LAW OF OBLIGATION ACT, PART 8, CHAPTER 36

Chapter 36

CONTRACT FOR SERVICES 

  • 635. Definition of contract for services

(1) By a contract for services, one person (the contractor) undertakes to manufacture or modify a thing or to achieve any other agreed result by providing a service (work), and the other person (the customer) undertakes to pay remuneration therefor.

(2) The provisions of §§ 620 to 626, subsections 628 (2) and (3), § 629 and §§ 631 to 634 of this Act apply to a contract for services where the object of the contract is entry into a transaction.

(3) It is presumed that a contractor is not required to perform the obligations arising from the contract in person.

(4) A consumer contract for services is a contract for services entered into by a contractor acting for the purposes of the contractor’s economic or professional activities and a customer who is a consumer where the object of the contract is the provision of a service with regard to a movable of the consumer or the manufacture or production of a movable for the consumer.

  • 636. Obligation to deliver

[RT I, 31.12.2013, 1 – entry into force 13.06.2014]

(1) If the object of a contract for services is the manufacture, modification of a thing or achievement of any other result which can be delivered, it shall be delivered to the customer. In addition to the delivery, the contractor shall make possible the transfer of the object of the contract for services specified in the first sentence.

[RT I, 31.12.2013, 1 – entry into force 13.06.2014]

(2) If the contractor is obliged to deliver a thing to the customer in a place other than the place where the thing is during the performance of the work, the provisions of subsection 209 (4) of this Act additionally apply to the performance of the obligation to deliver a thing.

[RT I, 31.12.2013, 1 – entry into force 13.06.2014]

(3) If, upon the manufacture of a thing, it is agreed that the ownership of the thing will remain with the contractor until the remuneration is paid, the provisions of § 233 of this Act apply.

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

(4) [Repealed – RT I, 31.12.2013, 1 – entry into force 13.06.2014]

(5) If the parties have not specified the time of delivery of a thing in the case of the object of a consumer contract for services, the contractor shall perform the obligation to deliver the thing immediately but not later than 30 days after the entry into the contract.

[RT I, 31.12.2013, 1 – entry into force 13.06.2014]

  • 637. Duty to pay fee

(1) If remuneration or the amount thereof has not been agreed in a contract for services, the standard remuneration or, if there is no standard remuneration, reasonable remuneration under the circumstances is payable.

(2) It is presumed that a contractor shall not demand remuneration for preparation of the budget for the work.

(3) The claim of a contractor for payment falls due after the completion of the work.

(31) If the contractor is obliged to deliver a thing to the customer in a place other than the place where the thing is during the performance of the work, the claim for payment shall not fall due before the performance of the obligation to deliver the thing.

[RT I, 31.12.2013, 1 – entry into force 13.06.2014]

(4) If acceptance of work by a customer has been agreed upon or is usual, the claim of the contractor for payment falls due after the work has been accepted or is deemed to have been accepted. If work is to be delivered in parts and the price has also been calculated in parts, each part shall be paid for after the acceptance of the corresponding part of the work.

(5) A customer is not required to pay for work before having the opportunity to examine the thing, unless the agreed manner of delivery or the terms and conditions of payment do not grant the customer such opportunity.

(6) [Repealed – RT I, 04.02.2011, 1 – entry into force 05.04.2011]

  • 638. Duty to accept work

A customer is required to accept completed work if the delivery of the work had been agreed upon or is usual due to the nature of the work. Work is also deemed to have been accepted if the customer fails, without legal basis, to accept the completed work during a reasonable term granted by the contractor to the customer therefor.

  • 639. Budget overdraft

(1) A budget for the work, which may be binding on the contractor or not, may be agreed in the contract of services. It is presumed that the budget is binding unless agreed otherwise.

(2) In the event of a significant overdraft of a budget which is not binding budget, the contractor may demand that remuneration be paid in the amount exceeding the amount prescribed in the budget unless the overdraft was foreseeable. In such case, the contractor shall immediately notify the customer of the significant overdraft. In the case of failure to notify, the contractor has the right to demand that the amount exceeding that prescribed in the budget be paid only to the extent to which the customer was unjustifiably enriched as a result of the overdraft.

(3) If the customer cancels the contract due to a budget overdraft, the customer is not required to pay remuneration in the amount exceeding the amount prescribed in the budget.

