If a thing has deteriorated due to circumstances for which the purchaser is not liable or if it has not been altered materially, the seller shall not claim compensation for the damage caused thereby or reduce the purchase price.
(2) If a purchaser has disposed of a purchased thing before the exercise of the right of repurchase by the seller or if the thing has been disposed of upon compulsory execution or in bankruptcy proceedings, the seller is required to remove the rights of third persons arising from such disposal.
§ 241. Compensation of costs
A purchaser may claim compensation from the seller for costs incurred by the purchaser on the thing purchased thereby before repurchase and to the extent that the value of the thing has increased as a result of the costs incurred.
§ 242. Repurchase at value of thing at time of repurchase
If the parties agree that the repurchase price is the value of an object at the time of repurchase, the provisions of §§ 240 and 241 of this Act do not apply.
§ 243. Several persons entitled to repurchase
If the right of repurchase belongs to several persons jointly, these persons may exercise the right of repurchase only jointly to the full extent. If the right of repurchase terminates for one entitled person or if one of them waives the right, the remaining entitled persons have the right to exercise the right of repurchase jointly to the full extent.
Division 3
Sale by Right of Pre-emption
§ 244. Definition and exercise of right of pre-emption
(1) The right of pre-emption is a right upon the exercise of which a contract of sale between a person with a right of pre-emption and a seller is deemed to be entered into on the same conditions which the seller agreed with the buyer. A contract of sale entered into with a purchaser or obligations arising therefrom do not become invalid upon the exercise of the right of pre-emption.
(2) A right of pre-emption is created on the basis of law or by a transaction.
(21) A right of pre-emption created on the basis of a transaction applies to a contract of sale entered into by a seller with whom the creation of the right of pre-emption was agreed upon. A right of pre-emption created on the basis of law may be exercised upon each sale of a thing.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(3) A person with a right of pre-emption with respect to a thing may exercise the right if the seller has entered into a contract of sale with a purchaser. A right of pre-emption may be exercised also in case of other forms of transfer for charge.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(4) The right of pre-emption is exercised by the person with the right of pre-emption submitting corresponding notification to the seller.
(5) The notification specified in subsection (4) of this section shall be made in the same form as the contract of sale. In the case of a written contract of sale, the submission of a notarially attested or verified statement is sufficient.
(6) Disposition of a thing to which a right of pre-emption created on the basis of law applies is void if the disposition is made after the right to exercise the right of pre-emption is created and if it would prejudice or restrict the exercising of the right of pre-emption. The provisions of this subsection do not apply to a pre-emptive right created on the basis of law in the case of the transfer of an immovable or a part thereof.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
§ 245. Void conditions
An agreement between the seller and purchaser is void with respect to a person with the right of pre-emption if, according to the agreement,:
1) the contract of sale is valid only if the right of pre-emption is not exercised;
2) the seller has been granted the right to withdraw from the contract in the case where the right of pre-emption is exercised.
§ 246. Accessory obligations
(1) If the purchaser has an accessory obligation arising from a contract which the person with the right of pre-emption is not able to perform, the person with the right of pre-emption shall, instead of performing the accessory obligation, pay the usual value thereof.
(2) The right of pre-emption cannot be performed if the purchaser has an accessory obligation arising from a contract which is not monetarily appraisable and which the person with the right of pre-emption is not able to perform. An accessory obligation does not impede the right of pre-emption being exercised and the person with the right of pre-emption is not required to perform the accessory obligation if it may be presumed that the seller and the purchaser would not have agreed on an accessory obligation if no right of pre-emption had existed.
§ 247. Exercise of right of pre-emption concerning several things
If a purchaser purchases a thing concerning which a right of pre-emption applies together with other things for an aggregate price, the person with the right of pre-emption shall pay a part of the aggregate price in proportion to the value of the thing. The seller may demand that the person with the right of pre-emption also purchase other things which cannot, without harmful consequences for the seller, be separated from the thing concerning which the right of pre-emption applies.
§ 248. Payment of purchase price by instalments
(1) If, pursuant to the contract of sale, the purchaser is not required to pay the purchase price upon entry into the contract, the person with the right of pre-emption has the same right only if he or she gives security for the amount paid by instalments.
