Introduction

Establishing a Basic Structure

Company law provides for a robust division between the personal assets of the shareholders, lenders to and
managers of the company, on the one hand, and the assets deployed in the company’s business, on the other.
The Act provides that, upon registration of the company in Companies House, the persons who put the
registration documents forward (the ‘subscribers to the memorandum of association’)16 are transformed from
a collection of subscribers into the first members (shareholders) of ‘a body corporate’ which the registration
creates.17 It thus follows that separate legal personality is an inevitable consequence of the incorporation of a
company.
Limited liability means that satisfaction of the claims of the company’s creditors is confined to the assets of
the company and cannot be asserted against the personal assets of the company’s members (shareholders)
or (p.7) others connected with the company.
In insolvent liquidation (where, by definition, the company does not hold sufficient assets to satisfy all its
creditors in full) the question arises whether the liquidator, who now runs the company in place of the
directors and owes duties primarily to the creditors, can claim a contribution to the company’s inadequate
assets from its members

Commercial Law in Lithuania

• Commercial relations and commercial law framework are established in the Constitution of
Lithuania.
• The main legislative act regulating commercial relations – Civil Code.
• Other legal and substatory acts: Law on Companies; Law on Small Partnerships; Law on
Partnerships; Law on Agricultural Companies; Competition Law; Law on Securities; Bankruptcy
Law; and etc.

Commercial Law in EU
• Legal basis: Articles 49, 50(1) and (2)(g), and 54, second paragraph, of the Treaty on the Functioning
of the European Union (TFEU).
• Objectives: An effective corporate governance framework creates a positive EU-wide business
environment in the internal market. The objective of harmonising company law is to promote the
achievement of freedom of establishment (Title IV, Chapter 2 TFEU) and to implement the
fundamental right laid down in Article 16 of the Charter of Fundamental Rights of the European
Union, the freedom to conduct a business within the limits of Article 17 of the Charter (right to
property) (4.1.2).
• Article 49, second paragraph TFEU guarantees the right to take up and pursue activities in a self-
employed capacity and to set up and manage undertakings, in particular companies or firms (2.1.4).
• The purpose of EU rules in this area is to enable businesses to be set up anywhere in the EU enjoying
the freedom of movement of persons, services and capital (2.1.3), to provide protection for
 shareholders and other parties with a particular interest in companies, to make businesses more
competitive, and to encourage businesses to cooperate over borders (2.1.5).
• The internal market implies the creation of Europe-wide companies.
• There are currently around 24 million companies in the EU[1], of which approximately 80% are
limited liability companies. While around 98-99% of limited liability companies are SMEs,
companies must be able to act throughout the EU according to a uniform legal framework.
• EU company law rules cover issues such as the formation, capital and disclosure requirements,
and operations (mergers, divisions) of companies. EU company law rules also address
corporate governance issues, focusing on relationships between a company’s management,
board, shareholders and other stakeholders, and therefore, on the ways the company is
managed and controlled.

Business Subjects

Natural Persons (NP) and Legal Entities (LE) acting or participating in civil or correspondingly
commercial relations.
A Natural person is real human being, as opposed to a Legal entity (person), which is legal structure
(organization) created by the people in accordance with the procedures provided by the legal acts, i.e. it is a
legal construct through which the law allows a group of persons to act as if they were single person for
certain purposes.
A Legal entity may be a private (business entity) or public (i.e., government) organization.
Article 2.1 of CC determines passive civil capacity of natural persons- every natural person shall have the
full enjoyment of civil rights (passive civil capacity). It is ability to have the civil rights.
In accordance with article 2.2 of CC, passive civil capacity of a natural person shall begin at the moment of
his birth and end at the moment of his death.
Active civil capacity of natural persons (lt. veiksnumas)
The active civil capacity of natural person is very important for the Commercial Law, whereas natural
person can act as a businessman when he acquires full active civil capacity.
In accordance with article 2.5 of CC, on attaining full age, i.e. when a natural person is eighteen years of
age, he, by his acts, shall have full exercise of all his civil rights and shall assume civil obligations.
Articles of 2.7 and 2.8 of CC regulate active civil capacity of minors under fourteen years, over fourteen and
under eighteen years of age. In the light of the Commercial Law they are not the subjects of Commercial
Law* * Some exceptions exist (e.g. marriage, emancipation)
Main attributes identifying natural person:
• Its occurrence (birth, acquisition of citizenship, determination of place of residence);
• Achieving Active civil capacity (efficiency);
• Registration, obtaining an appropriate document that establishes the factors listed above.
Constitutional right to engage in Business . Each person has a right to engage in business, this right is
expressis verbis guaranteed by the Constitution of the Republic of Lithuania (articles 46 and 48).
o Lithuania’s economy shall be based on the right of private ownership, freedom of
individual economic activity and initiative. Article 46
o Each human being may freely choose a job or business, and shall have the right to have
proper, safe and healthy conditions at work, to receive fair pay for work and social
security in the event of unemployment. Article 48

Commercial activity shall mean any independent activity in pursuit whereof a person seeks to derive
income or any other economic benefit over a continuous period on the own risk.
Commercial activity shall mean any independent activity in pursuit whereof a person seeks to derive
income or any other economic benefit over a continuous period on the own risk.
The Civil code (CC) provides details on the opportunity to engage in commercial activities (Article
2.4):
1. According to law, natural persons shall be entitled to property as the object of private ownership and
shall enjoy the right to engage in commercial activities, establish enterprises or other legal entities,
inherit property and bequeath it, choose a sphere of activities and residence, to have invention or
industrial sample rights as well as other property and individual non-property rights, which are
protected by the civil law.
2. Natural persons who, in accordance with the procedure established by the law, are engaged in
commercial activities shall be deemed to be entrepreneurs.
3. Every person engaged in business or practising of his profession shall have to administer his property
and everything related to his undertaking or practising of his profession as well as to safeguard
documents and other information about his property, undertaking or practising of his profession in the
manner, which would enable every person, having a legal interest, at any time, to receive
comprehensive information about the property rights and obligations of the person in question.

What is trying CC to determine in its article 2.4?

o The right to engage in commercial activities: As a natural person; or As a legal entity.
o Definition of businessman and the rights related to it.
o Obligations to businessman.

Natural person’s right to engage in commercial activities can be realized as individual activity or
through the incorporation of a legal entity.
Individual activity
Individual activity - including, but not limited:
 independent commercial or industrial activities of any nature, including those exercised under a
business certificate;
  independent creative or professional activities and other similar independent activities, including
those exercised under a business certificate;
 independent sports activities; independent performing activities.

An individual has two options how to engage in individual activity:
 without business certificate, i.e. with registration in the Register of Taxpayers;
 under a business certificate.

The fundamental differences:

 Business certificate – you must pre-pay an income tax which is settled in advance. Disadvantage:
you can not conclude agreement with the legal carrying out the same activities as natural person).
 Individual activity - income tax is paid before the end of the tax period (until 1 of May). Advantage:
you can conclude agreement with the legal carrying out the same activities, as natural person.
Practical aspects of individual activity
State Tax Inspectorate is responsible for registration of individual activity: In a way of the electronic service;
Physically submitting documents at the STI office

Concept of Legal Entity

• Legal entity (latin persona ficta) - derivative (unnatural) subject of civil and commerce law.
• In accordance with various “internet dictionaries” - an corporation or organization that has legal
standing in the eyes of law. A legal entity has legal capacity to enter into agreements or contracts,
assume obligations, incur and pay debts, sue and be sued in its own right, and to be held responsible
for its actions.
• In accordance with Article 2.33 of CC, a legal person shall be an enterprise or an organisation which
has its business name, which may in its name gain and enjoy rights and assume obligations as well as
act as a defendant and as a plaintiff in courts.
Theories of the Legal entity were developed by two German specialists:
• (Theory of Fiction) Savigny, Friedrich Karl ( 1779-1861) German jurist and legal historian wrote
that the legal institutions of a people are like their art or music. The Legal entity is a legal
technicality tool used only for legal purposes, and only in private law, in other words - it is
artificially made subject. The real subjects of the civil relations are individuals.
• (Theory of Reality) According to Otto Friedrich von Gierke (1841 –1921) legal entity is not a
fiction , otherwise it is real social organism. According to Gierke, a legal entity has its own
willpower, which is understood as a common willpower of the members of the legal entity. The
theory of reality is based on the aspect that the individuals who have created legal entity are not the
same with it. A legal entity remains when founders retires, changes and so on.
Main attributes identifying legal entity:
• Name.
• Management Bodies (organizational solidarity).
• Legal standing in the eyes of law:
 • a) AoA;
• b) May in its name gain and enjoy rights and assume obligations;
• c) Personal responsibility.
• Oher features - separate assets and etc.

Types of legal entities

• Legal persons shall be divided into persons of limited and unlimited civil liability.
• Unlimited civil liability. Where the property of a legal person of unlimited civil liability is not
sufficient to discharge its obligations, a member of a legal person shall be liable for the said
obligations. Personal (individual) enterprise and commercial partnership shall be legal persons of
unlimited civil liability.
• Limited civil liability. In case of limited liability a legal person shall not be liable for the obligations
of its member and the latter shall not be liable for the obligations of the legal person with the
exception of cases provided by the law and incorporation documents of a legal person*.
• *Where a legal person fails to perform his obligations due to acts in bad faith of a member of the
legal person, the member of a legal person shall, in a subsidiary manner, be liable for the
obligations of a legal person by his property.
• In accordance with article 2.34 of CC, legal entities shall be divided into public and private
persons.
• Private legal persons shall be legal persons, which aim at meeting private interests.
• Public legal persons shall be legal persons established by the state or municipalities, their
institutions or other non-profit-seeking persons whose goal is to meet public interests.
Public legal entities:
• state and municipality enterprises
• state or municipality institutions,
• public institutions,
• religious communities,

Private legal entities:

• Public limited liability companies
• Private limited liability companies
• Partnerships
• Small Partnership
• Personal (individual) enterprise
• Updated: Additional reading

Incorporation of legal entities

• Legal persons shall be incorporated pursuant to the procedure established by the law.
• Incorporator of a legal person shall be a person who has concluded a contract for the incorporation of
a legal person.
• Natural and legal persons may be incorporators of a legal person.
Active and passive civil capacity of a legal entity (applicable definition – legal capacity)

Legal entity obtains active and passive civil capacity at the same time after its registration.

