REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA Law on Trade Chapter 1 General provisions Article

1. Objective of this Law This Law shall establish the participants of trade activities, relations in the sale and purchase of goods and other relations associated with trade activities which are not regulated by other laws. Article
2. The Concept of Trade Activities and its Subjects Trade activities pertain to the economic activity associated with the purchase and sale of goods. The subjects of trade activities are natural persons and legal entities who are engaged in the purchase or sale of goods or act as intermediaries for the purpose of conducting business. Trade activities may be either a principal or an additional business for an economic entity. The subjects for whom trade activity is a principal business, shall be divided into merchants and small tradespeople. Merchants are entrepreneurs who for the purpose of business are engaged in the purchase and sale of commodities, hold and dispose of the property of the trade concern, organize business and financial activities of the company and have it registered according to the established procedure. Trade companies are companies which purchase the goods in their own name and at their own risk for the purpose of selling them. Small traders are natural persons without the status of the entrepreneur. Included among them are economic entities which do not hire employees, are engaged in mobile or home selling, sell goods in kiosks or in temporary stalls. Retailing means trade activities when goods are sold to the final consumer for personal or household use. Wholesaling means the trade activities when the goods are sold for reselling or for production activities. Public catering included both production and trade activities encompassing the production and sale of food and the organizing of its consumption. Different types of trade may be combined. Trade activities may be carried out in combination with other types of business activities. Chapter 2 State Regulation of Trade Activities Article
3. State Control Institutions for Trade Activities Domestic trade in the Republic of Lithuania shall be regulated within the limits of their capacity by: 1) the Government, 2) an institution authorised by the Government, 3) a municipality. Article
4. Special Cases of Regulation The Government of the Republic of Lithuania shall have the right in special cases, to introduce state monopoly of the trade in certain goods, as well as to establish special sales procedures for certain goods. The Government may, by its decision, direct an authorized institution and municipalities to distribute certain goods in a centralised manner. The Government and town (district) councils may decide for trade companies the days and the hours during which work is prohibited. Article
5. The Establishment, Reorganisation and Liquidation of Trade Companies The establishment, reorganisation and liquidation of trade companies shall be regulated by the laws of the Republic of Lithuania and other standard acts. Article
6. The Founders of Trade Companies The founder of a trade concern may be a natural or legal person who is not prohibited from engaging in trade. Article
7. Prohibition to Engage in Trade It shall be prohibited to engage in trade for: 1) natural and legal persons whom the court declares insolvent; 2) persons whose legal capacity is restricted by the laws of the Republic of Lithuania; 3)political parties and political organisations (excluding those engaged in the publishing trade). Article
8. Registration Characteristics of Trade Activities Trade companies shall be registered in accordance with the procedure established by the Republic of Lithuania Law on Enterprises and the Republic of Lithuania Law on the Register of Enterprises. Small tradespeople shall not be registered as companies. They must obtain a patent for their activities. The procedure for the issue of patents shall be established by the Government of the Republic of Lithuania. It shall be prohibited to engage in trade without having registered a company in compliance with the established procedure or without being issued a patent. It shall be permitted to undertake retailing and public catering only upon the delivery of the certificate to the city (district) council, stating the design capacity of each retail (public catering) unit, the range of goods offered for sale and the permit issued by the hygiene centre. The companies that are in operation shall have to file these documents with the city (district) council annually, by 1 March. Article
9. Reorganisation of Trade Companies In addition to the methods of reorganisation provided for in Article 37 of the Civil Code of the Republic of Lithuania, the change in legal status or the type of merchandise (food or non- food goods) shall also be considered as the reorganisation of a trade concern. Article
10. Liquidation of Trade Companies Trade companies shall be liquidated according to the procedure established by the Republic of Lithuania Law on Enterprises. Chapter 3 Salespersons and their Job Characteristics Article
11. An Employee of a Trade Company An employee of a trade concern is a hired employee whose job is directly related to the buying, storage and selling of goods and the accounting for these operations. Auxiliary staff shall not be attributed to this category of employees. The Government of the Republic of Lithuania may establish qualification requirements for the managers of trade companies and for certain categories of employees. Article