(2) If an immovable or a movable or right entered in a public register is the object of a contract of sale with the right of pre-emption and if the purchaser is not required to pay the purchase price upon entry into the contract, the person with the right of pre-emption is not required to give security in so far as establishment of a pledge on the object of the contract of sale has been agreed in order to ensure payment of the purchase price by instalments, or an obligation has been taken over for the ensurement of which a pledge has been established on the object of the contract of sale.
§ 249. Notification of sale to person with right of pre-emption
(1) A seller shall promptly notify the person with the right of pre-emption of any contract of sale entered into with a purchaser and the content thereof.
(2) If a contract of sale is entered into in written form, the seller is required to present the contract to the person with the right of pre-emption at the request of such person.
(3) The notification obligation of a seller is also deemed to have been performed if the purchaser notifies the person with the right of pre-emption of the contract of sale and the content thereof or presents the contract to such person.
§ 250. Term for exercise of right of pre-emption
The right of pre-emption may be exercised within two weeks after the receipt of the notice specified in § 249 of this Act or, in the case of immovables, within two months after the receipt of the notice specified in § 249 of this Act, unless a different term is prescribed by law or the contract.
§ 251. Restrictions on exercise of right of pre-emption
(1) The right of pre-emption cannot be exercised if the thing is sold upon compulsory execution or in bankruptcy proceedings or if the thing is expropriated.
(2) The right of pre-emption cannot be exercised if the thing is sold to the descendants, or ascendants or spouse of the seller.
§ 252. Exercise of right of pre-emption by several persons
(1) If a right of pre-emption belongs to several persons jointly, these persons may exercise the right of pre-emption only jointly to the full extent. If the right of pre-emption terminates for one entitled person or if one entitled person waives the right, the remaining entitled persons have the right to exercise the right of pre-emption jointly to the full extent.
(2) If the right of pre-emption belongs to several persons separately and they wish to exercise the right, they shall draw lots unless otherwise provided by law or an agreement of the parties.
(3) A right of pre-emption acquired pursuant to law shall be preferred to a right of pre-emption established by a transaction.
§ 253. Non-transferability of right of pre-emption
(1) A right of pre-emption is not transferable.
(2) A right of pre-emption for a specified term passes to the successors of the person with the right of pre-emption.
Chapter 12
Barter Agreements
§ 254. Definition of barter agreement
(1) In a barter agreement, the parties mutually undertake to transfer an object to the other party and to allow the transfer of ownership of the object and the transfer of any other right which grants the right to dispose of the object.
(2) The provisions concerning contracts of sale of apply to barter agreements. In a barter agreement, the party who transfers is deemed to be the seller and the party who takes delivery is deemed to be the purchaser of the object of the agreement.
§ 255. Price of bartered objects
The price of objects subject to barter is presumed to be equal.
Chapter 13
Factoring Contract
§ 256. Definition of factoring contract
In a factoring contract, one person (client in factoring) undertakes to assign to another person (factor) financial claims against a third person (obligor in factoring) which arise from a contract on the basis of which the client, in the client's economic or financial activities, sells an object or provides services to the obligor, and the factor undertakes to:
1) pay for the claim and bear the risk of non-fulfilment of the claim, or
2) grant credit to the client out of the fulfilment of the claim, administer the claim for the client and exercise rights arising from the claim, including organising related accounting, and collect the claim.
§ 257. Notification of assignment of claim
A client in factoring is required to notify the obligor of the assignment of the claim.
§ 258. Breach of contract
(1) If a client in factoring violates a contract of sale or provision of services entered into between the client in factoring and the obligor and if a financial claim arising from the contract is assigned to the factor, the obligor shall not claim repayment of money paid to the factor on the basis of the claim if the obligor can claim repayment from the client.
(2) In the case of a breach of contract by a party specified in subsection (1) of this section, the obligor in factoring may still claim repayment of money from the factor which was paid to the factor on the basis of a claim to the extent that the factor:
1) did not perform the obligation to make a payment to the client in the part of this claim;
2) made the payment to the client at a time when he or she was or ought to have been aware of the breach of the contract of sale or provision of services by the client.