  • 640. Transfer of risk of accidental loss or damage

(1) The customer shall pay the contractor for work performed also in the case where the work was accidentally destroyed or damaged after the risk of accidental loss of or damage to the thing had passed to the customer.

(2) A contractor shall bear the risk of accidental loss or damage until the completion of the work. If acceptance of the work by a customer has been agreed upon or if this is usual, the contractor shall bear the risk of accidental loss or damage until the work has been accepted or is deemed to have been accepted.

(3) If the contractor is obliged to deliver a thing to the customer in a place other than the place where the thing is during the performance of the work, the risk of accidental loss of or damage to the thing shall not pass to the customer before the performance of the obligation to deliver the thing.

[RT I, 31.12.2013, 1 – entry into force 13.06.2014]

  • 641. Conformity of work

(1) Work shall conform to the contract. Documents accompanying work shall also conform to the contract.

(2) Work does not conform to the contract if, among other things:

1) the work does not have the agreed qualities;

2) in the absence of an agreement concerning the qualities of the work, the work is not fit for the specific purpose for which the customer needs it and of which the contractor was aware or ought to have been aware at the time of entry into the contract if the customer could reasonably have expected to be able to rely on the professional skills or expertise of the contractor, and in other cases for the purpose for which work of the same description would ordinarily be used;

3) the use of the work is hindered by provisions of legislation of which the contractor 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 work;

5) under a consumer contract for services, the work is not of the quality which is usual for such type of work and which the customer may reasonably have expected based on the nature of the work and considering the declarations made publicly by the contractor with respect to the particular qualities of the work, in particular in advertising the work or on labels, unless the contractor proves that the declarations had been modified by the time of entry into the contract or that the declarations did not affect entry into the contract.

(3) The contractor is not liable for the non-conformity of work resulting from the instructions provided by the customer, defects in the material supplied by the customer or preliminary work performed by third parties if the contractor had sufficiently checked the instructions of the customer, the materials or the preliminary work.

(4) The lack of conformity of a thing produced as work resulting from the incorrect installation of the thing is deemed to be equal to a lack of conformity resulting from the work if the installation was carried out by the contractor or under the contractor’s responsibility. The same applies if the thing is installed by the customer and the incorrect installation thereof results from insufficient information provided by the contractor with respect to installation of the thing.

  • 642. Liability of contractor in event of lack of conformity of work

(1) The contractor is liable for the lack of conformity of work at the time when the risk of accidental loss or damage passes to the customer even if the lack of conformity only becomes evident later. Under a consumer contract for services, the contractor is liable for the lack of conformity of work at the time of delivery of the work to the consumer even if the passing of the risk of accidental loss or damage was agreed at an earlier date.

(2) Under a consumer contract for services, the contractor is liable for any lack of conformity of work which becomes evident within two years as of the delivery of the work to the consumer. Under a consumer contract for services, it is presumed that any lack of conformity which becomes evident within six months as of the date of delivery of the work to the customer already existed before delivery of the work, unless such presumption is contrary to the nature of the work or lack of conformity.

(21) In the case of a contract for services the object of which is construction work for the purposes of Building Code and which is entered into by a person engaged in economic and professional activities and a consumer, it is presumed that any non-conformity with the terms and conditions of the contract which becomes evident within two years as of the day of delivery of the work to the consumer existed at the time of delivery of the work, if such an assumption is not inconsistent with the nature or defect of the work. Agreements which derogate from the provisions of this subsection to the detriment of the consumer are void.

[RT I, 23.03.2015, 3 – entry into force 01.07.2015]

(3) The contractor is also liable for the lack of conformity of work which occurs after the risk of accidental loss of or damage to the thing passes to the customer if the lack of conformity of the work arises from a violation of the obligations of the contractor.

  • 643. Duty to examine work

If a customer has entered into a contract for services in connection with the customer’s professional or economic activities, the customer shall promptly examine the work performed or have the work performed examined.

  • 644. Notification of lack of conformity of work

(1) The customer shall notify the contractor of the lack of conformity of work within a reasonable time after the customer becomes or should have become aware of the lack of conformity. Under a consumer contract for services, the consumer shall notify the contractor of the lack of conformity of work within two months.

(2) A customer who entered into a contract for services in connection with the customer’s professional or economic activities shall provide a detailed description of the lack of conformity upon notification thereof.

