LAW OF OBLIGATION ACT, CHAPTER 6

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 responsible for the area.

(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 decision which has entered into force or is subject to immediate enforcement and which recognises the right of the obligee to the deposited property is presented to the depositary;

[RT I 2008, 59, 330 – entry into force 01.01.2009]

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) to (5) and §§ 121 to 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) Notice need not be given if the movable is highly perishable or if notification is impossible. 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.

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