Chapter 14
Gratuitious Contract
§ 259. Definition of gratuitious contract
(1) In a gratuitious contract, one person (donor) undertakes to transfer an object belonging thereto to another person (donee) and allow the transfer of ownership to the donee or waive a patrimonial right in favour of the donee or enrich the donee in another manner.
(2) The following are not deemed to be gifts in favour of another person:
1) avoidance of acquiring assets,
2) waiving of rights which have not yet been acquired;
3) renunciation of an estate or legacy.
§ 260. Gratuitious contract in favour of unborn child
A gratuitious contract may be entered into in favour of an unborn but conceived child or in favour of a future child of a specified person alive at the time the gift is made even if the child has not yet been conceived. In such case, the parent or guardian of the future child shall decide on the acceptance of the gift.
§ 261. Form of gratuitious contract
(1) An application by a donor to assume obligations arising from a gift shall be prepared in writing unless otherwise provided by law.
(2) A gratuitious contract is deemed to be valid upon performance of the obligations which arise from the gratuitious contract even if the formal requirements provided for in subsection (1) of this section are not complied with.
§ 262. Donatio causa mortis
If a gratuitious contract is entered into causa mortis, the provisions of the Law of Succession Act (RT I 1996, 38, 752; 1999, 10, 155; 88, 807; 2001, 56, 336; 93, 565; 2002, 53, 336) concerning legacy or testament apply thereto. If such obligation arising from a gratuitious contract is still performed during the lifetime of the donor, the provisions concerning gratuitious contracts apply thereto.
§ 263. Donor’s obligation to transfer
A donor shall deliver the gift to the donee or allow the receipt to take possession of the gift in another manner, and shall remove all impediments to possession of the object.
§ 264. Liability of donor for breach of contract
(1) Upon assessment of the conformity of a gift to the contract, the provisions of §§ 217 and 218 of this Act apply as appropriate.
(2) If a gift does not conform with the contract, the donor is liable only if the donor did not notify the donee of the lack of conformity intentionally or due to gross negligence or if the donor has undertaken such liability.
(3) If a donor had promised to deliver a thing only with specific characteristics and which the donor first had to acquire, and if the delivered thing did not conform to the contract, the donee may demand the delivery of a thing which conforms to the contract instead of the defective thing if the donor was aware or ought to have been aware of the defect at the time of acquiring the thing. If a donor does not give notification of the defects of a thing intentionally, a donee may claim compensation for the damage caused by violation of the obligation instead of delivery of a thing which conforms to the contract.
(4) The provisions concerning the liability of the seller for the lack of conformity of a sold thing apply to the demands of a donee specified in subsection (3) of this section.
(5) A donor shall not pay a penalty for late payment if the transfer of a gift is delayed, or transfer the benefit received from the granted object.
§ 265. Encumbrances and obligations for donees
(1) A gratuitious contract may prescribe duties and obligations for donees.
(2) If the performance of duties or obligations is in the public interest, a competent state agency or local government agency may also demand the performance thereof after the death of the donor.
(3) If an encumbrance is in favour of several persons without specifying the share of each person and one of these persons dies, the share of the deceased shall accrue to the shares of the other persons.
(4) If the value of a gift does not cover the costs necessary to fulfil a duty due to its lack of conformity, a donee may refuse to fulfil the duty to the extent exceeding the value of the gift until the expenses which exceed the value of the gift are compensated thereto. If a donee still fulfils a duty, the recipient may demand that the donor compensate the expenses which exceed the value of the gift and are incurred upon fulfilment of the duty.
§ 266. Specifications for termination of gratuitious contract
(1) A gratuitious contract which has not yet been performed by the donor terminates upon the suspension of execution proceedings due to a lack of assets or on the declaration of the donor as bankrupt.
(2) If a gratuitious contract prescribes the payment of an allowance which comprises payment by instalments to a donee who is a natural person, the contract terminates upon the death of the donor or donee who is a natural person or on the dissolution of the donor who is a legal person.