Private legal persons may be in possession of or achieve any civil rights and assume duties except
those, which may emerge only when such characteristics of a natural person as gender, age and
consanguinity are in place.

Public legal persons shall have a special legal capacity, i. e they may be in possession of or achieve
only such civil rights and assume such duties, which are not at variance with their incorporation
documents or goals of activities

Registration documents to be submitted to the Register of legal persons:

1) application of the established form for the registration of a legal person;
2) incorporation documents of a legal person (please see next slide);
3) licence, where issuance of a licence prior to the incorporation of a legal person is provided for by the
law;
4) documents verifying the authenticity of documents which are produced to the Register and the
compliance of incorporation documents with the provisions of laws as well as documents verifying the
fact that a legal person may be registered because contractual obligations assumed in the incorporation
contract have been fulfilled and the circumstances prescribed by the law and incorporation documents
have emerged;
5) other documents prescribed by the law.

Documents of Incorporation of a Legal Person* Incorporation contract Articles of incorporation. * Legal

persons shall act in accordance with the documents of their incorporation
Incorporation routines
• A legal person must be registered within 3 working days from the day on which all documents listed
in the law are produced and a registration fee is paid.
• Regulations of the Register of legal persons shall establish the procedure for the registration of legal
persons.

Moment of Incorporation of a Legal Person

• A legal person shall be deemed incorporated as of the moment of its registration with the Register of
legal persons.
Register of legal persons shall file legal persons and store data thereof.
Register of legal persons shall have to include:
1) business name of a legal person;
2) juridical form of a legal person;
3) code of a legal person;
4) registered office of a legal person;
5) bodies of a legal person;
6) members of managing bodies of a legal person (name, surname, personal code, place of residence);
7) members of managing bodies of a legal person and members of a legal person having the right to
conclude contracts in the legal person’s name, limits of authority;
8) branch offices and representative offices of a legal person (names, codes, registered offices,
members of managing bodies of branch offices and representative offices);
 9) restrictions on the activities of a legal person;
10) legal status of a legal person;
11) expiry of the term of a legal person;
12) dates of alterations in the data filed with the register and dates of the alteration of documents;
13) a financial year of a legal person;
14) other data prescribed by the law.

Bodies of a Legal Person

• Legal persons achieve civil rights, assume civil duties and implement them through their bodies
which are formed and act in accordance with laws and documents of incorporation of legal persons.
• Where incorporation documents and laws fail to provide a different structure of managing bodies,
each legal person must have a single-person or a collegial managing body and the general
meeting of members.
• Only natural persons may be members of managing bodies of a legal person whereas both natural
and legal persons may be members of other bodies.

Duties of Members of Legal Person’s Managing Bodies

• Member of a legal person’s body shall have to act in good faith and reasonable manner in respect of
the legal person and members of other legal person’s bodies.
• Member of a managing body of a legal person shall have to be loyal to the legal person and maintain
confidentiality.
• Member of legal person’s managing body shall have to avoid a situation where his personal
interests are contrary or may be contrary to the interests of a legal person.
• Member of a managing body of a legal person may not confuse the property of a legal person with
his own property.
 Business Name of Legal Person

Main goal of the name - to identify legal entity - entrepreneur, as well as its performance, prestige and the
ability to compete in the market.
THE BUSINESS NAME IS REGULATED UNDER NATIONAL AND INTERNATIONAL LEGAL
ACTS:
Civil Code determines main requirements related to composition, use and alteration of the Business name.
Naming of the Legal Entities in a number of the countries is governed by the Paris Convention.
1883 - Paris Convention for the Protection of Industrial Property*
As revised at Brussels on December 14, 1900,
at Washington on June 2, 1911,
at The Hague on November 6, 1925,
at London on June 2, 1934,
at Lisbon on October 31, 1958,
and at Stockholm on July 14, 1967,
and as amended on September 28, 1979
*the countries to which this Convention applies constitute a Union for the protection of
industrial property. The protection of industrial property has as its object patents, utility models,
industrial designs, trademarks, service marks, trade names, indications of source or appellations of
origin, and the repression of unfair competition.

Article 8. Trade Names. A trade name shall be protected in all the countries of the Union without the
obligation of filing or registration, whether or not it forms part of a trademark
Article 9Marks, Trade Names: Seizure, on Importation, etc., of Goods Unlawfully Bearing a Mark or Trade
Name. All goods unlawfully bearing a trademark or trade name shall be seized on importation into those
countries of the Union where such mark or trade name is entitled to legal protection <…>

Requirements of Civil Code:

Business Name:
Article 2.39 of Civil Code indices, a legal person shall possess its business name enabling to
distinguish it from other legal persons.
Business name of a legal person shall be its property, which, however, may not be sold or conveyed
in any other manner to become the property of the other person separately from the legal person.

Registration of Business Name

In accordance with part 4, article 2.39 of Civil Code, business name of a legal person shall not be
registered separately and shall be protected as of the day on which an application for the registration of a
legal person is filed with the register of legal persons.
 Exemption - incorporators of a legal person may apply to the register of natural persons and
request to make a temporary entry of the business name of a legal person, which is in the process of
incorporation, in the register of legal persons for period of 6 months.
Main requirements applicable to composition of the Business Name
Part 3 Article 2.39 of Civil Code: Business name of a legal person may not contradict the
public order or good morals or mislead the society as to its incorporator, co-owner, registered
office, purpose of activities, juridical form, identity of the legal person or similarity to business
names of other legal persons, business names of foreign enterprises, institutions and
organisations, as well as trademarks and service marks which are familiar to the Lithuanian
society. NOTE! Business name of a legal person may not mislead by its identity or similarity to the
recognised well-known trademarks and service marks which were submitted for registration, and
were registered prior to the said legal person.
Register of Legal Entities identifies just one aspect - whether given name is not identical to the other
firm names or trademarks. Conclusion - compliance with requirements of article 2.39 of Civil
Code is a concern of a new company and its founders.
Article 2.40 of Civil Code describes additional requirements to the composition of the Business
Name of Legal Person:
1. Business name of a legal person is composed of words or word-combinations used
in their figurative or direct meaning.
2. Business name of a legal person shall be composed by taking into consideration the
norms of standard Lithuanian and shall not be composed of a generic word (or words) denoting
directly the sort of objects or services of activity or a single toponym or of some other word which
fails to possess a distinctive feature.
3. Business name of a legal person may be composed only of letters, which may not be
understood as words and numerals or their combinations only in cases when such business name is
customary in the society. Where the consent has been given, business name of a legal person
which is related to a foreign legal person or other organisation may be composed in such
manner which would make the said name identical or similar to the business name of a foreign
legal person or other organisation.

Article 2.42 of Civil Code - right to the Business Name of a Legal Person
It shall be prohibited to gain rights and assume obligations by using other legal person’s business name as a
cover or to use other legal person’s business name without the latter’s consent.
Where legal person’s right to a business name has been infringed by other person’s unlawful use of the said
person’s business name or where the other person has or uses a business name, which fails to meet the
requirements laid down in Article 2.39 of the Civil Code, the legal person shall have the right to apply to
the court and request the court to oblige the legal person to discontinue the said unlawful acts or alter
the business name and to redress the property and non-pecuniary damage incurred by the said acts.
Alteration of the Business Name of a Legal Person
Article 2.43 of Civil Code: Prior to the alteration of the business name a legal person shall have, one
time, to make a public announcement thereof or notify, in writing, all creditors of the legal person.
Where a legal person fails to discharge its obligation stipulated above he shall have to suffer
the negative consequences related to its failure to notify about the alteration of its business name.
“Trade mark” means any sign capable of distinguishing the goods or services of one person from those of
other persons and capable of being represented graphically.
The terms "trademark" and "mark" are commonly used to refer to both trademarks and servicemarks

Copyright is a form of protection provided to the authors of "original works of authorship" including
literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished.
Legal acts generally gives the owner of copyright the exclusive right to reproduce the copyrighted work, to
prepare derivative works, to distribute copies of the copyrighted work, to perform the copyrighted work
publicly...

A patent for an invention is the grant of a property right to the inventor, issued by the Patent and Trademark
Office. Usually, there are two main types of patents:
-design patents (If the main feature of the new product is the appearance, i.e. ornamental design,
then a design patent will protect this main feature);
- utility patents (Protects the functional aspects of an invention).
DOMAIN .com, .org and .net are "open" to any kind of registrant, the policy is first-come, first-served, as
long as you have registered and used the domain name in good faith or have legitimate interests in the
domain name.
However, you have no right to violate trademark law or engage in cybersquatting* just because you
registered the name first.
*Cybersquatting is the act of registering a popular intrnet address--usually a company name--with the
intent of selling it to its rightful owner.
 Legal Forms of Legal Entities

Legal forms
Public Limited Liability Company; Private Limited Liability Company (commonly – PLC or
company).

PLC were first established in the sphere of trade and turned into a convenient form of validation of property
relations and the organization of business.
PLC can be based on private capital, public capital mixed capital - private and public, domestic and foreign
capital.
Definition and main features of PLC
The Law on Companies (hereinafter - LoC) provides regulation on PLC:
http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=363774
In accordance with article 2 of LoC:
• PLC shall be an enterprise whose authorised capital is divided into parts called shares;
• PLC shall be a private legal person with limited civil liability;
• PLC’s written documents used in its relations with other persons must contain the
information specified in Article 2.44 of the Civil Code.
• the registered office of PLC must be situated in the Republic of Lithuania;
• In its activities, PLC shall be guided by the AoA, the Civil Code, this LoC and other laws
and legal acts.