(3) The customer shall not rely on the lack of conformity of work if the customer does not notify the contractor of the lack of conformity in due time or, in the case of a contract entered into by a customer in connection with the customer’s professional or economic activity, if the customer does not provide a sufficiently detailed description of the lack of conformity. If failure to notify is reasonably excusable, the customer may, by relying on the lack of conformity, still reduce the amount of remuneration payable or claim compensation for damage from the contractor, except for any loss of profit.

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

  • 645. Specifications for relying on lack of conformity of work

(1) A customer may rely on the lack of conformity regardless of the customer’s failure to examine the work or failure to give notification of the lack of conformity in due time if:

1) the lack of conformity is caused due to the intent or the gross negligence of the contractor;

2) the contractor is aware or ought to be aware of the lack of conformity or the circumstances related thereto and does not inform the customer thereof.

(2) Upon failure to perform the obligation to examine work, a customer who is acting in the course of the customer’s economic or professional activities may rely on the lack of conformity of a thing, which the customer could have discovered by examining the thing only if the customer proves that the work already lacked conformity at the time when the risk of accidental loss or damage passed to the customer.

(3) A contractor shall not rely on an agreement which precludes or restricts the rights of the customer which are related to the lack of conformity of work if the contractor was aware or ought to have been aware that the work did not conform to the contract and failed to notify the customer thereof.

  • 646. Requirement to perform contract as legal remedy

(1) If work does not conform to the contract, the customer may demand that the work be improved or substitute work be performed by the contractor if this does not cause the contractor to incur unreasonable expenses or suffer unreasonable inconvenience taking into consideration, inter alia, the value of the thing and the significance of the lack of conformity. The contractor may, instead of improving the work, perform substitute work which conforms to the contract.

(2) In the case specified in the first sentence of subsection (1) of this section and provided that the given contract for services is not a customer contract for services, the customer may, in the event of the lack of conformity of work, demand that substitute work be performed only if the lack of conformity of the work constitutes a fundamental breach of the contract.

(3) If the contractor performs work which conforms to the contract to replace non-conforming work, the contractor may demand that the customer return the non-conforming work. In such case, the provisions of §§ 189 to 191 of this Act apply.

(4) The contractor shall incur the expenses relating to remedying the lack of conformity of work or performance of substitute work, in particular expenses relating to transport, work, travel and materials.

(5) If the customer legitimately demands that the work be improved and the contractor fails to do this within a reasonable period of time, the customer may improve the work or have the work improved and claim reimbursement of any reasonable expenses incurred thereupon from the contractor.

(6) The customer loses the right to demand that the contractor improve the work or perform substitute work if the customer fails to submit a corresponding request to the contractor with the notice concerning the lack of conformity of the work or within a reasonable period of time after submission of the notice, unless the behaviour of the contractor is contrary to the principle of good faith.

(7) The provisions of subsection (6) of this section do not apply to consumer contracts for services.

  • 647. Fundamental breach of contract for services by contractor

(1) A contractor is deemed to be in fundamental breach of a contract for services if, inter alia, the improvement or substitution of work is not possible or fails or if the contractor refuses to improve or substitute the work without good reason or fails to do so within a reasonable period of time after the contractor has been notified of the lack of conformity.

(2) Under a consumer contract for services, the causing of unreasonable inconvenience to a customer by the improvement or substitution of work is also deemed to be a fundamental breach of contract by the contractor.

(3) In the cases specified in subsections (1) and (2) of this section, the customer is not required to grant the contractor an additional term for performance as specified in § 114 of this Act and has the right, inter alia, to withdraw from the contract.

  • 648. Restrictions on reduction of remuneration

The customer shall not reduce remuneration payable to the contractor if:

1) the contractor brings the work into conformity with the contract or performs substitute work;

2) the customer refuses, without legal basis, to accept the contractor’s proposal to bring the work into conformity with the contract or to perform substitute work.

  • 649. Specifications for compensation for damage

The customer may also claim compensation from the contractor for damage caused due to the thing produced as work being used for purposes other than those intended, if such use was caused due to the contractor providing insufficient information to the customer, and compensation for damage which is caused to the thing due to its lack of conformity.

  • 650. Contractor’s guarantee and duty to inform of servicing

(1) It is presumed that, upon the assumption of a guarantee obligation (contractor’s guarantee) by a contractor with respect to work, the guarantee covers all aspects of the lack of conformity of the work which become evident during the term of the guarantee. The provisions of §§ 230 and 231 of this Act apply to contractor’s guarantee.