§ 267. Withdrawal from gratuitious contract before performance thereof
A donor may refuse to perform a contract before transfering a gift to a donee and withdraw from the contract if:
1) the donee behaves in a manner displaying gross ingratitude towards the donor or a person close to the donor;
2) in the case of performance of the contract, the donor is unable to perform a maintenance obligation arising from law or to maintain himself or herself reasonably, unless the donor has placed himself or herself in this situation intentionally or due to gross negligence or unless the donor pays the necessary maintenance sum;
3) the donee unjustifiably fails to fulfil a duty or condition related to the contract;
4) new or significantly greater maintenance obligations arise for the donor after entry into the contract.
5) the donee dies.
§ 268. Withdrawal from gratuitious contract after performance thereof
(1) If a gratuitious contract is performed, the donor may withdraw from the contract and reclaim the gift from the donee according to the provisions concerning unjustified enrichment in the cases prescribed in clauses 267 1)-3) of this Act.
(2) If a donor withdraws from a gratuitious contract on the basis provided for in clause 267 2) of this Act, the contract is not deemed to have been terminated if the donee pays the sum needed for the maintenance of the dependant pursuant to the procedure provided for in § 571 of this Act as of the transfer of the gift until the death of the donor.
§ 269. Restriction on compensation for damage
In the cases specified in §§ 267 and 268 of this Act, the donee does not have the right to claim compensation for the damage caused to him or her by withdrawal from the contract.
§ 270. Restrictions on withdrawal
(1) A donor may withdraw from a gratuitious contract within one year as of the time when the donor becomes or should have become aware of the creation of the right of withdrawal. If a gratuitious contract is performed, the donor may not withdraw from a gratuitious contract after the death of the donee.
(2) If a donor dies before the expiry of the term provided for in subsection (1) of this section, the rights specified in subsection (1) transfer to his or her successors to the extent of the remaining term. Successors may withdraw from a gratuitious contract within the term specified in subsection (1) of this section only if the donee intentionally and unlawfully caused the death of the donor or hinders his or her withdrawal from the contract.
(3) A donor shall not withdraw from a gratuitious contract which is entered into for the observation of a moral obligation.
Part 3
Contracts for Use
Chapter 15
Lease Contract
Division 1
General Provisions
§ 271. Definition of lease contract
By a lease contract, one person (the lessor) undertakes to grant the use of a thing to another person (the lessee) and the lessee undertakes to pay a fee (rent) therefor to the lessor.
§ 272. Application of provisions upon lease of dwellings and business premises
(1) A dwelling is a residential building or apartment which is used for permanent habitation. Business premises are premises used in economic or professional activities.
(2) The provisions concerning the lease of immovables also apply to the lease of dwellings and business premises unless otherwise provided by law.
(3) The provisions concerning residential lease contracts and lease contracts of business premises also apply to the lease of things granted for use together with the dwelling or business premises by a lessor to a lessee.
(4) The provisions concerning residential lease contracts and lease contracts of business premises do not apply to the following:
1) lease contracts, with a term not exceeding three months, of premises of accommodation establishments and premises intended for holidays, and lease contracts entered into for the temporary use of other premises;
2) lease contracts the purpose of which is to sublease rooms for profit;
3) lease contracts the object of which is a dwelling which is part of the dwellings used by the lessor and the greater part of which is furnished by the lessor;
4) lease contracts the object of which is a dwelling which the state, a local government or other legal person in public law leases, in order to perform its functions arising from law, to persons who urgently need a dwelling or persons acquiring education, if the lessee is informed of the intended use of the room upon entry into the contract.
§ 273. Nullity of agreement related to residential lease contract
An agreement which makes entry into or continuation of a residential lease contract dependent on an obligation of a lessee in respect of a lessor or third party is void unless the obligation is directly related to the use of the leased dwelling.
§ 274. Effect of format of residential lease contract on term of contract
If a residential lease contract with a term exceeding one year is not entered into in writing, the contract is deemed to have been entered into for an unspecified term, but the contract shall not be cancelled such that it terminates earlier than one year after the transfer of the dwelling to the lessee.
