Summary

The issues regarding regulation of lease contracts has brought about heated discussions this year, and the need for reviewing the respective part of the Law of Obligations Act (LOA) has become relatively topical. Several cases have been featured in the media, in which getting rid of a lessee who does not fulfil its obligations has turned out to be an extremely complicated process in practice. This is why the question has been raised as to whether the valid lease contract regulation is too favourable towards lessees and needs updating.

The article presents an overview of the theoretical bases of implementing LOA § 316, and its implementation practice in the Estonian courts in the last six years, and seeks to answer the question whether LOA § 316 should be updated and the rights and obligations of the parties balanced better. For that, the authors have compared the Estonian regulations on cancellation due to delay in payment by a lessee with the respective provisions of the rental law of Germany and Switzerland, which were used as examples in preparation of the Estonian provisions. The authors indicate that in both the German and the Swiss law, a lessor can cancel a rental contract due to payment delay by a lessee in a simpler way than under the Estonian law. The authors also provide options based on this comparative analysis as to how the Estonian law could be made more favourable towards lessors in this matter.