12. Job Characteristics of an Employee of a Trade Company The employee of a trade concern shall have no right to independently engage in trade without the employers consent, as well as to be involved in trade activities of competing firms. The employee of a trade concern who violates these requirements must make restitution for the losses caused by him. The employer when hiring an employee, may conclude a separate contract pursuant to which the employee, after termination of the employment contract, would not compete with company of the former employer. The prohibition against competition may not last for more than one year. This restriction may be applied, if upon termination of the employment contract, the employer obliges to pay the employee a compensation for the entire period of prohibition against competition. The amount of the compensation shall be set in the contract. The restrictions specified in Par.2 of this Article shall not apply provided: 1) the activities of an employee of a trade concern, who terminated employment contract, do not violate the commercial interests of the former employer; 2) the employment contract is cancelled for its breach by the employer; 3) the employer waives in writing the prohibition against competition. It shall be prohibited to work as an employee of a trade concern for persons who are ill with communicable diseases or are the carriers of such diseases. The list of diseases and the range of goods that said persons shall be prohibited from selling shall be determined by the Ministry of Health of the Republic of Lithuania. Chapter 4 Procuration Article
13. The Concept of Procuration The procuration is an authorisation by which an employee of a trade concern or some other person is empowered in the name of the trader to perform legal actions in court or other institutions, relative to the activities of a trade concern. A person who acts by virtue of a procuration is a procurator (proctor). Article
14. Granting or Revocation of Procuration The procuration may be granted only by the trade companies which are registered in the Republic of Lithuania Register of Enterprises. The procuration of an individual (personal) enterprise shall be granted by its owner or some other person authorised by him, of general or limited parternship - in the manner prescribed by Partnership Agreement, of stock companies and state (municipal) enterprises - in the manner prescribed by the Articles of Association. If the Partnership Agreement (Articles of Partnership) does not provide for procuracy, in the general partnership it may be granted by all partners, in the limited partnership-by its general partners and in stock companies and closed stock companies, state-owned (municipal) enterprises, agricultural companies and co-operative companies (co-operatives) - by the Board (Board of Directors). For several persons a joint procuration may be granted. In such case they must act jointly. The procurator shall not be authorised to perform the following actions: to sign the balance sheet and tax return of the company, to declare the company bankrupt, to sell it, to grant procuracy, to admit trading partners. The procuracy must be certified by a notary. The procuration may not be transferred to another person. The procuration may be revoked by the person who granted it and in a limited partnership - by each general partner. The procuration may be revoked at any time. Article
15. Limitation of Procuration The procuration may be limited by: the affiliate of the company, certain spheres of company activities, certain circumstances, time and place. These limitations may be applied only in the internal relations of a company. Article
16. The Beginning and Termination of Procuration In the internal relations of a company the procuration shall begin at the moment it is granted. In the external relations of a company the procuration shall become effective only upon its registration. The procuration shall cease to exist: 1) upon the termination of legal relations relative thereto; 2) it is revoked by a tradesperson; 3) the company terminates its operation; 4) when the ownership of the company changes hands. Upon the death of the owner of the company the procuration remains in effect. The appropriate record in the established register of procuration shall be considered as the termination of procuration. Article
17. Procurator's Signature and Responsibility Undersign the documents in the name of the firm, the procurator must use the word per procuratione or p.p. If due to the violation of the procuration the tradesperson incurs losses, the procurator must fully compensate for them. Chapter 5 Trade Representative (Agent) Article
18. The Concept of Trade Representative (Agent) Trade representative (agent) is a businessman who has his firm registered and acts as intermediary for other businessmen when concluding transactions or who concludes such transactions on their behalf. Trade representative (agent) shall perform his functions under commission contract. The tradeperson may, concurrently, be a trade representative (agent) if he has registered such firm. Article
19. The Relations between the Trade Representative (Agent) and the Principal Trade representative (agent) when acting as an intermediary and when concluding transactions must act in the interests of the principal. The relations between a trade representative (agent) and the principal shall be regulated by the commission contract and the Republic of Lithuania Civil Code. Article
20. The Obligations of a Trade Representative (Agent) upon Termination of a Contract A trade representative (agent) shall have no right to use for his own benefit commercial or other secrets of the principal's company entrusted to him or of which he learns in the course of dealing with him, or to reveal them to other persons. When concluding a commission contract, the principal shall have the right to request that upon the termination of the commission contract, the trade representative (agent) would not compete with him. This stipulation shall apply only in respect to the goods specified in the contract and in the territory of representation. The competition may not be restricted for more than one year. During the entire period of competition restriction, the party being represented shall pay the trade representative (agent) compensation, the amount of which shall be determined at the onset of the commission agreement. Chapter 6 Trade Dealer (Broker) Article