§ 275. Mandatory nature of provisions
An agreement which derogates from the provisions of law regarding the rights, obligations and liability of the parties to a residential lease contract to the detriment of the lessee is void.
Division 2
Rights and Obligations of Parties
§ 276. General obligations of parties
(1) A lessor is required to deliver a thing, together with its accessories, to a lessee by the agreed time and in a suitable condition for contractual use and to ensure that the thing is maintained in such condition during the validity of the contract.
(2) A lessee shall use a thing with prudence and according to the intended purpose which is the basis for the lease.
(3) The lessee of a dwelling or business premises shall take the interests of other residents and neighbours into account.
§ 277. Failure to transfer leased thing on time and transfer of thing not conforming to contract
(1) If a lessor does not deliver a thing at an agreed time or transfers a thing the defects of which preclude the use of the thing for its intended purpose or restrict the use thereof to a significant extent, the lessee may withdraw from the contract.
(2) If, upon transfer of a thing, the lessee knows or ought to know that the thing does not conform to the contract but accepts the thing irrespective thereof, the lessee loses the right to withdraw from the contract and may exercise the rights provided for in § 278 of this Act only if the lessee reserves this right upon accepting the thing.
§ 278. Defects in leased thing which arise during term of contract and obstacle to use of thing
If a leased thing is, during the term of a contract, affected with a defect for which the lessee is not responsible and which the lessee need not remove at the expense thereof, or if there is an obstacle to the contractual use of the thing, the lessee may:
1) demand that the lessor remove the defect or obstacle pursuant to the provisions of § 279 of this Act;
2) demand that the lessor take over a legal dispute with a third party;
3) demand compensation for the damage from the lessor;
4) reduce rent pursuant to the provisions of § 296 of this Act;
5) deposit rent pursuant to the provisions of § 298 of this Act.
§ 279. Removal of defect or obstacle
(1) If a lessor knows or ought to know about a defect or obstacle specified in § 278 of this Act but does not remove it within a reasonable period of time after the lessor becomes or ought to have become aware thereof, the lessee may cancel the contract without advance notice if the defect or obstacle precludes the use of the thing for the intended purpose or restricts such use to a significant extent.
(2) A lessee does not have the right to demand the removal of a defect if the lessor substitutes the defective thing with a thing not affected by defects within a reasonable period of time.
(3) A lessee may remove a defect or obstacle and demand reimbursement of the necessary expenses incurred therefor if the lessor delays removal of the defect or obstacle or if the defect or obstacle only restricts the possibility of using the thing for the intended purpose to an insignificant extent.
(4) Agreements which derogate from the provisions of subsections (1) and (3) of this section to the detriment of the lessee are void.
§ 280. Removal of minor defects
A lessee shall remove the defects of a leased thing at the expense of the lessee if these defects can be removed by light cleaning or maintenance which is in any case necessary for the ordinary preservation of the thing.
§ 281. Prohibition on restriction of rights of lessee
An agreement concerning preclusion or restriction of the rights of a lessee in connection with the non-conformity of a leased thing to the contract is void if the lessor knows or ought to know, upon entry into the contract, that the thing does not conform to the contract and fails to notify the lessee thereof.
§ 282. Notification obligation of lessee
(1) A lessee shall promptly notify the lessor of the following:
1) the lack of conformity of the thing to the contract unless the lessee is required to correct the instance of non-conformity;
2) danger to the thing if it is necessary to take measures in order to avert the danger;
3) the right of a third party to the thing which becomes known to the lessee.
(2) If a lessee violates an obligation specified in subsection (1) of this section, the lessee shall compensate the lessor for loss caused by violation of the obligation.
(3) If a lessor cannot remove the defect of a leased thing or an obstacle to use of the thing for the reason that the lessee has violated an obligation specified in subsection (1) of this section, the lessee shall not exercise the rights provided for in § 278 of this Act in respect of the lessor or exercise the right of extraordinary cancellation of lease contract in the case provided for in subsection 314 (1) of this Act without granting the lessor a reasonable term to re-enable use of the leased thing.
