We draft and negotiate sales agency (brokerage) agreements and related transactional documentation. Some legal assistance might be necessary to ensure that the reward for performance of a sales agent is duly paid and the principal would not take advantage of agent's services without properly remunerating him. The Lithuanian Civil Code has certain mandatory rules in relation to the brokerage and it may be necessary for both parties to check the validity of the agency contract in light of the overriding requirement of the Lithuanian law.In particular, we advise on the following legal matters:
Knowledge & Insights
By virtue of the Lithuanian Civil Code, the sales agent is entitled to remuneration for each consummated transaction. The sales agent shall be entitled to the remuneration also when the transaction has been concluded after the agency arrangement ended, but the agent facilitated such transaction.
The amount of remuneration shall be fixed or determined in percentage from the value of transaction or the amount recovered. The sale agent must also be paid disbursements if such costs are not included into the agent's fee. The agreement between a principal and a sale agent shall be deemed as enforceable in cases when the exact amount of remuneration was not agreed. In such event, the sales agent shall be paid the remuneration, which is paid to sales agents, acting under similar terms and facilitating sale of similar goods. In the event when there is no similar practice can be determined, the sales agent’s remuneration, such remuneration is be determined reasonably considering the specifics of the particular transaction.
The sales agent shall have a right to withhold the assets of the principal and relevant documents until the principal pays his fee. The agreement contracting-out the agent's right to withhold the principal’s assets shall be null and void.
Contracting without proper authority
In the event when a sales agent enters into the agreement on behalf of the principal, when he was not properly authorised doing this, and the other contracting party was not aware of this fact or was able to learn this under existing circumstances, it shall be deemed that that the principal approves such contract, unless the pricipal immediately notified the relevant party that the sales agent was not properly aurhorised and he did not ratify such contract.
Somewhat more relaxed rules are applicable for international contacts of the sale of goods. If a sales agent enters into international sales agreement without due authority or overstepping the authority, the approval of the sale agent has no legal consequences for the principal. This rule shall not be applicable if the conduct of the principal reasonably implied to a third party that the sales agent was properly authorised and acted without overstepping the authority.
Lithuanian Civil Code specifies that a sales agent must maintain mandatory civil liability insurance for possible damage that he or she cause to the principal or third persons in relation his or her activity.
The sales agent and the principal may agree that two (2) years following expiration of the sales agency, the agent will not compete with the principal. This term has to be specified in the contract expressly in writing. The restriction not to compete must specify (i) the territory that is covered by this non-competition clause, the goods and services or (ii) the group of clients and territory that were entrusted to a sales agent. The principal shall have a right to withdraw from the non-competition arrangements unilaterally until the expiration of such agreement. In the event the non-competition agreement was made, a sales agent shall have a right to be reimbursed, and such fee has to be agreed between parties.
The principal shall not be entitled to invoke the non-competition covenants in the event when:
The non-competition arrangements can be struck out by the court upon a request of the sales agent if such clause is detriment to the lawful interests of the sales agent. The agreements that are more detriment to the interests of the sale agent that permitted by the Lithuanian Civil Code shall be null and void.
Sales agent’s right to compensation
The Lithuanian Civil Code specifies that the agent shall have a right to receive a fee, unless the sales agent receives the reimbursement of his or her costs. If the agreement does not specify expressly that the sale agent is entitled to such reimbursement, the overriding provisions of the Lithuanian Civil Code can be invoked, and the sales agent would be reimbursed by invoking the overriding provisions of the Civil Code. Thus, the sale agent is entitled to a fee:
The maximum compensation to be made to a sale's agent shall be an average annual remuneration of the sales agent when the agreement was effective for more than five (5) years term. If the agreement was valid for more than five (5) year, the annual average remuneration of last five (5) years will be taken into consideration. The sales agent is not entitled to claim compensation if the claim for the compensation is not made within one (1) year after expiration of the sales agency. Also, the sales agent shall not have a right to compensation if the sales agency agreement:
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