Guiding differences
1. Capital of Public LLC:
• -The amount of the authorised capital of the public limited liability company must be not
less than EUR 25k;
• Its shares may be offered for sale and traded in publicly in compliance with the legal acts
regulating the securities market.
 2. Capital of Private LLC:
• The authorised capital of the private limited liability company must be not less than EUR
2,5 k;
• It must have at least 250 shareholders;
• The shares of the private limited liability company may not be offered for sale and may
not be traded in publicly unless the laws provide otherwise.
Incorporation
Incorporators according to the article 6 of LoC:PLC may be incorporated both by natural and by legal
persons. Every incorporator of a company must acquire shares in the company and become its shareholder.
Incorporation documents Establishment of PLC is a commercial operation, it starts and completes when
the. Memorandum of Association or the Act of Establsihment (PLC is founded by one founder) is
signed.

The Memorandum of Association of the company must indicate (article 7 of LoC):

1. the incorporators;
2. the name of the company being incorporated;
3. the persons who have the right to represent the company being incorporated and their rights and
duties;
4. the amount of the company’s authorised capital;
5. the nominal value of shares, the share issue price;
6. the number of shares according to classes, the rights attached to the shares;
7. the number of shares acquired by each incorporator and the number of shares according to
classes;
8. the procedure and time limits for the payment for the shares acquired by each incorporator,
including the procedure and time limits for the payment of initial contributions;
9. each shareholder’s contribution made otherwise than in cash if payment for shares is made
partly otherwise than in cash;
10. the time limits for convening the statutory meeting;
11. the procedure for submitting the documents of the company being incorporated and of
information relating to the statutory meeting;
12. compensation of incorporation costs and remuneration for incorporation;
13. the procedure for concluding contracts in the name of the company being incorporated and for
approving them;
14. the initial contribution repayment procedure, should the company be refused registration;
15. the date of the conclusion of the Memorandum of Association.
The Memorandum of Association of the company drawn up and signed in the manner laid down shall grant
the right to open a saving account of the company being incorporated with a bank
Subscription and Payment of Shares of PLC (article 8 of LoC):
The Share Subscription Agreement
-The shares of a company being incorporated must be fully paid up within the time period set in the
Memorandum of Association or the act of establishment, which may not exceed 12 months from the
date of signing of any of the above documents.
 -The funds in the savings account may be used only after the registration of the company
AoA- The Articles of Association shall constitute a document governing the conduct of the
PLC’s business (article 4 of LoC).
The Articles of Association of a company must state:
1. the name of the company;
2. the legal form of the company (public limited liability company or private limited liability
company);
3. the registered office of the company;
4. the purposes of the company, specifying its object of activity;
5. the amount of the company’s authorised capital;
6. the number of shares and their number according to class, their nominal value and the rights
they carry;
7. the powers of the General Meeting of Shareholders, the procedure for convening the
Meeting;
8. other organs of the company, their powers, the procedure for electing or removing from
office their members;
9. the procedure for publishing the notices of the company;
10. the daily of the Republic of Lithuania or Electronic Edition of Register of Legal Entities in
which public notices shall be published;
11. the procedure for presenting the company’s documents and other information to the
shareholders;
12. the decision-making procedure as regards the establishment of branches and representative
offices of the company, and appointment and removal from office of the heads of the
company’s branches and representative offices;
13. the procedure for amending the Articles of Association of the company;
14. the company’s duration period if the company is established as a company of limited
duration;
15. the date of signing of the Articles of Association.

Registration
PLC shall be deemed incorporated from the date of its registration in the Register of Legal Entities.
Data of the Register of Legal Entities related to PLC is public (article 12 of LoC). If any changes are made
to the data of the Register of Legal Entities or the AoA of PLC or if other documents provided for by
law must be submitted.

Resume (1)
The company shall be registered:
- after the conclusion of the Memorandum of Association or the act of establishment;
- after the signing of the Articles of Association of the company being incorporated;
- after payment of all initial contributions for the subscribed shares,
- after the holding of the statutory meeting which approved the statutory report and management
bodies (PLLC/AB);
 - after the fulfilment of other obligations established by other laws and following the filing of the
documents prescribed by law with the manager of the Register of Legal Entities

So, the signing of the Memorandum of Association establishing the first stage of incorporation, which is
followed by a second stage - the capital formation, i.e. subscriptions of shares, the statutory meeting, the
management bodies formation and etc. The third stage is a registration of PLC.

Statutory Capital (1) (authorized capital)

PLC must have a statutory capital. The amount of the statutory capital shall be equal to the
aggregate amount of the nominal values of all shares subscribed for in the company.
The statutory capital should not be muddled with the company's assets, which have an independent
meaning. The statutory capital is understood as a nominal amount of money paid for the right to become a
shareholder of a company.

The main features of statutory capital:

-Activities;
-Warranties;
-Participation.

Statutory Capital (2)

The statutory capital is formed in two ways: open and enclosed.
Shares. Shares shall be the securities confirming the right of their holder (shareholder) to participate
in the management of the company, unless otherwise stipulated by laws, the right to receive dividend, the
right to a portion of company’s assets remaining after the liquidation thereof and other statutory rights.
Shares shall be divided into classes according to the rights they grant to their holders.

• A share shall not be divided into parts.

• Shares in public limited liability companies may only be uncertificated shares. Shares in
private limited liability companies can be both uncertificated shares and certificated
shares.
• The holder of an uncertificated share (shareholder) shall be a person in whose name a
personal securities account has been opened, save for the exceptions laid down by laws. The
holder of a certificated share (shareholder) shall be a person indicated in the share.

Management of the company

The management of the company is nothing else than the representation of the owner's interest.
The General Meeting of Shareholders shall have the exclusive right to:
1. amend the Articles of Association of the company, unless otherwise provided for by this Law;
2. elect/remove the members of the Supervisory Board; if the Supervisory Board is not formed, elect
members of the Board, if neither the Supervisory Board nor the Board is formed, elect the manager
of the company;
3. select and remove the firm of auditors;
4. approve the set of annual financial statements;
5. take a decision on profit/loss appropriation;
6. take a decision on the formation, use, reduction and liquidation of reserves;
7. take a decision on increase of the authorised capital;
8. take a decision on the reorganisation or split-off of the company and approve the terms of
reorganisation or split-off;
9. take a decision on restructuring of the company; on liquidation of the company;

Supervisory Board
The Supervisory Board shall be a collegial body supervising the activities of PLC. It shall be managed by its
chairman. The number of members of the Supervisory Board shall be set by the AoA. The Supervisory
Board must have at least 3 and not more than 15 members.
The Supervisory Board shall:
• elect or remove the members of the Board (the manager of the company, if the Board is not
formed)
• supervise the activities of the Board and the manager of the company;
• submit its comments and proposals to the GM on the company’s operating strategy, set of
annual financial statements, draft of profit/loss appropriation and the annual report of the
company as well as the activities of the Board and the manager of the company;
• submit proposals to the Board and the manager of the company to revoke their decisions
which are in conflict with legal acts;

Management Board
The Board is a collegial management organ of the company.
The number of the Board members shall be laid down in AoA. The Board must have at least 3
members, elected for a term specified in AoA, which may not exceed 4 years.
The Board shall consider and approve:
• the operating strategy of the company;
• the annual report of the company;
• the management structure of the company and the positions of the employees;
• the positions to which employees are recruited through competition;
• regulations of branches and representative offices of the company.
The Board shall elect and remove from office the manager of the company
Manager of the Company
The Manager of the company shall be a single-person management body of the company (article 37 of LoC).
The manager of the company shall act on behalf of the company and shall be entitled to enter into
transactions at his own discretion, except where the AoA of the company provide for a quantitative
representation of the company.
The manager of the company shall be responsible for:
• organisation of activities of the company;
• drawing up of the set of annual financial statements and drafting of the annual report;
• submission of information and documents to the GM, the SBoard and the Board in the cases
laid down in the law or at their request;
• submission of documents to the Register of Legal Entities;
• publication of the information referred to in the legal acts;

Corporate governance

Concept
Limited liability companies raised in mid-19th century, the world’s first corporate governance code was
developed by Sir Adrian Cadbury only in 1992, focusing on the listed, public companies.
The role of directors, as a rule, was defined by the corporate law or financial and auditing standards.
Corporate governance framework typically comprises elements of legislation, regulation, self-regulatory
arrangements, voluntary commitments and business practices designed to ensure:
• effective boards,
• transparency around roles and responsibilities,
• accountability to, and engagement with, stakeholders, and
• driving sustainable business practices.

Corporate governance systems (1)

*Composition: The members of collegial bodies
should collectively ensure the diversity of
qualifications, professional experience and
competences and seek for gender equality. With a
view to maintain a proper balance between the
qualifications of the members of boards, it should be
ensured that members of boards, as a whole, should
have diverse knowledge, opinions and experience to duly perform their tasks
** An independent director is a director (member) of a board who does not have any material relationship
with a company or related persons.
Corporate governance framework typically also covers following recommendations:
• Fit and proper tests
• Committees
• CoI
• Strategy and sustainable business practices
• Internal Control
• Risk Management
• Decion making
• Accountability
• Board meetings
Other Legal forms of Legal Entities

Partnerships

General and Limited Partnerships

The Law on Partnerships regulate the establishment,
management, activities, transformation and dissolution of
enterprises having the legal form of a general partnership and
enterprises having the legal form of a limited partnership, the
rights and duties of the members of the enterprises.
Responsibility. The partnership shall be a private legal person
of unlimited civil liability. The partnership shall acquire civil
rights, assume civil obligations and implement the above
through the general partners.
Definition. The general partnership shall be an enterprise all of whose members are general partners. The
limited partnership shall be an enterprise whose members are general partners and limited partners.
Foundation of the Partnership
Founders
The founders of the partnership shall be the persons who have concluded the partnership agreement. The
founders of the partnership may be both natural and legal persons.
The partnership may have no less than two founders. Where a limited partnership is being founded, a
limited partner’s agreement must be concluded in writing with every person seeking to become a limited
partner.
Founding moment
The partnership shall be considered to have been founded from the moment of its registration in the Legal
Entities Register
The partnership agreement shall be the partnership foundation document governing the activities of
the partnership. The partnership agreement shall state:
1. the name of the partnership;
2. the legal form taken by the partnership (general partnership or limited partnership);
3. the head office of the partnership;
4. the object of the partnership activities;
5. data of the general partners (natural person’s name, surname, personal number, place of residence;
legal person’s name, legal form; code number, head office);
6. partnership founders’ contributions, the procedure and time limits for making the contributions.
Where the contribution is made otherwise than in cash the value thereof must be stated;
7. liability of the general partners for failure to discharge the obligations;
8. the procedure for transferring the rights of the general partner to another person;
9. the procedure for admitting new general partners;
10. the procedure for effecting settlement with the general partners who retire from the partnership;
11. the procedure for drawing on the partnership cash at hand as profit paid in advance for the personal
needs of the general partners;
12. source for publishing of the information;
 13. the date of drawing up the partnership agreement;

The limited partner’s agreement

The limited partner’s agreement shall indicate the following:
1. the limited partner’s contributions, the procedure and time limits of making the contributions. Where
the contribution is made otherwise than in cash, the value thereof must be stated;
2. liability of the limited partner for failure to discharge the obligations;
3. the share of partnership profits allocated to the limited partner;
4. duration of the agreement, where the agreement of limited duration is concluded.