§ 283. Obligation of lessee to tolerate
(1) A lessee shall tolerate work performed in respect of a thing and also other effects on the thing which are necessary in order to preserve the thing, remove defects, prevent danger or eliminate the consequences thereof. The obligation to tolerate work performed in respect of a thing and other effects on the thing does not preclude or restrict the right of a lessee to reduce rent or demand compensation for damage due to the work or other effects.
(2) A lessee shall allow the lessor to examine a thing if this is necessary to preserve the thing or to transfer or lease the thing to another person.
(3) A lessor shall notify a lessee of work performed and examination of a thing in good time and take the interests of the lessee into account upon performance of the work.
§ 284. Improvements and alterations made to thing by lessor
(1) A lessor may make improvements and alterations to a thing and the lessee shall tolerate the works and other effects on the thing related to the improvements and alterations, unless the work and effects are unfairly burdensome to the lessee.
(2) At least two months before commencement of the making of improvements and alterations, the lessor shall notify the lessee in a format which can be reproduced in writing of the nature, extent, time of commencement and expected duration of the measures planned for making the improvements and alterations, and of any potential increase in the rent which may arise therefrom.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(3) A lessee may cancel a contract within fourteen days as of receipt of a notice specified in subsection (2) of this section by giving at least thirty days’ notice. If a lessee cancels a contract, the making of improvements and alterations shall not commence before termination of the contract.
(4) The provisions of subsections (2) and (3) of this section do not apply if the improvements and alterations are insignificant and do not bring about an increase in the rent.
(5) Upon making improvements and alterations, the lessor shall take the interests of the lessee into account. The obligation to take the interests of the lessee into account does not preclude or restrict the right of the lessee to reduce the rent or demand compensation for damage. The lessor shall, to a reasonable extent, reimburse the expenses incurred by the lessee as a result of the improvements and alterations and, at the request of the lessee, pay such expenses to the lessee in advance.
§ 285. Improvements and alterations made to thing by lessee
(1) A lessee may make improvements and alterations to a leased thing only with the lessor’s consent which is submitted in a format which can be reproduced in writing. The lessor shall not refuse to grant consent if the improvements and alterations are necessary in order to use the thing or manage the thing reasonably.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) If the lessor consents to improvements and alterations, the lessor may demand that the original condition be restored only if this has been agreed in a format which can be reproduced in writing.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(3) Upon expiry of a lease contract, the lessee may remove an improvement or alteration made to a thing if this is possible without damaging the thing. The lessee does not have the right to remove an improvement or alteration if the lessor pays a reasonable compensation therefor, unless the lessee has a legitimate interest in removing the improvement or alteration.
§ 286. Compensating lessee for expenses
(1) If, upon expiry of a lease contract, it becomes evident that the value of the thing has increased considerably due to the improvements or alterations made with the consent of the lessor, the lessee may demand reasonable compensation therefor.
(19.11.2003 entered into force 27.12.2003 - RT I 2003, 78, 523)
(2) A lessee may demand that the lessor compensate for expenses other than those specified in subsection (1) of this section pursuant to the provisions regarding negotiorum gestio.
§ 287. Prohibition on agreement on contractual penalty upon lease of dwellings
Any agreement which requires the lessee of a dwelling to pay a contractual penalty upon violation of a contract is void.
§ 288. Sublease of thing
(1) A lessee may, with the consent of the lessor, transfer the use of a thing fully or partially to a third party (sublease), particularly to sublet the thing.
(2) A lessor may refuse to grant consent for the sublease of a thing only if the lessor has good reason therefor, particularly if:
1) the lessee does not disclose the conditions for the sublease to the lessor;
2) the sublease would cause significant loss to the lessor;
3) the sublease would be unreasonably burdensome on the leased premises;
4) the lessor has good reason therefor arising from the identity of the sublessee.
(3) If a lessor refuses to grant consent for the sublease of a thing without good reason, the lessee may cancel the contract taking into account the terms provided for in § 312 of this Act.
(4) If the sublease of a thing may be expected only in conjunction with a reasonable increase in the rent, the consent may be made subject to the condition that the lessee agrees to the increase in the rent.
(5) If a lessee transfers the use of a thing to a sublessee, the lessee shall be equally responsible for the activities of the sublessee and for the activities of the lessee.
