A Lawyer’s Practical Advice for Construction Entrepreneurs

According to attorney-by-law and head of Advokaadibüroo Kaupo Kask, Kaupo Kask, the construction sector is one of the most complex branches of the economy, where the evaluation of work results, adherence to deadlines, and payment are often tied to significant legal nuances. “I have repeatedly seen in practice how construction companies end up in disputes that could have been avoided – if only timely attention had been paid to the provisions of the contract for services, documentation, and proper communication with the client.”

Kask highlights several important aspects that every construction entrepreneur should consider. These observations are based on his experience and the case law of the Supreme Court, and they help builders better protect their rights.

1. The contract must be clear and detailed

To avoid disputes and better protect the builder's rights, the content of the contract for services should not remain vague. It is essential to precisely define:

• the scope and content of the work;

• the amount of the fee and the conditions for its payment;

• the procedure for handover and acceptance of the work;

• conditions regarding liability and warranties.

It is especially important to agree on whether the work is accepted as a whole or in stages – this affects the assessment of whether the payment claim becomes due.

The Supreme Court has found that if a specific procedure has been agreed upon in the contract (e.g., objections must be raised within three working days regarding the handover act), then silence or inaction can be interpreted as acceptance of the work and confirmation of compliance with the contract terms. This happened, for example, in case no. 2-10-12908, where the client did not raise objections within the agreed timeframe regarding the handover act, and therefore it was considered that the work was approved and the client had no grounds to refuse payment.

Tip: Add a specific deadline and format to the contract for acceptance of work and notification of defects.

2. Handover of work must be documented

Carrying out the work does not automatically entitle the contractor to payment. A payment claim generally becomes due only when:

• the work is completed and complies with the contract;

• the work has been handed over to the client;

• the client has accepted the work or has unreasonably refused to accept it.

According to Supreme Court practice, the contractor must provide evidence of the handover of the work. For example, an email about the completion of work, a signed act, or another written document. If the work is carried out in stages, each stage must be handed over and documented separately.

3. Acceptance of work – a legally significant moment

Acceptance of work brings several legal consequences:

• It is presumed that the work complies with the contract. If the work is accepted, the client must prove that the work did not meet the contract terms if defects are claimed (see civil case no. 2-16-5851/38).

• If the work is not accepted, the contractor must prove that the work was completed in accordance with the contract and handed over to the client.

• Acceptance does not automatically exclude the use of legal remedies regarding defects, but the burden of proof shifts to the client.

In civil case no. 2-15-2810/51, the Estonian Supreme Court emphasized that the work is considered accepted even if the client fails to fulfill their obligation to accept the work within a reasonable time (General Part of the Civil Code Act § 638, second sentence).

4. The principle of good faith prohibits refusal to accept work due to minor defects

Notably, in civil case no. 2-15-2810, the Estonian Supreme Court stated that the client may not refuse to accept work due to insignificant defects. Likewise, a complete rejection of the work is not justified if the work is divisible and part of it is of good quality and does not violate the client’s rights.

Tip: Document the condition of the work at the time of handover in as much detail as possible, including photos or an assessment by a third party if necessary. In the event of a dispute, photographic documentation of covered work may also be significant.

5. Silence may mean acceptance – if agreed

In case no. 2-10-12908, the Estonian Supreme Court found that if the parties have agreed on a deadline within which an act must be responded to and defects notified, then the passing of that deadline without response constitutes acceptance.

Section 68(4) of the Estonian General Part of the Civil Code Act and Section 20(2) of the Law of Obligations Act allow silence to be considered as a declaration of intent if it arises from law, agreement, or practice.

6. The contractor bears a higher duty of care

When performing construction work, it is not enough to merely comply with the contract. The contractor must also consider:

• applicable laws, norms, and standards;

• the client’s objectives and intended use (even if the client has not explicitly stated them, but the contractor had reason to know them);

• the need to check prior work, designs, or instructions if these influence the quality of the work performed.

7. Why use a lawyer?

The construction field is full of legal risks – from flawed contracts to improper handover of work. The points mentioned in this article are just a few observations among many. It is important to note that each dispute must be assessed individually, and there is no magic solution to prevent all conflicts. Taking this into account, it is often cheaper to consult a lawyer before entering into a transaction or dispute to ensure that your rights are fully protected.

Very often, a dispute can be avoided if:

• the contract is drafted or reviewed by a specialist;

• documentation is properly formalized;

• timely actions were requested from the contracting partner.

Attorney-by-law Kaupo Kask has been dealing with construction-related matters for over 7 years.

The article is also published in Meesteleht: https://meesteleht.ee/kinnisvara-ja-ehitus/ehitustoo-tookohtuleping-nouanded-kaupo-kask/