Rights and Duties of the Partners

The general partner shall have the following rights:
1. to take part in the settling of partnership affairs and in the decision-making;
2. to act on behalf of the partnership unless otherwise established in the partnership Agreement;
3. to be granted access to the documents of the partnership;
4. to receive a share of the partnership profits;
5. to exercise other rights prescribed by laws or the partnership agreement.
The limited partner shall have the following rights:
1) to receive a share of the limited partnership’s profits allocated in the limited partner’s agreement;
2) upon the expiration of the limited partner’s agreement to request the contribution be returned;
3) to be granted access to the documents of the limited partnership’s general affairs management and its
financial statements where these are drawn up by the limited partnership;
4) other rights established by laws and the limited partner’s agreement.

Small partnership

Definition and Main Features

Law on Small Partnership (hereinafter – LoSP) has entered in force on 1st September 2012 creating
new legal form – Small Partnership. The new legal form should find the place between PLC and IC
and General or Limited Partnership.
Simplified. Small Partnership has simplified management, simplified accounting methods and the members
of Small Partnership can administer the accounting.
Limited Liability. Small Partnership has limited liability, therefore the members of Small Partnership will
only risk their contribution and in case of default, Small Partnership members will not respond with their
private property.
Capital
There is no requirement to form the minimal share capital.
The members are free to decide the amount of such contributions in accordance to their business needs.
The contributions of members of Small Partnership can be monetary and non-monetary (movable and
immovable property), property rights, but work or services could not be members’ contribution.
Incorporation
Founders. Small Partnership is a legal entity, whose founders can only be natural persons. There can be
maximum 10 members in Small Partnership.
Documents. In order to establish Small Partnership an incorporation contract (in case of few founders) or an
incorporation act (in case of a single founder) shall be signed. AoA shall be approved
Other: Persons can join Small Partnership under the decision of the members’ meeting. Any member can
leave Small Partnership anytime by giving a written notice to the company and the company shall pay him
back his contribution in accordance with the profit/loss of the company at the day of such notice.
Management of Small Partnership
Small Partnership may have two managing bodies:
• meeting of members and a manager; or
• only one managing body – meeting of members. In case the company does not have a manager all
the managing powers are hold by the meeting of members and the members shall elect one member
as a representative of the company*.
*Such representative is not treated an independent managing body but only represents the managing
body – meeting of members. The activity of such representative may be paid or not.

EU company, called a Societas Europaea, or "SE"

The Law on EU Companies and EU regulation provide four ways of forming a European limited
company:
• merger - formation by merger is available only to public limited companies from different Member
States;
 • formation of a holding company*- formation of an SE holding company is available to public and
private limited companies with their registered offices in different Member States or having
subsidiaries or branches in Member States other than that of their registered office;
• formation of a joint subsidiary – it is available under the same circumstances to any legal entities
governed by public or private law,
• conversion of a public limited company previously formed under national legal acts.
Holding Company: When a company acquires controlling interest in the affairs of another company, it is
known as the holding company.
Holding company does not have any business operations bit it owns assets. Holding company controls the
composition of board of directors due to its controlling capacity.
Subsidiary Company: Subsidiary company is a company that more than fifty percent of issued share
capital or voting power is held by another company or the majority of directors can be appointed by another
company.

Minimum capital
The SE must have a minimum subscribed capital of €120,000.
Registered office
The registered office of the SE must be the place where it has its central administration. The SE may transfer
its registered office within the Community without dissolving the company in one Member State in order to
form a new one in another Member State.
Management
The Statutes of the SE must provide as governing bodies the AGM and either a management board and a
supervisory board (two-tier system) or an administrative board (single-tier system).
Advantages of setting up a European Company
o The creation of the European Company Statute will mean in practice, that companies established in
more than one Member State will be able to merge and operate throughout the EU on the basis of a
single set of rules and a unified management and reporting system.
o In particular, there will be advantages in terms of significant reductions in administrative and legal
costs, a single legal structure and unified management and reporting systems..
o European Companies with commercial interests in more than one Member State will be able to move
across borders easily as the need arises in response to the changing needs of their business.

Mergers and Acquisitions

The key acquisition methods:
Acquisition of the shares;
Purchases of assets;
Companies buying and selling;
Reorganization (merger).
COMPETITION LAW
The main institutes governed by competition law:
-Prohibition of Agreements Restricting Competition
-Abuse of dominant position
-Concentration control
-Unfair Competition
The Competition Council shall be a state institution of the Republic of Lithuania implementing the
state competition policy and supervising compliance with this Law

Prohibition of Agreements Restricting Competition

• agreements to directly or indirectly fix prices of certain goods or other conditions of purchase or sale;
• agreements to share the product market on a territorial basis, according to groups of buyers or
suppliers or in any other way;
• agreements to fix production or sale volumes for certain goods as well as to restrict technical
development or investment;
• agreements to apply dissimilar (discriminating) conditions to equivalent transactions with individual
undertakings, thereby placing them at a competitive disadvantage;
• agreements to require other undertakings to assume supplementary obligations which, according to
their commercial nature or purpose, have no direct connection with the subject of the contract.

Abuse of dominant position

o direct or indirect imposition of unfair
o prices or other conditions of purchase or sale;
o restriction of trade, production or technical development to the prejudice of consumers;
o application of dissimilar (discriminating) conditions to equivalent transactions with certain
undertakings, thereby placing them at a competitive disadvantage;
o the conclusion of contracts subject to acceptance by the other party of supplementary obligations
which, according to their commercial nature or purpose, have no direct connection with the subject of
such contract.

Concentration
The intended concentration must be notified to the Competition Council and its permission must be
obtained where the combined aggregate income of the undertakings concerned in the business year
preceding concentration is more than Eur 20 million and the aggregate income of each of at least two
undertakings concerned in the business year preceding the concentration is more than Eur 2 million.

Unfair Competition
• unauthorised use of a reference mark identical or similar to the name, registered trade mark or
unregistered well known trade mark;
 • misleading of undertakings by providing them with incorrect or unsubstantiated information about the
quantity, quality, components, properties of usage, place and means of manufacturing and price of its
goods;
• usage, transfer, disclosure of information representing a commercial secret of another undertaking
without its consent;
• imitating of the product or product packaging of another undertaking;
• use of advertising which is considered misleading under the laws of the Republic of Lithuania

LEASE

Lease agreement :
Under a contract of lease one party (lessor) shall be obliged to grant to the lessee a thing for payment in
temporary possession and use, and the other party (lessee) shall obligate himself to pay a lease payment.(CC
6.477 str. 1 d.).
Parties:
Parties to the contract is the lessor and the lessee.
The lessor - it is party to the contract, which gives the item for temporary use for a fee to another person.
The lessee - it is party, which receives temporary access to the object for a fee.

A subject-matter of a contract :
1) A subject-matter of a contract of lease may be any durable thing. The kinds of things, the leasing of
which is not permitted, may be established by laws.
2) A thing or its features enabling to define the thing which is to be transferred by the lessor to the lessee
must be specified in the contract of lease. In the absence of such features in the contract, and if the subject-
matter of the contract of lease cannot be determined according to other features, the contract of lease shall
not be considered concluded.
3) Ownership is not transefered.

Form of a contract (CC. 6.478):

A contract of lease for a period of more than one year must be concluded in written form.
Exceptions exist (buildings, facilities, legal entities and etc. – always written form).
Period of a contract of lease (CC 6.479)
A contract of lease may be fixed-term or concluded for an indefinite period, but in all cases the
period of lease may not exceed one hundred years.A period of a contract of lease shall be determined by the
agreement of the parties. If the period of the contract of lease has not been determined in the contract, the
contract of lease shall be considered to have been concluded for an indefinite period.
Consequences of a contract of lease concluded for an indefinite period (6.480)
If the contract of lease is indeterminate, both of the parties shall have the right at any time to terminate the
contract having warned the other party one month in advance, and in the event of the lease of immovable
things, three months in advance.
A more extensive period may be established in the contract of lease for the issue of warning about the
termination thereof

Preferential right of the lessee to renew a contract of lease:

The lessee who has duly performed his duties accepted according to the contract of lease shall
have a preferential right (priority) before other persons to renew the contract upon the expiry of the
period thereof.