21. The Concept of Trade Dealer (Broker) A trade dealer (broker) is a businessperson who has registered a company and who, not having any permanent agreement- based connections with, either the buyer or the seller, shall mediate between them in the sale and purchase of goods. Article
22. Obligations of a Trade Dealer (Broker) Upon acquiescence by the parties to form a buy and sell agreement, the trade dealer (broker) shall prepare and furnish them with a document of this agreement. The parties concerned, the object of the agreement, the type of goods, the amount, the price, the term of the delivery of goods and other conditions, must be indicated in the document. In the event one of the parties, shall renege on signing the document, the dealer (broker) shall immediately inform the other party. In instances when the goods are purchased and sold according to samples, which are given to the trade dealer (broker), he must protect these samples, until such time as they shall be accepted and no claims shall be made regarding their quality. The trade dealer (broker) shall not be tasked with accounting for the goods sold. The trade dealer (broker) must take care of a daily account log, and shall register therein, in chronological order, all documents of agreements entered into, under his mediatorship, including all the data prescribed in Par.1 of this Article. The entries must be signed by him on a daily basis. Upon request by the parties, the trade dealer (broker) must present the daily log, indicating everything, that has been entered concerning the transaction he mediated. In the event of a court order, the trade dealer (broker), must furnish the daily log. The trade dealer's (broker's) records are protected, in keeping with the general requirements of account document safekeeping. Article
23. Liability of the Trade Dealer (Broker) For the non-compliance with the requirements established for the maintenance of the daily log, administrative penalties shall be imposed on the trade dealer (broker). Trade dealer (broker) must indemnify for losses incurred by the parties through his fault. Article
24. The Brokerage (Courtage) for Mediation The services of a trade dealer (broker) shall be compensated for mediation the compensation as agreed by the parties. In the absence of such agreement the parties shall pay in equal portions. Chapter 7 Commission Agent Article
25. The Concept of Commission Agent Commission agent is a businessperson who has registered his concern and assumes obligation to sell, in consideration for a commission, the goods of other persons (consignors) in his own name, or upon their commission, to buy goods for them. Commission agent may be employed under open-end commission contract or may be commissioned to enter into one-time contract. Article
26. Regulation of the Relations between the Commission Agent and Consignor Business relations between the commission agent and the consignor shall be regulated by the Republic of Lithuania Civil Code and this Law. Article
27. Additional Activities of the Commission Agent If terms for the purchase of goods are not established by the consignor, the commission agent may sell goods to the consignor from his warehouses becoming in this way a seller. The commission agent who was commissioned by the consignor to sell goods may purchase said goods himself becoming in this way the buyer. When the commission agent becomes involved in the consignors' commission to buy or sell goods, he must receive payment for the rendered services as it is done in cases when the services are rendered with the participation of third persons. Chapter 8 Contract of Sale and Purchase Article
28. Offer to Conclude a Contract Offer to conclude a contract is an offer to one or several specific persons indicating the conditions requisite for the conclusion of the contract provided that the attached conditions are sufficiently express and convey the obligations assumed by the offeror. The offer to conclude a contract is sufficiently express if it specifies the goods and establishes, either directly or indirectly, their amount and price or provides for the procedure of establishing same. The offer to conclude a contract which is made generally shall be considered only as an invitation to express an offer, unless the offeror directly provides otherwise. Article
29. Effectiveness and Change of an Offer An offer shall become effective when received by the person specified in the offer. The offeror of a contract may change the offer provided that the offeree receives a notice of its change prior to or simultaneously with the receipt of the offer. Article
30. Revocation of the Offer The offeror may revoke the offer if the offeree receives a notice of revocation of the offer prior to communicating his acceptance. The offer may not be revoked: 1) if the time for communicating acceptance is stipulated in the offer or if it is otherwise stated that the offer is irrevocable; and 2) if it was in the offeree's interest to consider the offer as irrevocable and the offeree acted accordingly. Article
31. Expiry of an Offer An offer to conclude a contract shall become ineffective when the offeror receives a notice of non-acceptance. The provision shall also apply in the cases where the offer is irrevocable. Article
32. Acceptance of an Offer Acceptance of an offer is the offeree's communication thereof or performance of some other act expressing acceptance. Silence or non-performance shall not be deemed acceptance. Once acceptance becomes effective the offer shall become a contract. Acceptance of an offer to conclude a contract shall become effective from the moment the offeror receives notice of agreement. Acceptance shall not become effective if the offeror does not receive notice of agreement within the time stipulated in the offer. If the time is not specified, the parties shall act in accordance with the circumstances of the transaction, including the delivery speed of the means of communication used by the offeror. If, in accordance with the offer or following the practice or customs established in the mutual relations between the parties, the offeree may, without notifying the offeror, express his agreement by performing certain actions - shipping goods or paying money- acceptance shall become effective upon performance of said actions on condition that they are performed within the time period specified in Pars. 2 and 3 hereof. Article