(6) A sublessee shall not use a thing after expiry of the lease contract or in any other manner than that permitted to the lessee. The lessor may demand this directly from the sublessee.
§ 289. Accommodation of family members of lessee of dwelling
The lessee of a dwelling has the right to accommodate in the leased dwelling his or her spouse, minor children and parents who are incapacitated for work without the consent of the lessor unless it is agreed in the lease contract that the lessee may do so only with the consent of the lessor.
§ 290. Transfer of lease contract
(1) A lessee may transfer the rights and obligations arising from a lease contract to a third party with the lessor’s consent in a format which can be reproduced in writing.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) Upon transfer of the rights and obligations arising from a lease contract, the initial lessee and the person to whom the rights and obligations of the lessee are transferred shall be solidarily liable for performance of the obligations to the lessor which arise from the contract. The liability of the initial lessee expires as of the time when the lessor could cancel the lease contract for the first time or as of the time when the lease contract is terminated, but not later than two years after the transfer of the rights and obligations.
§ 291. Transfer of lease contract upon change of ownership of leased immovable
(1) If a lessor transfers an immovable after transfer of the immovable into the possession of a lessee, or if the owner of a leased thing changes after transfer of the thing into the possession of the lessee in the event of the transfer of the thing upon compulsory execution or in bankruptcy proceedings, the rights and obligations of the lessor arising from the lease contract are transferred to the acquirer of the thing.
(2) Upon constitution of a right of superficies or establishment of a usufruct on a leased thing after transfer of the thing into the possession of the lessee, the rights and obligations arising from the lease contract are transferred from the owner of the thing to the person with the limited real right.
(3) Upon establishment of a real servitude or personal right of use on a thing and if the exercise of the servitude restricts the rights of the lessee arising from the lease contract, the rights and obligations of the lessor are transferred to the person who is entitled according to the real servitude or personal right of use.
(4) If the new lessor violates an obligation arising from the lease contract, the previous lessor shall be liable as a surety for three years as of the transfer of the rights and obligations of the lessor for damage caused to the lessee due to violation of the obligation.
Division 3
Rent and Accessory Expenses
§ 292. Accessory expenses
(1) In addition to the payment of rent, a lessee shall bear other expenses related to the leased thing (accessory expenses) only if so agreed. Charges for the services and acts of a lessor or a third party which are related to the use of a thing are accessory expenses.
(2) The lessor shall, at the request of the lessee, enable the lessee to examine documents certifying accessory expenses.
§ 293. Taxes and duties
All taxes and duties related to a thing shall be borne by the lessor unless agreed otherwise.
§ 294. Due date
If the rent is measured by certain periods of time, the rent and accessory expenses shall be payable after expiration of each of the corresponding periods of time, unless the parties have agreed otherwise. If the rent is not measured by periods of time, the lessee shall pay the rent and accessory expenses upon expiry of the contract.
§ 295. Obligation to disclose previous rent
Upon entry into a contract, the lessee may demand to be informed by the lessor of the rent payable according to the previous lease contract.
§ 296. Refusal to pay rent and reduction of rent
(1) A lessee need not pay rent or bear accessory expenses during any period when the lessee cannot use the thing for its intended purpose due to a defect or obstacle specified in § 278 of this Act or for the reason that the lessor has not granted use of the thing to the lessee.
(2) If the possibility of using the thing for its intended purpose has only diminished due to a defect or obstacle specified in § 278 of this Act, the lessee may reduce the rent to an extent corresponding to the defect for the period from becoming aware of the defect until removal of the defect.
(3) The lessee shall also pay rent for the period when the lessee is not able to use the thing due to circumstances depending on the lessee, particularly due to the absence of the lessee, although the lessee may deduct the amounts saved by the lessor from the rent and the value of any benefit received from the thing being used differently.
§ 297. Notification of set-off and refusal to pay rent
(1) The lessee of a dwelling or business premises may set off a claim belonging to the lessee against a lease claim of the lessor or may refuse to pay the rent on the bases provided by law if the lessee notifies the lessor of this intention at least one month prior to the due date for payment of the rent and in a format which can be reproduced in writing.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) Agreements which derogate from the provisions of subsection (1) of this section are void.
