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.
(5) If the obligee requires performance of an obligation by the obligor in court and the obligor withholds performance on the basis of this section, the court shall make a judgement whereby it orders the obligor to comply with the judgement only if the obligee has performed his or her obligation with respect to the obligor or acceptance of the performance by the obligor is delayed.
[RT I 2008, 59, 330 – entry into force 01.01.2009]
- 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.
(7) If the obligee requires performance of an obligation by the obligor in court and the obligor withholds performance on the basis of subsection (1) or (4) of this section, the provisions of subsection 110 (5) shall be applied. Upon withholding the performance of a contract on the basis of subsection (4) of this section, the court may require the obligor to perform his or her obligation only against security.
[RT I 2008, 59, 330 – entry into force 01.01.2009]
- 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 eight per cent per year shall be the rate of penalty for late payment. If a contract prescribes payment of interest exceeding the rate provided by law, the interest rate prescribed by the contract shall be the rate of penalty for late payment.
[RT I, 05.04.2013, 1 – entry into force 15.04.2013]
(2) If the time for performance of a monetary obligation is not set, including in the case of claims for the compensation of damage or for delivery of the object of unjust enrichment or for delivery arising from withdrawal, the penalty for late payment on the money owed shall be calculated as of the time when the obligee informed the obligor of the claim or filed an action to collect the money or a petition for application of expedited procedure in the matter of payment order. If the date of making the payment of the charge is not set in the case of a mutual contract, the penalty for late payment shall be calculated on the charge as of the expiry of the term provided for in subsection 821 (1) of this Act.
[RT I, 06.12.2010, 1 – entry into force 05.04.2011]
(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 penalty for late payment, compensation for the sum which exceeds the penalty for late payment may be claimed if a claim for compensation for damage exists.
[RT I, 11.03.2015, 1 – entry into force 01.10.2015]
(6) A penalty for late payment shall not be charged for a delay in the payment of interest, including penalty for late payment, or other charge for use of money. Agreements which derogate from such requirement to the detriment of the obligor are void.
[RT I, 11.03.2015, 1 – entry into force 01.10.2015]
(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, including penalty for late payment and other charge for use of money.
[RT I, 11.03.2015, 1 – entry into force 01.10.2015]
(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.
[RT I 2005, 39, 308 – entry into force 01.01.2006]
(9) An obligor engaged in economic or professional activities may not rely on an agreement which restricts the right to claim penalty for late payment provided for in subsection (1) of this section, if this agreement is grossly unfair with regard to the obligee due to the circumstances.
[RT I, 05.04.2013, 1 – entry into force 15.04.2013]
(10) An agreement which precludes charging of penalty for late payment from a person engaged in economic or professional activities or pursuant to which the person specified in subsection 10 (1) or (2) of the Public Procurement Act is obliged to pay penalty for late payment at a rate lower than that provided for in subsection (1) of this section shall be void.
[RT I, 05.04.2013, 1 – entry into force 15.04.2013]
- 1131. Compensation for collection costs by persons engaged in economic or professional activities
[RT I, 11.03.2015, 1 – entry into force 01.10.2015]
(1) If an obligee may charge penalty for late payment, the obligee may require the obligor to pay compensation for collection costs in the amount of 40 euros.
(2) If the damage caused by a delay in performance of an obligation exceeds the rate of the compensation provided for in subsection (1) of this section, the obligee may claim penalty for late payment and compensation for damage which exceeds the determined sum of the collection costs, if a claim for compensation for damage exists.
(3) An obligor may not rely on an agreement which precludes compensation for collection costs or which restricts the right of claim of compensation for collections costs provided for in subsection (1) of this section if such agreement is grossly unfair with regard to the obligee due to the circumstances. It is presumed in the case compensation for collection costs is precluded that this is grossly unfair with regard to the obligee.
(4) This section does not apply to an obligor who is a consumer.
[RT I, 05.04.2013, 1 – entry into force 15.04.2013]
- 1132. Compensation for collection costs by consumers
(1) During the term of a contract, an obligee engaged in economic or professional activities may require that a consumer compensate for debt collection costs relating to only one reminder letter sent per each obligation fallen due in the amount of up to 5 euros. The compensation of the collection costs referred to in the preceding sentence shall increase in respect of any solidary obligor or person who provided security by 5 euros. An obligee is entitled to the compensation specified in this subsection only in the case the obligee has first sent at least one free reminder to the consumer.
(2) After the termination of a contract, an obligee engaged in economic or professional activities may require from a consumer, on the basis of the contract entered into with the consumer, and additionally per each solidary obligor or person who provided security:
1) compensation for collection costs in the total amount of up to 30 euros, and up to 15 euros may be demanded for the first reminder sent to the consumer for a fee and 5 euros each for two subsequent letters, if the claim of the obligee amounts to up to 500 euros;
2) compensation for collection costs in the total amount of up to 40 euros, and up to 20 euros may be demanded for the first reminder sent to the consumer for a fee and 5 euros each for two subsequent letters, if the claim of the obligee is more than 500 euros and up to 1000 euros;
3) compensation for collection costs in the total amount of up to 50 euros, and up to 25 euros may be demanded for the first reminder sent to the consumer for a fee and 5 euros each for two subsequent letters, if the claim of the obligee is more than 1000 euros.
(3) After the termination of a contract, an obligee engaged in economic or professional activities may send the first reminder letter for a fee at the earliest when seven days have passed from the termination of the contract. The obligee may send the second and the third letter for a fee at the earliest seven days after sending of the preceding letter.
(4) If the amount of loss relating to collection of a debt due to delay in performance of an obligation exceeds the compensation limit provided for in subsections (1) and (2) of this section, including in the case provided for in § 48 of the Bailiffs Act, an obligee may demand compensation for any loss in excess of the penalty for late payment and compensation limit of collection costs only in exceptional cases, in particular if the collection activities were extremely complicated.
(5) A consumer required to pay compensation for collection costs may claim reduction thereof pursuant to the provisions of § 162 of this Act. Upon reduction of the compensation for collection costs, any extra-judicial objections of the consumer to the claims or earlier recognition of the claim shall be taken inter alia into consideration.
(6) Agreements which derogate from the provisions of this section to the detriment of the consumer are void.
[RT I, 11.03.2015, 1 – entry into force 01.10.2015]
- 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) to 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 to 191 of this Act.
(5) [Repealed – RT I 2003, 78, 523 – entry into force 27.12.2003]
- 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.
(6) In the case of a fundamental breach of a long-term contract, the injured party may cancel the contract pursuant to the provisions of § 196 of this Act.
[RT I 2003, 78, 523 – entry into force 27.12.2003]
- 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.
(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.
[RT I 2003, 78, 523 – entry into force 27.12.2003]