33. Receipt of Acceptance The statement of acceptance or any other expression of acceptance shall be considered to have been received by the offeror when he is notified thereof by a telegram, instant communications or when it is in any other way delivered personally to the offeror's company or to his registered address, or, if the offeror does not have a private business or registered address - to his permanent place of residence. Article
34. Acceptance of Offer under other Conditions A response to an offer which has supplements, restrictions or other modifications attached to it shall be deviation from the offer and shall be treated as a new offer to conclude a contract. If a response to the offer contains conditions, supplements or variations which have no material effect on the terms of the offer, it shall be considered as acceptance provided that the offeror does not without undue delay express objections concerning the abovementioned variations by telegram, instant communications or in writing. If he expresses no objections, the offer terms with modifications attached to the acceptance shall become terms of the contract. The following proposals by the acceptor shall be considered conditions having a material effect on the offer: proposals concerning the prices, quality and quantity of goods and payment for them and the place and time of their supply, the extent of one party's liability to the other or settlement of a dispute. Article
35. Beginning of the Acceptance Period The period of acceptance specified by the offeror of a contract in a telegramme or a written note shall commence from the moment of delivery of the telegramme or from the moment of posting of the letter which fact is confirmed by a postal seal on the envelope. The period of acceptance stipulated by the offeror by a telegramme, teletype or other instant communications shall commence from the moment of receipt of the offer. When calculating the duration of the period of acceptance, days of national holidays and days off shall not be excluded. However, in the event that the notice of acceptance cannot be delivered to the offeree on the last day of the established period, the day being a national holiday or a day off in the location where the offeror's commercial company is situated, the period shall be extended until the first working day following thereafter. Article
36. Late Acceptance Late acceptance shall be effective provided that the offeror immediately notifies by a telegramme or instant communications or in writing of his agreement to recognise it. Late acceptance shall be effective if it was timely posted, but the offeror of the contract failed to immediately notify by a telegramme, or instant communications, or in writing of his offer having been revoked. Article
37. Revocation of Acceptance Acceptance may be revoked if the offeror receives notice of the revocation prior to the moment or at the moment when acceptance is due to become effective. Article
38. The Moment of Conclusion of a Contract A contract shall be deemed concluded at the moment when the offer becomes effective pursuant to the requirements set forth in Article 32 of this Law. Article
39. Prices of Goods The price of goods which are being sold shall be fixed by agreement between the parties, with the exception of cases when the price is regulated by the State. Article
40. Quality of Goods The goods which are being sold must correspond to the requirements set by normative documents (norms, technical conditions, standards, samples, etc.), except the goods which require no normative documents. The seller must provide the buyer with detailed information concerning the quality, safety, mode of use, guarantee period of goods. Goods the use whereof may endanger human life, health or the environment may be sold only on condition that the seller possesses documents of the manufacturer or other competent institutions certifying to the quality and safety of the goods. The list of the goods shall be approved by the Government of the Republic of Lithuania or its authorised institution. Manufacturing and trade companies shall be prohibited from selling Lithuanian-made and imported goods, during the marking of which the following has not been specified in the documents of their use or in contracts: the name of goods; the mark of the declared normative document (with the exception of goods for which normative documents are nor required); manufacturer's name and address; or other requisites of product marking as established by law and other standard acts. Responsibility for the non-compliance with the requirements of normative documents shall be established by the Code of Administrative Violations of Law of the Republic of Lithuania. Article
41. Acceptance of Goods Acceptance of goods is the examination of their quantity and quality. The buyer must accept goods: from transport organisations - in accordance with the effective transport regulations; in other cases - in compliance with the regulations approved by the Government of the Republic of Lithuania, normative documents and requirements of the contract. Article
42. Characteristics of a Retail Purchase and Sale Contract A purchase and sale contract shall be considered concluded: 1) when the buyer expresses agreement to purchase goods offered by the seller and pays for the goods immediately or within the period agreed by the parties; or 2) when the seller accepts the buyer's order for the advertised goods. If the goods sold to the buyer are not in conformity with the documents regulating their quality or conditions of the contract, the buyer may exercise the rights established by the laws of the Republic of Lithuania. By agreement between the parties additional obligations of the seller may be provided for in the purchase and sale contract - protection of sold goods, additional packaging, dispatches and other obligations. A retail purchase and sale contract shall be performed when the seller delivers goods to the buyer and the buyer pays for the goods. Article
