LAW OF OBLIGATION ACT, PART 3, CHAPTER 16, DIVISION 1 & 2

Chapter 16

COMMERCIAL LEASE CONTRACT 

Division 1

General Provisions 

  • 339. Definition of commercial lease contract

By a commercial lease contract, one person (the commercial lessor) undertakes to grant the use of the object of the commercial lease contract to another person (the commercial lessee) and enables the fruits received from the object of the commercial lease contract to be enjoyed under the rules of regular management. The commercial lessee is required to pay a fee (rent) therefor.

  • 340. Agricultural lease contract

(1) Enterprises designated mainly for agricultural production, including non-agricultural enterprises connected with agricultural production, agricultural immovables or parts thereof, may be the objects of an agricultural lease contract. Upon the lease of an agricultural immovable, the lease contract is presumed to include the accessories and rights relating to the immovable.

(2) The provisions concerning agricultural lease contracts also apply to commercial lease contracts regarding immovables intended for forestry use if such immovables are part of the assets of the leased agricultural enterprise.

(3) The provisions concerning agricultural lease contracts do not apply to commercial lease contracts the object of which is a plot of land with an area of less than 2 hectares.

(4) Agreements which derogate from the provisions of this Chapter to the detriment of the commercial lessee of an agricultural immovable or enterprise are void.

  • 341. Application of provisions concerning lease contracts to commercial lease contracts

The provisions concerning lease contracts also apply to commercial lease contracts unless the provisions of this Chapter provide otherwise.

Division 2

Rights and Obligations of Parties 

  • 342. Description of immovable subject to commercial lease

(1) Upon transfer of an immovable after entry into or expiry of a commercial lease contract, the commercial lessor and the commercial lessee of the immovable shall jointly prepare a description of the immovable which describes the parts, accessories and condition of the immovable upon transfer. The description shall set out the time of preparation of the description and it shall be signed by both parties.

(2) If one party refuses to participate in the preparation of a description or if material disagreements arise upon preparation of the description, either party may demand that an expert prepares the description, unless more than nine months have passed since the transfer of the immovable or more than three months have passed since the expiry of the commercial lease contract. The parties shall bear the costs of the expert’s fees in equal shares.

(3) In the case of preparation of a description specified in subsection (1) of this section, the description is deemed to be correct in relations between the parties. If a description is not prepared, the immovable is deemed to have been transferred in good condition.

  • 343. Commercial lessor’s right to check

A commercial lessor has the right to check the management of the object of the commercial lease contract and that the maintenance thereof is ensured.

  • 344. Obligation to manage according to intended purpose

A commercial lessee shall manage the object of the commercial lease contract according to its intended purpose, particularly by preserving the economic purpose of the object of the commercial lease contract and using the object in a regular manner and prudently.

  • 345. Removal of defects

(1) The commercial lessee shall ensure the ordinary maintenance of the object of the commercial lease contract at the expense of the commercial lessee, particularly by removing defects which can be removed by cleaning or repair as part of ordinary preservation, and by carrying out customary small repairs and replacing equipment and tools of low value if, due to their age or use, they have become unusable.

(2) The commercial lessee of an agricultural immovable or enterprise shall, inter alia, ensure the ordinary maintenance of equipment necessary for the use and servicing of roads, tracks, ditches, dams, roofs, fences, water conduits and other objects of the commercial lease contract according to local custom.

  • 346. Commercial lease of immovable with accessories

(1) Upon the commercial lease of an immovable with accessories, the commercial lessee shall preserve the accessories and replace any destroyed or lost accessories even if they are destroyed or lost through no fault of the lessee. The commercial lessee shall replace animals forming part of the accessories that have become unfit for service by regular use in so far as this conforms to regular management.

(2) The commercial lessee shall preserve the accessories in a condition which conforms to regular management practice and replace accessories to this extent as and when necessary. Accessories replaced by the commercial lessee shall be transferred into the ownership of the commercial lessor.