Obligations of the Lessor (1):

o The lessor shall be obliged to deliver property to the lessee in the condition corresponding to the
conditions of the contract and designation of the property.
o The lessor shall be bound to guarantee that the thing is fit to be used for the purpose for which it is
leased throughout the whole period of the lease
o The lessor shall be obliged to deliver to the lessee the documents relating to the thing leased and
supplements thereof (technical passport, certificate of quality, etc.) which are necessary for the use
of that thing unless otherwise provided for by the contract.
In the event of the failure of the lessor to deliver into the use the leased thing, its documents and
supplements, the lessee shall have the right to recover this thing from the lessor and to claim damages
caused by the delay of performance or to demand dissolution of the contract and compensation of
damages caused by the non-performance of the contract.
The lessor shall not be held liable for the defects of the property leased which were stipulated by him
when concluding the contract !!!!
The lessor shall be liable for defects of the thing leased out which wholly or partially obstruct the use
thereof for its designation even in those instances where the lessor was not aware of those defects at the
time of concluding the contract.
In the event of discovery of such defects, the lessee shall have the right at his choice:
o demand from the lessor either elimination of those defects without compensation or a reduction
of the lease payment, or compensation of the expenses of the lessee incurred in the elimination
of the defects;
o withhold the amount of expenses incurred for the elimination of defects from the lease
payment if the lessor was informed of this in advance;
o demand the dissolution of the contract before time!!!!!!

Duty of the lessor to make capital repair of a leased thing

The lessor shall be obliged to make capital repair at his own expense of the leased thing unless otherwise
provided for by laws or the contract.
Obligations of the Lessee (1):
The lessee shall be obliged to pay the lease payment on time.
Upon the agreement of the parties, the lease payment may be established in the following forms:
o in a fixed sum of money which must be paid in a lump sum or in instalments;
o in a portion of the products or incomes received from the use of the leased thing;
o by certain services supplied to the lessor by the lessee;
o by the duty of the lessee to improve the state of the leased thing at his own expense;
o by the duty of the lessee to transfer to the lessor a thing stipulated in the contract into his ownership or
on lease.
The parties may agree on a combination of these forms for the determination of the amount of the lease
payment or may establish another form of calculating the lease payment.
The lessee shall be obliged to use the leased thing in accordance with the contract and designation of the
thing.
The lessee shall be obliged to maintain the leased thing in a proper state and to bear expenses for the
maintenance of this thing and to make its current repair at his own expense unless otherwise provided for
by laws or the contract.
Upon the termination of the contract of lease, the lessee shall be bound to return the thing to the lessor in
the state he received it, taking into account normal wear and tear, or in the state agreed in the contract.
Improvement of a thing – two instances:
I. With the permission
In the instances where the lessee with the permission of the lessor has made improvements of the
leased thing, he shall have the right to compensation of the necessary expenses incurred by him for that
purpose.
II. Without the permission
a. In the event where the improvements made by the lessee without the permission of the lessor are
separable without harm to the leased thing, and where the lessor does not agree to compensate for them,
they may be taken out by the lessee.
b. The value of improvements which are not separable without harm to the leased thing made by the
lessee without the permission of the lessor shall not be subject to obligatory compensation

Sublease:
The right to sublease the object can be realized only if it is provided in the contract or after the lessor gives
to the lesse consent in written

Termination of a contract of lease (1):

Typically, the lease expires when the lessee fulfills its obligation - to return an thing to the lessor at the end
of the contract period or when parties of the contract request to terminate it.
The lessor shall have the right to bring an action into a court for the dissolution of a contract of lease
before time*, if:
• the lessee uses the thing in violation of the contract or not according to the designation of the thing;
• the lessee intentionally or through negligence worsens the state of the thing;
• the lessee fails to pay the payment of lease;
• the lessee fails to perform capital repair in those cases where the laws or the contract obligate him to
do so;
• there exist other grounds provided for by the contract of lease.
* The lessor shall have the right to demand dissolution of the contract of lease before time only after
having sent a written warning to the lessee about the necessity to perform the obligation or eliminate
violations within reasonable time

The lessee shall have the right to bring an action to a court for dissolution of a contract of lease before
time, if:
o the lessor fails to carry out the repair he is obliged to;
o the thing by virtue of circumstances for which the lessee is not liable becomes not fit for use;
o the lessor fails to transfer the thing to the lessee or hinders the use of the thing in accordance with its
designation and the conditions of the contract;
o the thing transferred has defects which were not stipulated by the lessor and were unknown to the
lessee and which render the thing impossible to be used in accordance with its designation and the
conditions of the contract;
o there exist other grounds provided for by the contract of lease.

SALES AND PURCHASE AGREEMENT

Formation of a contract. A contract is concluded either by the proposal (offer) and the assent (acceptance)
or by any other actions of the parties that are sufficient to show their agreement.
Form of transactions. Transactions shall be made in writing (in the ordinary or notarial form) or their
formation may be implied from the actions. Where the written form is not required by laws or by an
agreement of the parties as a necessary condition for the forming of a transaction, the transaction may be
formed verbally.
Obligations of parties in pre-contractual relationships
In the course of pre-contractual relationships, parties shall conduct themselves in accordance with good
faith. Parties shall be free to begin negotiations and negotiate, and shall not be liable for failure to reach an
agreement.
A party who begins negotiations or negotiates in bad faith shall be liable for the damages caused to the other
party (It shall be considered bad faith for a party to enter into negotiations or continue them without
intending to reach an agreement with the other party, likewise any other actions that do not conform to the
criteria of good faith).
Information
The parties shall be bound to disclose to each other the information they have and which is of essential
importance for the conclusion of a contract.
Where in the course of negotiations one party furnishes the other with confidential information, the party
that has learned or received such information shall be under the duty not to disclose it, or use it unlawfully
for his own purposes, irrespective of whether a contract is subsequently concluded or not. The breach of
confidentiality inflicts liability of the faulty party in damages suffered by the injured party.
Concept of SPA is similar in many countries!
According to article 6.305 of Civil Code:
A contract of purchase-sale is a contract by which one person (the seller) obligates himself to transfer
ownership or trust of the thing (good) to another person (the buyer) and the latter obligates himself to accept
the thing (good) in exchange of a fixed money consideration (price).
These provisions are also applicable to the purchase-sale of securities, currency, rights of property.
Expenses Incidental to the Formation of SPA
Unless the parties agree otherwise, the expenses incidental to the formation of SPA shall be assumed by the
buyer.
The expenses of delivery of the things, weighing and calculating (checking the quantity) thereof shall be
assumed by the seller, unless otherwise agreed by the parties.
The expenses incidental to the acceptance of the things, the drawing up of the deed of transfer-acceptance
thereof shall be assumed by the buyer.
Form of SPA
The form of SPA shall be established by the rules set for the form of conclusion of transactions.
Parties of the Contract
Buyer and Seller – natural and legal persons having full capacity. The common rule – the seller must be the
owner of the property. Where the contract is declared null on the ground provided above, the thing shall be
returned to the owner.
Essential conditions
Subject Matter of SPA
The things which form the subject matter of SPA may be either existing things, owned or possessed by the
seller, or things to be manufactured or acquired by the seller in future, securities and other things or property
rights. Yield, crop and other future goods things may also form the subject matter of SPA.
The subject mater of SPA may be characterised both by individual characteristics and by its kind.
The term of a contract of purchase-sale regarding the subject matter of the contract shall be deemed to have
been agreed provided the contents of the contract allows to determine the name and quantity of the
thing/good.
Other conditions
• General obligations of the Seller
• General obligations of the
 • Term.
• Patents and Copyrights – if applicable.
• Confidentiality – if applicable.
• Taxes – if applicable.
• Insurance – if applicable.
• Dispute Resolution and Liability.

General obligations of the Seller:

The seller is bound under SPA to deliver the things (including documents) to the buyer, i.e. put the things
into the buyer’s possession by the right of ownership (trust) and to warrant ownership of the things and the
quality thereof.
The seller is bound to deliver the things at the time provided in the SPA.
The thing which is being sold must be of the quantity, quality and other description required by the contract
or, where the contract contains no specific requirements, correspond to the regular requirements.
Unless the SPA provides otherwise, the risk of accidental perishing of or damage to the things shall pass to
the buyer from the moment when the seller is deemed under the contract or law to have been duly
discharged of his duty to deliver the things, regardless of the time of passing of the right of ownership.
Warranty
General obligations of the Buyer:
The buyer is bound to pay the price of the things within the time limits fixed in the contract or laws and at
the set place. Price - shall be fixed* in cash by agreement between the parties. Unless bound to pay the price
at a specified place, the buyer must pay the seller the price at the place of delivery of the thing.
*Where the price is not fixed in SPA or the manner for fixing the price is not agreed by the contract, it shall
be considered, unless otherwise agreed by the parties, that the parties have impliedly made reference to the
price generally charged at the time of the conclusion of the contract for such thing sold under comparable
circumstances in the trade concerned and, where the price is non-existent, the price meeting the criteria of
reasonableness.
The buyer is bound to accept the delivered things, unless he is entitled to demand replacement of the things
or rescission of the contract..
Projection of Rights
Consequences of Failure to Perform the Obligation to Deliver the Thing:
If the seller refuses without a good reason to deliver the thing to the buyer, the latter shall have the right to
request to deliver the thing or to refuse to perform the contract of purchase-sale and claim damages.

Rights of Buyers of Things of Unsatisfactory Quality

Where the things sold do not correspond to the quality requirements and the seller did not discuss the defects
with the buyer, upon buying things of unsatisfactory quality the buyer shall be entitled to demand, at his own
choice;
 1) to replace the thing which is characterised in the contract by its kind by the thing of satisfactory
quality unless the defects are minor or appeared due to the fault of the buyer;
2) to reduce the purchasing price;
3) that the seller eliminates the defects within a reasonable time without any additional payment or
reimburses the buyer’s expenses for the elimination of defects if these may be eliminated;
4) to restore the price and repudiate the contract, where the sale of things of unsatisfactory quality is an
essential breach of contract.

Responsibilities associated with buyer's obligation to accept the purchased item or to pay for it:

1) The buyer owes interest on the sale price from the time of delivery of the things or the expiration of the
period agreed by the parties, unless the contract or laws provide otherwise.
2) Where the movable things have already been delivered to the buyer but the latter fails to pay the sale
price, the seller shall have the right to terminate the contract, notifying the buyer thereof in writing and
recover the things.
3) Where the buyer, in breach of his obligation, does not accept or refuses to accept things, the seller have
the right to demand that the buyer accept the things or refuse to perform the contract and claim damages.

