- 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.
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.
(6) Agreements derogating from the provisions of this Chapter to the detriment of a surety shall be void unless otherwise provided by law.
[RT I 2002, 53, 336 – entry into force 01.07.2002]
- 143. Contract of consumer surety
(1) A contract of consumer surety is a contract of suretyship where the surety is a natural person.
[RT I, 06.12.2010, 1 – entry into force 05.04.2011]
(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.
[RT I 2003, 78, 523 – entry into force 27.12.2003]
- 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 jointly and severally 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 penalties for late payment, 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. 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.
[RT I 2005, 39, 308 – entry into force 01.01.2006]
- 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.
(4) [Repealed – RT I 2003, 78, 523 – entry into force 27.12.2003]
(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.
[RT I 2002, 53, 336 – entry into force 01.07.2002]
- 150. Co-sureties
If one and the same obligation is secured by several persons (co-sureties), such persons shall be jointly and severally 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.
(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.
[RT I 2003, 78, 523 – entry into force 27.12.2003]