(2) If, under a consumer contract for services, the customer can reasonably presume that services related to the use, maintenance or repair of work performed will be provided but the contractor does not provide these services, the contractor shall, at the time of delivery of the work and also thereafter if so requested by the consumer, provide sufficient information to the customer on the possibilities of using such services.

  • 651. Commencement of limitation period of claims arising from lack of conformity of work

(1) The limitation period of a claim arising from the lack of conformity of work shall commence as of the completion of the work. If the customer is required to accept the work, the limitation period of a claim shall commence as of the acceptance of the work or as of the work being deemed to have been accepted.

(2) Upon the performance of substitute work, the limitation period shall commence as of the completion of the substitute work. Upon remedying a lack of conformity, the limitation period shall recommence with respect to the remedied lack of conformity as of the remedying of the lack of conformity.

  • 652. Delay by customer

(1) If, in order for work to be performed, a customer must perform an act which may among other things consist of the supply of material, provision of instructions or assistance in any other manner in the performance of the work and the customer delays the performance thereof, the contractor has the right to demand compensation for the damage created to the contractor by the delay. The duration of the delay, the amount of remuneration, the savings made by the contractor due to the delay and anything which the contractor obtained or could reasonably have obtained by using the labour force thereof for different purposes shall be taken into account upon determination of the amount of compensation.

(2) If, in order for work to be performed, a customer must perform an act which may among other things consist of the supply of material, provision of instructions or assistance in any other manner in the performance of the work and the customer delays the performance thereof and by doing so fundamentally violates the contract, the contractor has the right to cancel the contract and to demand payment of a part of the remuneration corresponding to the work already performed and reimbursement of expenses not included in the remuneration.

(3) If a delay in acceptance of work is caused by the customer, the contractor has the right to demand payment of the total agreed remuneration from which the amount which the contractor saved in costs by cancelling the contract or obtained or could reasonably have obtained by using the labour force thereof for different purposes is deducted.

  • 653. Destruction or deterioration of work or impossibility of performing work for reasons arising from customer

If, due to a defect in the material supplied by the customer or an order given by the customer for performance of work, the work is destroyed or deteriorates or it becomes impossible to perform the work before its completion or, in the case where work has to be accepted, before its acceptance, the contractor has the right to cancel the contract and demand payment of a part of the remuneration corresponding to the work already performed and reimbursement of expenses not included in the remuneration.

  • 654. Right of security

(1) In order to secure claims arising from a contract for services, the contractor has the right of security over the movables of the customer which the contractor has manufactured, repaired or modified if such movables are in the possession of the contractor for contracting purposes.

(2) In order to secure claims arising from a contract, a contractor who is required to construct, repair or modify a structure or a part thereof has the right to demand the establishment of a mortgage on the immovable on which the structure is situated.

(3) In order to secure claims arising from a contract, a contractor who is required to construct, repair or alter a ship entered in the ship register has the right to demand the establishment of a maritime mortgage on a ship belonging to the customer.

  • 655. Customer’s right of cancellation

(1) A customer has the right to cancel a contract for services at any time. If the customer has cancelled the contract for services, the contractor has the right to demand payment of the agreed remuneration from which the savings made by the contractor due to the cancellation of the contract and anything which the contractor obtained or could reasonably have obtained by using the labour force thereof for different purposes are deducted.

(2) The provisions of subsection (1) of this section do not apply if the customer cancels the contract due to violation thereof by the contractor.

  • 656. Prohibition on violation of provisions

Under a consumer contract for services, a person or an agency provided by law has the right, pursuant to the procedure provided by law, to demand that a contractor who is in violation of the provisions concerning contracts for services specified in this Chapter and in the General Part of this Act terminate the violation and refrain from further violation.

  • 657. Mandatory nature of provisions under consumer contracts for services

(1) Under a consumer contract for services, any agreement which derogates from the provisions of this Chapter and from the provisions of the General Part of this Act concerning legal remedies used in the event of a breach of contract to the detriment of the customer is void.

[RT I, 04.02.2011, 1 – entry into force 05.04.2011]

(2) The provisions of this Chapter apply to consumer contracts for services entered into with customers residing in Estonia if the contracts are concluded as a result of public tenders, advertising or other similar economic activities which occur in Estonia, regardless of which state’s law is applicable to the contract.

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