OTHER types of PURCHASE-SALE AGREEMENTS

Consumer Contract of Purchase-Sale (1) (CC 6.350)
Under the consumer contract of purchase-sale the seller who is the person engaged in trade, or his agent
obligates himself to sell a good - a movable thing - to the buyer - a natural person for his personal, family or
household needs not related to business or profession, while the buyer obligates himself to pay the price.
Additional requirements to the agreement:
-The consumer contract of purchase-sale shall contain no conditions aggravating the consumer’s (buyer’s)
position or abolishing or restricting the consumer’s (buyer’) right to bring an action against the seller for
breach of contract conditions.
-In a consumer contract of purchase-sale the seller shall be prohibited from:
1) making the conclusion of the contract of purchase-sale conditional on the purchase of a certain
quantity of things;
2) offering the buyer entitlement to a gift or other supplement to the product, receivable immediately
or within a certain time period after the conclusion of the contract, except for advertising samples,
or promising entitlement to the purchase of accessories to the things;
3) attempting to exert influence on the buyers by offering things or services, showing price reduction
in the price lists, price tags, in shop windows, or trying to induce the buyers to make a purchase by
other ways and means which are contrary to good morals and public order.
Replacement and Return of Things
The buyer shall be entitled to replacement of the purchased things, other than food products, at the place of
purchase or elsewhere, as indicated by the seller, within fourteen days from the delivery thereof to the buyer,
unless the seller has set a longer time period, receiving in exchange analogous things of different
measurements, form, colour model or completeness.
Seller: If the seller does not possess things suitable for replacement, the buyer shall have the right to return
the things to the and recover the money paid.
Buyer: The buyer’s claim for replacement of the things shall be satisfied provided the things have not been
in use, have not been damaged, have retained their fitness for use, and have not lost their merchantability
and the buyer is in possession of proof confirming that he purchased the things from the seller.
The things listed in the Rules for the Return and Replacement of the Things shall not be subject to
replacement or return according to the procedure laid down in this Article. The Rules shall be approved by
the Government or the institution authorised by it.

The buyer who has been sold things of improper quality with defects that the seller has not given notice shall
be entitled, at his own choice, to demand from the seller*:
1) to replace the thing of improper quality with a thing of satisfactory quality;
2) to reduce the price accordingly;
3) to eliminate the defects without any payment within a reasonable time ;
4) to reimburse the buyer’s expenses for the elimination of defects if the buyer has not eliminated the
defects on his own or with the help of third persons.
In all cases the buyer shall be entitled to be reimbursed for the expenses sustained due to the sale of a thing
of improper quality.
The buyer shall be entitled to demand replacement of a technically complex and expensive thing in case of
material violation of quality requirements laid down for the thing
Instead of putting forward the demands provided above, the buyer may unilaterally rescind the contract and
demand restoration of the price.
*Where the time period of warranty of quality or fitness for use of the item of the thing has not been
established, the buyer may file claims regarding the defects of the thing within a reasonable time but not
later than within two years from the day of sale of the thing, unless a longer time period is provided by law
or the contract

CONTRACTS OF PURCHASE-SALE OF AN IMMOVABLE THING (CC 6.392-6.401)

Additional requirements to the agreement:
-A contract for the purchase-sale of an immovable thing shall be subject to notarial certification.
Non-compliance with the requirements of the form shall render the contract null and void.
-Ownership of an immovable thing shall pass to the buyer from the moment of delivery of the thing.
Transfer and acceptance of an immovable thing must be executed by the transfer-acceptance deed or any
other document provided for in the contract, signed by the seller and buyer
- Under the contract for purchase-sale of a building, installation or other immovable thing the seller
shall transfer to the buyer, together with the right of ownership to the thing, the rights to the part of the land
plot, which is occupied by the thing and which is necessary for the thing to be fit for the purpose it would
ordinarily be used (ownership to the land plot or the right of land lease or right of superficies) . A contract in
which the rights of the buyer to the land plot are not contemplated may not be certified by a notary and if
certified, shall be null and void.
 - In the event of sale of a land plot containing buildings, constructions, installations, plantations or
other objects, the issue of passing of the right of ownership therein must be contemplated in the contract. If
the issue is not contemplated in the contract, the right of ownership in the buildings, construction works,
installations, plantations or other objects situated on the land plot shall be deemed to have passed to the
buyer of the land plot.
-The contract for purchase-sale of an immovable thing shall contain information relating to the
immovable thing which the seller is bound under contract to transfer to the buyer, also indication of the
location of the thing in the relevant land plot or location of the immovable thing being sold in another
immovable thing.
-The price of the immovable thing being sold must be indicated in the contract of purchase-sale of
the immovable thing.

Contracts law – introduction

The contract / agreement - one of the oldest legal forms designed to

regulate the relationships between individuals, indicating possible and
mandatory behavior limits, as well as the consequences of non-
compliance.

Importance of the Agreement

Meaning of the Agreement: What?
• A written document, which lays down the conditions of the agreement;
• A legal fact composing the legal ground for the obligation;
• A contractual obligation;
• Transaction Type.

Concept of the agreement 1

“A contract is an agreement of two or more persons to establish, modify or extinguish legal relationships by
which one or several persons obligate themselves to one or several other persons to perform certain actions
(or to refrain from performing certain actions) while the latter persons obtain the right of claim.” Article
6.154 of CC. Unidroit principles. What ? Who?

- actions directed to establish defined legal consequences;

- voluntary will coordination of two or more persons to build mutual rights and obligations;
- expression of will of the parties brought in some form;
- expression of will of the parties in accordance with law.. What?
Why you need a contract? Why on earth do we need to sign a contract? Can’t we just use a handshake?
Can’t I trust you?
1. Contracts provide a description of responsibilities. This will help avoid confusion or
disagreement.
2. Contracts bind parties to their duties. A contract will bind the parties to the previously defined
description of duties.
3. Contracts can establish a time frame for duties. If you need work performed and performed
within a certain time frame a contract binds the party to that time frame.
4. Contracts can secure payment. No one likes to be stiffed for work performed and a binding
contract provides a written legal document establishing an agreement to be paid for services
rendered.
Contracts provide recourse when the relationship falters. If the relationship between the contracted
parties deteriorates, a contract outlines the previously agreed upon steps required for dissolving the
relationship without punitive measures.

Main Principles of Contract Law

- Principle of freedom of contract
- Equality of the contracting parties
- Good faith, justice, reasonableness
- Mandatory aspect of agreement “Pacta sund servanta” (lot.) and etc.

Principle of freedom of contract

• The parties shall be free to enter into contracts and determine their mutual rights and duties at their
own discretion;
• The parties may also conclude other contracts that are not established by CC if this does not
contradict laws.
• The conditions of a contract shall be established by the parties at their own discretion, except in the
cases where certain conditions of a contract are determined by the mandatory rules of law.
• It shall be prohibited to compel another person to conclude a contract, except in cases when the duty
to enter into a contract is established by laws or a free-will engagement.
• The parties may form a contract which contains elements of contracts of several classes.

“Pacta sund servanta” (lot.)

- A contract which is formed in accordance with the provisions of laws and is valid shall have the
force of law between its parties. The contract shall bind the parties not only as to what it expressly
provides, but also to all the consequences deriving from its nature or determined by laws.
- The parties may agree that the contract shall apply to their relationships arisen before that
contract was concluded.
- Breach of contract cause the civil liability (exist exceptions Force Majeure)
Force Majeure
• Force majeure is a French term that literally means "greater force." It is related to the concept of an
act of God, an event for which no party can be held accountable, such as a hurricane or a tornado.
• Force majeure also encompasses human actions, however, such as armed conflict. Generally
speaking, for events to constitute force majeure, they must be unforeseeable, external to the parties
of the contract, and unavoidable. These concepts are defined and applied differently by different
jurisdictions.
Classes of contracts
Contracts may be:
• unilateral and bilateral,
• repayable and gratuitous,
• consensual and real,
• contracts of successive performance and of instantaneous performance,
• consumer contracts and others.

Elements of Contract
The basic elements to render a contract valid:
- an agreement of legally capable parties, and, when prescribed by laws, also a form of a contract.
Common rule - the contract is effective:
Where the parties agree on all essential conditions of a contract, the contract shall be effective, even though
the parties have reserved an agreement as to secondary conditions.
If the parties do not reach their agreement on the secondary conditions, the dispute may be resolved within
the judicial proceedings taking regard to the nature of the contract, non-mandatory norms, usages, the
principles of justice, reasonableness and good faith.
Formulation of Contract
A contract is concluded either by the proposal (offer) and the assent
(acceptance) or by any other actions of the parties that are sufficient to
show their agreement.