§ 298. Deposit of rent
(1) If the lessee of a dwelling or business premises demands that the lessor remove defects or obstacles specified in § 278 of this Act, the lessee may set a term therefor a format which can be reproduced in writing and warn the lessor that, if the defects or obstacles are not removed, the lessee will deposit the rent which falls due after expiry of the term pursuant to the provisions of § 120 of this Act. The lessee shall notify the lessor of such deposit in a format which can be reproduced in writing.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) The lessor may demand payment of the deposited amount if the lessee does not file a claim specified in subsection (1) of this section against the lessor with a lease committee or court within thirty days as of the time when the first rent deposited becomes collectable.
§ 299. Increase in rent in case of lease contract for unspecified term
(1) In the case of a lease contract for an unspecified term, it is presumed that the lessor may raise the rent as follows:
1) upon the lease of immovables, ships entered in the ship register and aircraft entered in the Estonian aircraft register, after each six months as of entry into the contract;
2) upon the lease of furnished rooms or separately leased parking places, places in garages and the like, each month as of entry into the contract.
(2) The lessor of a dwelling shall notify the lessee of any increase in the rent in a format which can be reproduced in writing not later than thirty days before the increase in the rent and shall provide the reasons therefor. The notice shall clearly set out the following:
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
1) the extent of the increase in the rent and the new amount of rent;
2) the date as of which the rent is increased;
3) the reasons for increasing the rent and a calculation of the rent;
4) the procedure for contesting the increase in the rent.
(3) An increase in the rent is void if the lessor does not give notification thereof in the manner and form specified in subsections (1) and (2) of this section or warns the lessee that the lessor will cancel the lease contract if the increase in the rent is contested.
(4) Even if it is agreed in the lease contract that the lessor may unilaterally amend the terms and conditions of the contract not related to the amount of rent, the provisions of subsections (1)-(3) of this section apply if the lessor unilaterally amends the contract terms to the detriment of the lessee, particularly if the lessor reduces the services hitherto provided to the lessee or imposes new accessory expenses on the lessee.
§ 300. Agreement on periodical increase in rent of dwelling
An agreement on a periodical increase in the rent of a dwelling is valid only if:
1) the lease contract is entered into with a term of at least three years and
2) the rent increases not more than once a year and
3) the extent of the increase in the rent or the basis for calculation thereof are precisely determined.
§ 301. Excessive amount of rent for dwelling
(1) The rent for a dwelling is excessive if unreasonable benefit is received from the lease of the dwelling, except in the case of a luxury apartment or house.
(2) The amount of the rent for a dwelling is not excessive if it does not exceed the usual rent for a dwelling in a similar location and condition.
(3) An increase in the rent is not excessive if it is based on an increase in the expenses incurred in relation to the dwelling or an increase in the obligations of the lessor or if the increase in the rent is necessary in order to make reasonable improvements or alterations, including improving the condition of a part of a leased room or building such that the room or building is in the usual condition for such rooms and buildings.
§ 302. Contestation of amount of rent for dwelling during period of validity of contract
(1) If a lessor receives excessive benefit due to significant changes in the bases for calculation of the rent, particularly a decrease in expenses, the lessee may contest the excessive amount of the rent for the dwelling and claim a reduction of the rent as of the submission of an application with a lease committee or court.
(2) A lessee shall submit a request for reduction of the rent in a format which can be reproduced in writing to the lessor, who shall notify the lessee of the opinion of the lessor concerning the request within thirty days.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(3) If a lessor does not consent in full or in part to the reduction of the rent or does not respond to the request of a lessee specified in subsection (2) of this section within the prescribed term, the lessee may file a claim for reduction of the rent with a lease committee or court within thirty days as of the expiry of the term for responding.
§ 303. Contestation of increase in rent for dwelling
(1) A lessee may contest an excessive increase in the amount of the rent for a dwelling as defined in § 301 of this Act within thirty days as of informing the lessee thereof.
(2) Even if it is agreed in the lease contract that the lessor ma