(3) A condition of a contract which prohibits the commercial lessee from disposing of things forming part of the accessories or allows this to be done only with the consent of the commercial lessor or requires the accessories to be transferred to the commercial lessor is valid only if the commercial lessor undertakes to acquire the accessories at least at their usual value upon expiry of the commercial lease contract.

  • 347. Care for leased animals

(1) The commercial lessee shall bear the costs of feeding and caring for leased animals.

(2) The commercial lessee shall be liable for any damage caused to a leased animal unless the lessee proves that the damage could not have been prevented by the commercial lessee, regardless of the regular feeding and care.

(3) The commercial lessee may demand reimbursement of expenses incurred in relation to the extraordinary care of an animal from the commercial lessor unless these expenses are caused by circumstances dependant on the commercial lessee.

  • 348. Alterations and improvements made by commercial lessor of agricultural immovable or enterprise

(1) In the case of an agricultural lease contract, the commercial lessee shall tolerate the measures taken by the commercial lessor to alter or improve the object of the commercial lease contract. The commercial lessee need not tolerate such measures if they have consequences which are not justified taking into account the legitimate interests of the commercial lessor. The commercial lessor shall compensate the commercial lessee to a reasonable extent for the expenses caused by application of the measures and for the loss of profit. At the request of the commercial lessee, the commercial lessor shall pay the compensation in advance.

(2) If the commercial lessee receives more profit due to measures specified in the first sentence of subsection (1) of this section or could receive such profit by regular management, the commercial lessor may increase the rent to the same extent unless payment of a larger amount of rent cannot be expected from the commercial lessee in the circumstances. Any increase in the rent does not enter into force before the profit actually increases.

  • 349. Change of way of management

(1) The commercial lessee may change the regular way of managing the object of a commercial lease contract and may make alterations and improvements to the object of the commercial lease contract which exceed ordinary maintenance only with the consent of the commercial lessor provided in a format which can be reproduced in writing. If the commercial lessor consents to the alterations and improvements, the commercial lessor may demand the restoration of the former situation only if the obligation to restore was agreed on in a format which can be reproduced in writing.

(2) If a commercial lessor has not consented to changing the regular way of management in a format which can be reproduced in writing and if the commercial lessee does not restore the previous way of management within a reasonable period, the commercial lessor may cancel the commercial lease contract without advance notice. In the case of business premises, the contract may be cancelled for that reason by giving at least 30 days’ notice.

(3) If the commercial lessor refuses to grant consent specified in subsection (1) of this section, the commercial lessee may apply for the grant thereof by a court proceeding if the changes are necessary in order to maintain or bring about a long-term improvement in the profitability of the enterprise and if the commercial lessor may be expected to grant consent taking into account the legitimate interests of the commercial lessor. The grant of consent shall not be demanded if the commercial lease contract has been cancelled or the contract expires within less than three years.

(4) In the case specified in subsection (3) of this section, a court judgment which satisfies an action shall replace consent.

[RT I 2002, 53, 336 – entry into force 01.07.2002]

  • 350. Amendment of terms of agricultural lease contract

(1) The amendment of an agricultural lease contract shall not be demanded on the bases and under the conditions provided for in § 97 of this Act before two years have passed since entry into the commercial lease contract or the last amendment thereof. This restriction does not apply if relations between the parties change significantly and permanently due to force majeure.

(2) If, in the case of an agricultural lease contract, the rent is unreasonably high, the commercial lessee may, taking into account the profit received upon regular management of the object of the commercial lease contract, demand a reduction of the rent by a reasonable amount as of the due date for payment of the rent following submission of the application for a change of the rent. The commercial lessee shall not demand a reduction of the rent if the value of the thing has changed as a result of the activities of the lessee unless such right has been agreed upon.

(3) Any agreement whereby the commercial lessee or commercial lessor waives the right to apply for amendment of a contract is void.

  • 351. Right of security of commercial lessor of agricultural immovable or enterprise

The commercial lessor of an agricultural immovable or enterprise has the right of security over things brought into the immovable or the enterprise by the lessee and over the fruits of the object of the commercial lease contract in order to secure the claims of the lessor arising from the commercial lease contract. The right of security does not secure future claims for compensation.

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