The distinct change in the conditions :

− matter;
− price;
− payment;
− quality and quantity;
− delivery place and time;
− responsibility questions;
− dispute resolution.
Form of a contract
• Transactions shall be made in writing (in the ordinary or notarial form) or their formation
may be implied from the actions.
• Where in accordance with the law or agreement of the parties a contract must be formed in a simple
written form, it may be made either by drawing up one document signed by the parties, or by means
of the parties exchanging written communication, telegrams, telephone messages, facsimile
communication or any other information transmitted over communication terminal equipment,
providing the protection of the text is guaranteed and the signature of the sending party can be
identified.
Form of a contract. Verbal form of transactions
Where the written form is not required by laws or by an agreement of the parties as a necessary condition for
the forming of a transaction, the transaction may be formed verbally.
Written form of transactions
1. transaction is made exceeds 1500 Eur, except such transactions which are performed at the time of
their formation;
2. transactions on the foundation of legal persons;
3. contracts of purchase and sale of goods by instalments;
4. insurance contracts;
5. arbitration agreements;
6. contracts of lease of a movable thing for a term of over one year;
7. preliminary contracts;
8. contracts of life annuity (contracts of rent);
9. compromise agreements;
10. other transactions whose mandatory ordinary written form is provided for by Civil Code or other
laws.
The following transactions shall be drawn up in the notarial form:
1) transactions on the transfer of the real rights in an immovable thing and transactions on the
encumbrance of the real rights and of the immovable thing;
2) contracts of marriage (pre-nuptial and post-nuptial);
3) SPA (14 500 eur or more than 25%)
4) other transactions which are to be notarised in accordance with the mandatory provisions of the
Civil Code.
Preliminary contract
A preliminary contract is an agreement of parties by which they obligate themselves to conclude
another – principal – contract in future under the conditions negotiated in the agreement.
A preliminary contract must be made in writing. A preliminary contract which fails to meet the required
conditions of its form shall be null and void.
In the preliminary contract, the parties shall be obliged to establish a time-limit within which the principal
contract must be formed
If after conclusion of the preliminary contract, a party without due grounds avoids or refuses to enter into a
principal contract, he shall be bound to compensate to the other party for damages inflicted.
Content of Contract
Entering into the contract the parties agree on a variety of mutual rights and obligations*.
The Contract provides:
o object,
o price,
o terms,
o quality questions,
o dispute resolution ...
o Something else?
*The implied conditions shall follow from the essence and purpose of the contract, the nature of
relationships established between the parties, the criteria of good faith, reasonableness and justice

Structure of a typical commercial agreement I

Objective - logical sequence – easy to read - clause numberings and headings, schedules.
Elements:
• Parties
• Recitals - history and background
• Definitions - terms which are long and repeated several times - a shorthand ‘label’
• Main operative clause - describes the main commercial transaction
• Conditions
• Consideration – cash/non-cash
• Duration and termination
• Warranties
• Confidentiality
• Other: Miscellaneous clauses/‘Boiler plate’, Annexes
Recitals:
o History/background
o Statements of things that have already been done
o Explain matters of fact which are necessary to make the transaction understandable

Term of the contract or not –

• Terms which are long and repeated several times
• a shorthand ‘label’
• Location of definitions - layout
• Caps/bold

What is Boiler Plate ?

• Wording that can be re-used over and over without change
• A template wording
• Standard contract clauses that can be useful whatever the
contract covers

Top Mistakes :
1. Non-Inclusion of Complete Case Terms
Apart from the legal boiler plates, it is essential to include any or all of the following terms, if
applicable:
• The basic reason for entering into an agreement
• Complete give-and-take detailing between the parties, statements of parties laiming business
expertise
 • The agreed-upon dates
• Special negotiating circumstances
• Critical deadlines
• Any contract promises

2. Incorrect Time-Frames and Dates:

The incorrect inclusion of time-frames and dates is seen quite often while drafting the contracts. This
is a very critical error which may result in unwanted consequences. Although this type of mistake is
more of a typing mistake but it can literally change the meaning of the contract.
Having contract management drafters on board with deep attention to detailing is one of the best
ways to avoid such an occurrence. The dates must be cross-referred with the calendar and deal sheet
along with the confirmation of both the parties before signing.

3. Non-Inclusion of a Termination Clause:

In most of the agreements, the termination clause holds a lot of significance. It clearly states the
exemption rules in case the contract fails to meet or fulfill the mentioned terms and conditions.
By not including the termination clause which clearly states the terms which allow a party to end the
agreement or the termination consequences, the chances of a legal dispute may arise in the near
future.
It is important to discuss the termination clause with both the parties and incorporate the same while
drafting the contract irrespective of how good a rapport both the parties share.

4. Last Minute Inclusions:

Last minute inclusions are truly problematic as they increase the chances of drafting mistakes,
especially if attorneys are facing a shortage of time. Usually, the last additions sound good but prove
to be a hindrance when the document is read as a whole.
In case a lawyer is making the last minute inclusions, it is essential to assess the perspective of both
the parties. In order to avoid these last minute inclusions, it is recommended to plan drafting of the
contract keeping each and every perspective in place.

5. Not Proofreading Enough:

Inconsistencies and grammatical errors are often seen at the end of contract drafting. Therefore, it is
essential to eliminate the same by going through the contract over and over. The terms and
conditions should be clearly stated and any further explanation must be incorporated if required.
It is recommended to get the contract reviewed by senior attorneys as their expertise will help in
addressing the inconsistencies of each and every kind at the earliest or take help from the leading
providers of contract drafting services.

Note! Therefore, it is essential to plan and assess the drafting of the contract deeply in order to have
an error-free contract

Principles of performance of a contract (Civil Code 6.200, UNIDROIT)

• A contract must be performed by the parties in a proper way and in good faith.
• In performing a contract, each party shall be bound to contribute to and to cooperate with the other
party.
• The parties shall be bound to use the most economical means in the performance of the contract.
• Where according to a contract or its nature, a party in exercising certain actions is bound to make the
best effort in the performance of a contract, this party shall be bound to make such effort as a
reasonable person would make in the same circumstances

Performance of contractual obligations upon a change of circumstances 1 (Civil Code 6.204,

UNIDROIT)
In the event where the performance of a contract becomes obstructed, the party shall have the right to
make a request to the other party for the modification of the contract.
Such request shall have to be made immediately after the occurrence of obstructions and the grounds on
which the request is based. The request for modification of the contract shall not in itself entitle the party
with the right to suspend performance of the contract.
Where within a reasonable time the parties fail to reach an agreement on the modification of the contractual
obligations, any of them may bring an action into a court. The court may:
1) dissolve the contract and establish the date and terms of its dissolution;
2) modify the conditions of the contract with a view to restoring the balance of the contractual
obligations of the parties
Additional reservations
The performance of a contract shall be considered obstructed under such circumstances which
fundamentally alter the balance of the contractual obligations, i.e. either the cost of performance has
essentially increased, or the value thereof has essentially diminished if:
1) these circumstances occur or become known to the party after the conclusion of the contract;
2) these circumstances could not reasonably have been foreseen by the aggrieved party at the
time of the conclusion of the contract;
3) these circumstances are beyond the control of the aggrieved party;
4) the risk of occurrence of these circumstances was not assumed by the aggrieved party.

Non-performance or defective performance of a contract (Civil Code 6.205, UNIDROIT)

Non-performance of a contract shall be failure to perform any of the obligations arising from the contract,
including defective performance and delay of a time-limit of performance.
IMPLICATIONS:
Where a person fails to perform his contractual obligation or performs it defectively, he shall be liable to
compensation for damages caused to the other contracting party and/or pay a penalty (fine, interest).
Suspension of performance of a contract (Civil Code 6.207, UNIDROIT)
Were the parties are bound to perform a contract simultaneously, either party shall have the right to suspend
performance until the other party begins to perform thereof.
Elimination of defects of performance (Civil Code 6.208, UNIDROIT)
The party failing to perform a contract may at its own expense eliminate any defects of performance if:
 1) he gives notice without undue delay to the other party indicating the manner and time of elimination
of defects;
2) the party has no lawful interest in refusing elimination;
3) elimination is effected immediately;
4) elimination is appropriate in the concrete circumstances.
Upon effective notice of elimination, rights of the party that are inconsistent with the performance of the
contract shall be suspended until the expiry of the time-limit allotted for elimination.
Additional period for performance of a contract (Civil Code 6.209, UNIDROIT)
In the case of non-performance, the party may establish in writing an additional period of time of a
reasonable length for the performance and notify the other party about this establishment.
Having established an additional period for performance, the party may suspend for this period the
performance of his own obligations and claim compensation for damages, though he shall not be able to
invoke any other remedy.
If the party receives notice from the other party that the latter will not perform his obligations within the
additional period either, or if upon the expiry of that period the contract has not been performed, the
aggrieved party shall be able to set up other remedies available to him.
Conditions excluding liability (Civil Code 6.211, UNIDROIT)
The conditions of a contract which limit or exclude a party's liability for non-performance of an obligation,
or which permit to effectuate performance in a substantially different manner from what the other party
reasonably expected, shall not be valid if such conditions, taking in regard the nature of the contract and
other circumstances, are unfair.
Grounds for arising of contractual liability (Civil Code 6.256, UNIDROIT)
Every person shall have a duty to perform his contractual obligations in a proper way and without delay.
Where a person fails to perform his contractual obligation or performs it defectively, he shall be liable to
compensation for damages caused to the other contracting party and/or pay a penalty (fine, interest).
Demages to be considered:
• personal property loss or damage;
• expenses incurred;
• loss of income, that person would have received if no illegal behavior were performed.
Superior force (force majeure) Civil Code 6.212, UNIDROIT
A party shall be exempted from liability for non-performance of a contract if he proves that the non-
performance was due to the circumstances which were beyond his control and could not have been
reasonably expected by him at the time of the conclusion of the contract, and the arising of such
circumstances or consequences thereof could not be prevented.
A superior force (force majeure) shall not include such circumstances as absence in the market of goods
needed for the performance of the obligation, or lack of the necessary financial resources on the part of the
party, or violation of their own obligations committed by the contrahents of the debtor.
The party who failed to perform a contract shall be obliged to inform the other party about the arising of an
impedimental circumstance.
End of Contract
- termination;
- Fulfillment.
- -Applicable Law (Civil Code 1.37)
- -Linguistic discrepancies (Civil Code 6.194)

Independent work agreement

Concept of indepedent work agreement (CC 6.644-6.715)

Under a contract of independent work, one party (independent work contractor) shall take an obligation to
perform certain work at his own risk in accordance with the task of another party (customer), and transfer
the results thereof to the customer, while the latter shall be obliged to accept the work performed and pay for
it.
Different individual types of independent work (consumer independent work, construction independent
work and etc.)
The independent work contractor and customer shall not be connected by subordination or any other
dependence relationship – difference between employment agreement.
Form. Indepedent work agreement is subject to the general requirements of the contract form.
Parties:
Parties to the contract is the work contractor and the customer.
Work contractor – legal person and natural person having special right to perform certain work at his own
risk.

Customer – natural or legal person.

The independent work contractor shall have the right to involve other persons (subcontractors) to
perform his obligations. In the event where subcontractors are involved for the performance of the task, the
independent work contractor shall act in the capacity of a general independent work contractor.

