An Estonian private limited company (OÜ) that sells, buys or works with partners abroad lives by its contracts: a services agreement with a client in Germany, a distribution agreement in Poland, a supply agreement with a manufacturer outside the EU. Which law governs such a contract, when it is binding and how the company's own standard terms become part of it are set out in the Estonian Law of Obligations Act and, within the EU, in the Rome I Regulation. This article sets out those rules and what a contract we draft contains.
The article is general information, not legal advice. The parties agree the terms; a court or an arbitral tribunal decides a dispute.
Which law governs the contract
- The parties choose. A contract is governed by the law chosen by the parties — expressly, or clearly shown by its terms or the circumstances — and the choice may cover the whole contract or a part of it (Regulation (EC) No 593/2008, Rome I, Article 3(1)).
- Without a choice. A contract for the sale of goods is governed by the law of the country where the seller has its habitual residence, a contract for services by that of the service provider, and a distribution contract by that of the distributor (Article 4(1) points (a), (b) and (f)). An Estonian company that provides services and chooses no law therefore usually contracts under Estonian law — but its foreign distributor's contract is governed by the distributor's law.
- Mandatory rules stay. Where everything else in the situation is in one country, choosing another country's law does not set aside the rules of the first country that cannot be derogated from by agreement (Article 3(3)).
Under Estonian law: when the contract binds
- Freedom of contract. The parties may derogate from the Law of Obligations Act unless the act or the nature of a provision does not allow it, or the derogation is contrary to public order or good morals (Law of Obligations Act § 5). Parties act in good faith towards each other (§ 6(1)).
- Agreement. A contract is entered into by an offer and its acceptance, or otherwise when it is sufficiently clear that the parties have agreed (§ 9(1)); where the parties have said that certain terms must be agreed, there is no contract until they are (§ 9(3)). A contract is binding on the parties (§ 8(2)).
- Form. A contract may be oral, written or in another form unless the law requires a form (§ 11(1)); where a form is required by law or by the parties, the contract is not entered into until it has that form (§ 11(2)). A written contract is entered into when the parties have signed it or exchanged documents signed by both (§ 11(4)).
The company's own standard terms
- What they are. Terms drafted in advance for standard contracts, which the other party cannot influence, are standard terms (§ 35(1)).
- When they apply. They are part of the contract if the company clearly refers to them before or when the contract is made and the other party can examine them (§ 37(1)); an unusual or unintelligible term is not part of it (§ 37(3)). An individually agreed term prevails over a standard term (§ 38).
- Reading them. In case of doubt, standard terms are interpreted against the party that supplied them (§ 39(1)). When both parties refer to their own standard terms, only the terms that do not conflict apply, and the law fills the rest (§ 40(1)).
- Between businesses too. A standard term of the list in § 42(3) — the terms the act treats as unfair in consumer contracts — is presumed unfair also where the other party is a business (§ 44).
What we prepare
The service International commercial contract drafting for an Estonian company, from from €900 per contract, prepares from the agreed terms:
- a draft of the contract, with the choice of law and of the court or arbitration written in;
- one round of changes after your comments;
- a short list of the points the parties still have to agree.
The starting price is for one contract of ordinary scope; more work is agreed in writing before it starts. Not included: a legal opinion, negotiating with the other party and representation in a dispute. A contract you already have can be checked with the separate contract review.
Prices exclude VAT. All communication takes place by email.
Ready to start? A draft from the agreed terms, one round of changes and the open points; not a legal opinion. Order.
Official sources
The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.
- Law of Obligations Act — Riigi Teataja, English translation
Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.