43. Characteristics of a Wholesale Purchase and Sale Contract A wholesale purchase and sale contract may be long-term, short-term, and one-time. The following must be established in wholesale purchase and sale contracts: 1) names, range, quantity and quality of goods to be sold; 2) dates of shipment (transfer) of goods; 3) the price. In addition to the above obligatory terms of contract, the parties may also include the following provisions in the contract: 1) method of transportation (transfer) of goods, procedure and form of effecting settlement; 2) requirements for the tare and packaging of goods and procedure and dates of the return of tare; 3) liability for breach of contract or inadequate performance of contract; and 4) other conditions. Wholesale purchase and sale contracts may also provide for other obligations of the seller which are not related to trade activities (manufacture of intermediate products, leasing of equipment, dispatching, etc.). A wholesale purchase and sale contract shall be considered performed on the day: 1) when goods are shipped to a non-local receiver; or 2) when goods are transferred in the buyer's or seller's warehouse. Another procedure of the performance of contract may also be established by agreement between the parties. Chapter 9 Peculiarities of Commercial Competition Article
44. Unfair Commercial Competition Unfair commercial competition means such actions of the participants in trade which mislead the buyers, are harmful to the business and name of other traders. The actions of unfair competition and responsibility for them shall be established by the Law on Competition of the Republic of Lithuania and this Law. It shall be prohibited to offer, in pursuit of competitive goals, or promise or pay remuneration to an employee or authorised person of another trade company with an intent to secure that the company in an unfair manner buys goods from the seller or a third person. Employees or authorised persons of trade companies shall be prohibited from extorting or taking remuneration for granting unfair privileges to another person who buys goods. Article
45. Unfair Competition through Commercial Advertising It shall be prohibited to emphasise fictitious exclusiveness of the trade company or goods. It shall be prohibited to attract buyers by using forbidden means: pestering a person with offers of goods or services; showing alleged price reduction in the price-lists, price tags, shop windows or show-cases; or appealing to prejudices and base instincts. An advertisement must not arouse fear or other negative emotions, or incite violence, or cause harm to human beings or environment. Statements by official or private persons or photographs or films showing them may not be used in commercial advertising without the consent of the persons. Article
46. Prohibition to Offer Added Value to a Purchased Product It shall be prohibited to offer or give, for the purpose of advertising, either openly or implicitly, either free of charge or for a small charge, added value in addition to the purchased product or service. Prohibitions set forth in this Article shall not apply in the cases when: 1) advertising extras of small value on which the advertised company is specified are given in addition to the goods; or 2) the extra is considered an accessory of the product or is a customary trade service. Article
47. Prohibition to Hold Public Sales of Goods Public sales of goods which are not in conformity with the customary trade shall not be permitted in retail trade if the objective of the sales is to gain advantage over the competitors by producing a misleading impression upon the customers so that they would believe they are granted a special privilege. Public sales shall not be prohibited in the following cases: 1) when goods damaged by fire, flood, storm or other natural calamities are being sold; 2) when, upon coordination with architectural and building institutions, a trade building is undergoing reconstruction; 3) when seasonal sales of textiles, clothes, footwear, leather articles, sports articles and other goods are held. Autumn and winter seasonal sales may be held beginning from the last Monday of February, while spring and summer sales - from the last Monday of August; and 4) when a trade company is being liquidated. The duration of public sales may not exceed 4 weeks. Article
48. Limitation of Dominance of a Trade Company A trade company shall be considered dominant on the geographical market or on the market for a product when its turnover constitutes 40% of the appropriate market turnover. If a company is dominant on the market, its owners shall be prohibited from establishing on the same geographical market another company of the type (retail or wholesale trade) or a structural division until another founder establishes on the same market an analogous trade company or structural division. Article
49. Divulging Secrets of a Trade Company The owner (management) of a trade company shall acquaint the employees - salespersons, auxiliary staff or apprentices - with the list of information which constitutes the company's commercial secret. During the period of duration of their employment contracts, said employees of the trade company shall be prohibited from divulging, either for personal benefit or with the intention of causing harm to the owner of the trade company, commercial secret entrusted or accessible to them. A trade company employee who violates the above requirements must compensate the owner for the inflicted losses. I promulgate this Law passed by the Seimas of the Republic of Lithuania. Algirdas Brazauskas President of the Republic Vilnius 12 January 1995 No.I-747