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