Subject matter of a contract of independent work

A contract of independent work shall be concluded for the manufacture or transfer of the results of a
certain work to the customer.
Important aspects:
- Prior to the conclusion of the contract, the independent work contractor shall be obliged to submit to
the customer all the necessary information related with the fulfilment of the work likewise the
information concerning the materials and the time necessary for the fulfilment of the work.
- Unless otherwise provided for by the contract, the independent work contractor shall fulfil the work
at his own risk and independently determine the methods of performing the task set by the
customer.
In the event of the character and value of the work fulfilled being relatively insignificant in comparison with
the value of the manufactured, purchased or converted thing, the contract shall be deemed to be not that of
independent work, but a purchase-sale contract.
Time-limits for the fulfilment of work
The beginning and ending of the fulfilment of the work shall be indicated in the contract of independent
work. The parties may also determine the time-limits for completing concrete stages of work (intermediate
time-limits).
Unless otherwise provided for by laws or the contract, the independent work contractor shall be liable for a
violation of both the beginning and the ending of work, likewise for the violation of the intermediate time-
limits.
Upon the agreement of the parties, the time-limits for the fulfilment of the work specified in the contract
may be changed in accordance with the procedure indicated in the contract of independent work.
Quality of work
The quality of the work fulfilled by the independent work contractor must conform to the conditions of the
contract of independent work and, in the absence of any determination of quality in the contract, to
the requirements ordinarily presented for work of the respective nature.
The result of work fulfilled must at the moment of transfer to the customer possess the properties specified
in the contract of independent work or determined requirements usually presented, and within the limits of a
reasonable period be fit for use in accordance with its designation.
Price:
The contract of independent work shall specify the price of the work subject to fulfilment or the
methods and criteria of its calculation.
The price of work specified in the contract may be determined by drawing up a definite or approximate
estimate*.
Procedure for payment of work
Unless preliminary payment for work fulfilled or individual stages is not provided, the customer shall be
obliged to pay the independent work contractor the stipulated price after the final acceptance of the results of
work.
The independent work contractor shall have the right to demand an advance payment or an earnest only in
the instances provided for in the contract

Obligations of the Parties(1)

Obligations of work contractor:
- The obligation to perform certain work;
- The obligation to obtain permissions and licenses;
- The obligation to protect customer assets;
- Duty to warn the client;
- Obligation to transfer to customer the result of the work;
- Duty of confidentiality.
Customer responsibilities:
- The obligation to provide assistance to the contractor and verify a contractor;
- The obligation to pay for the work;
The obligation to accept the result of the work;
- Duty of confidentiality.

Liability of the independent work contractor for improper quality of work

In the instances where the work is fulfilled with deviations from the conditions of the contract, the customer
shall have the right, unless otherwise provided for by the law or the contract, at his choice to require from
the independent work contractor:
- elimination of defects without compensation within a reasonable period;
- reduction of the price established for work;
- compensation of his expenses for elimination of the defects when the right of the customer to
eliminate them has been provided for in the contract of independent work.

Judicial system and etc

A COURT
A court is an institution administering justice and established by law.
In pursuance of the fair and impartial court decisions and on purpose to prevent any interference in the court
activities the Constitution and the Law on Courts establish that in the administration of justice courts shall
be independent from other government institutions, officials, political parties, organisations and other
persons.
Right to Have a Court Hearing within a Reasonable Time by an Independent and Impartial Court
Everyone shall be entitled to a fair hearing by an independent and impartial court established by law.
The court, in all its activities, must ensure that hearing of a case shall be fair and public and within a
reasonable time.
Court proceedings in the Republic of Lithuania shall be held in the state language.
A court system
A court system of the Republic of Lithuania is made up of courts of general jurisdiction and courts of
special jurisdiction:
The Supreme Court of Lithuania (1), the Court of Appeal of Lithuania (1), regional courts (5) and district
courts (12) are courts of general jurisdiction dealing with civil and criminal cases.
District courts also hear cases of administrative offences coming within their jurisdiction by law. The
regional courts, the Court of Appeal, the Supreme Court of Lithuania have the Civil Division and the
Criminal Division.
The Supreme Administrative Court of Lithuania (1) and regional administrative courts (5) are courts of
special jurisdiction hearing disputes arising from administrative legal relations.
A district court is first instance for criminal, civil cases and cases of administrative offences (assigned to its
jurisdiction by law), cases assigned to the jurisdiction of mortgage judges, as well as cases relating to the
enforcement of decisions and sentences. Judges of a district court also perform the functions of a pre-trial
judge, an enforcement judge, as well as other functions assigned to a district court by law.
A regional court is first instance for criminal and civil cases assigned to its jurisdiction by law, and appeal
instance for judgements, decisions, rulings and orders of district courts. The Chairman of a regional court
organises and controls the administrative activities of district courts and their judges within the territory of
his activities in accordance with the procedure prescribed by law.
The Court of Appeal is appeal instance for cases heard by regional courts as courts of first instance. It also
hears requests for the recognition of decisions of foreign or international courts and foreign or international
arbitration awards and their enforcement in the Republic of Lithuania, as well as performs other functions
assigned to the jurisdiction of this court by law. The Chairman of the Court of Appeal organises and controls
the administrative activities of the regional courts and their judges in accordance with the procedure
prescribed by law.
The Supreme Court of Lithuania is the only court of cassation instance for reviewing effective
judgements, decisions, rulings and orders of the courts of general jurisdiction. It develops a uniform court
practice in the interpretation and application of laws and other legal acts.
A regional administrative court is the court of special jurisdiction established for hearing complaints
(petitions) in respect of administrative acts and acts of commission or omission (failure to perform duties) by
entities of public and internal administration. Regional administrative courts hear disputes in the field of
public administration, deal with issues relating to the lawfulness of regulatory administrative acts, tax
disputes, etc.
Before applying to an administrative court, individual legal acts or actions taken by entities of public
administration provided by law may be disputed in the pre-trial procedure. In this case disputes are
investigated by municipal public administrative dispute commissions, district administrative dispute
commissions and the Chief Administrative Dispute Commission.
The Supreme Administrative Court is first and final instance for administrative cases assigned to its
jurisdiction by law. It is appeal instance for cases concerning decisions, rulings and orders of regional
administrative courts, as well as for cases involving administrative offences from decisions of district courts.
The Supreme Administrative Court is also instance for hearing, in cases specified by law, of petitions on the
reopening of completed administrative cases, including cases of administrative offences. The Supreme
Administrative Court develops a uniform practice of administrative courts in the interpretation and
application of laws and other legal acts.
Judicial System in Lithuania
Courts hearings

When hearing cases courts shall be guided by the Constitution, the Law on Courts and other statutes,
international agreements to which the Republic of Lithuania is a party, resolutions of the Government,
other legal acts in force in the Republic of Lithuania which are not in conflict with the statutes.
Principles. Hearing of a case by the court shall be founded on the following principles: equality of the
parties, the right to legal assistance, the right to due process, speedy and least expensive proceedings, the
right to be heard, the adversarial procedure, presumption of innocence, impartiality of the court, public
hearing, immediateness and prohibition of the abuse of process.

Info Distribution. Final acts of courts, separate decisions and annual reviews of court practice of the
Supreme Court and Supreme Administrative Court shall be published in the internet web site of the
National Court Administration according to the procedure established by the Judicial Council except in
the cases provided by law.

Expenses
Property disputes (calculated from the amount of the claim):
-up to 28 962 EUR- 3 percent, but not less than 20 EUR,
-from more than 28 962 EUR to 86 886 EUR- 868 EUR plus 2 percent of the amount of the claim
in excess of 28 962 EUR;
of more than 86 886 EUR- amount – 2027 EUR plus 1 percent of the amount of the claim in
excess of 86 886 EUR.
Total stamp duty property disputes may not exceed 12 550 EUR

Arbitration
Arbitration – is an attractive alternative to solve both national and international commercial disputes in a
confidential way. Arbitration is a way for solving disputes when natural or legal persons on the grounds of
mutual agreement consign the resolution of their case to the third party but not to the courts of state.
Features
Usually the arbitration procedure consumes less time and cost than the litigation in national courts.
The process of arbitration is more flexible than state civil proceedings – the parties may agree on the
language, place, number of arbitrators, the nominating order thereof, as well as the governing law to solve
the dispute, etc.
The arbitration awards are recognized and may be enforced in the territory of more than 140 states of the
World, as these states that are the members of United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (New York, 10 June 1958).

Disputes to Be Settled by Arbitration

The Court of Arbitration shall hear and settle commercial disputes arising from both contractual and non-
contractual legal relations with the exception of disputes that cannot be settled by arbitration.
Parties may agree on the following issues:
1) the number of arbitrators
2) the procedure for appointment of arbitrator(s)
3) the procedure for challenge of arbitrator(s)
4) the place of arbitration
5) the language of arbitration
6) the mode of proceedings (either hearings or written proceedings may be agreed)
7) the time limits for submission of applications for arbitration (claims) and Answer(s) to the claims
8) other issues, provided they conform with the applicable law.

Principles of Arbitration
The Arbitral Tribunal shall hear and resolve disputes within the scope of its competence in accordance with
the principles of autonomy of the parties to the dispute, procedural equality, competition, the principle of
party disposition (free exercise by the parties of their rights), confidentiality, economy, cooperation and
expeditiousness.
Example of the model arbitration clause to be included into the contract if you would like that the
resolution of your dispute, controversy or claim arising out of or relating to the contract would be
attended and organized by Arbitration:
“Any dispute, controversy or claim arising out of or relating to this contract, its breach, termination
or validity, shall be finally settled by arbitration in the Vilnius Court of Commercial Arbitration in
accordance with its Rules.
The number of arbitrators shall be … .
The venue of arbitration shall be ….
The language of arbitration shall be … “.

ARBITRATION FEES AND EXPENSES

When submitting the claim (counterclaim), the Claimant (Counterclaimant) shall pay the Registration fee
(400 EUR plus VAT), which shall not be refundable.