The form of a contract means the way in which it is concluded. Under the Law of Obligations Act, a contract may be oral, written or in any other form unless the law prescribes a mandatory form.
A required form may follow from the law, the parties' agreement or a party's request.
If a contract must take a particular form, that form generally also applies to amendments, security arrangements, ancillary obligations and agreements assigning claims or transferring obligations.
Oral contracts
A contract may be oral where no stricter requirement applies. Buying goods in a shop and paying for them creates a sale contract even though no formal document is prepared.
Although oral contracts are probably the most common, oral form is not mandatory for any transaction type. Their main drawback is that the terms can be difficult to prove later. Oral contracts are best suited to minor transactions and relationships of trust.
Written contracts
Written form means recording the terms and having the parties sign by hand. In some cases, only the obligated party must sign. A mechanically reproduced signature may be sufficient where customary and the other party does not immediately request a handwritten signature.
A written contract is concluded when the parties sign the document or exchange signed documents or letters. The law may provide that the signature of only the obligated party is sufficient.
Written declarations made while performing a written contract may also be communicated by another method that allows reproduction in writing.
Notarial authentication or certification can replace written form.
Electronic contracts
Electronic form is equivalent to written form. The contract must be permanently reproducible, identify the persons making the transaction and be electronically signed by the parties.
The electronic signature must connect the signatory with the transaction's content and the time it was made. A digital signature is one example.
A form reproducible in writing
This means a transaction must be capable of permanent reproduction in writing and record the parties' names, without requiring handwritten signatures.
A contract can be concluded by exchanging emails or text messages if the parties are sufficiently identifiable and at least their names appear in the correspondence.
Notarial contracts
Where certification or authentication is required, the contract is concluded when that requirement is completed. If the parties' declarations are certified or authenticated separately, the contract is concluded upon completion of the last declaration.
Notarial certification
The contract must be written and the notary must certify the parties' signatures. Notarial authentication can replace certification.
Notarial authentication
Authentication also replaces certification. In addition to checking signatures, the notary reviews the content and explains it to the parties.
Authentication is required where the law prescribes it, including:
- Transfers of immovable property and transactions establishing real rights over it.
- Marital property agreements.
- Transfers of shares in a private limited company if they are not registered in the Estonian securities register and the company has not waived the formal requirement in accordance with the Commercial Code.
What happens if the required form is not followed?
A transaction failing to comply with a statutory form requirement is void unless the law or the purpose of that requirement provides otherwise.
A transaction failing to comply with an agreed form is void unless the law or the parties' agreement provides otherwise.