The Commercial Agency section of the Civil Code of the republic of Lithuania
|•||1 month if less than or equal to 1 year|
|•||2 months if more than 1 year and less than or equal to 2 years|
|•||3 months if more than 2 years and less than or equal to 3 years|
|•||4 months if more than 3 years|
Indemnity or compensation or both
Either indemnity or compensation can be claimed on termination, unless an election has been made for one over the other
Calculation of indemnity/compensation
|•||Indemnity - Capped at a maximum of the average annual commission over last 5 years or, if less than 5 years, over the agency|
|•||Compensation – The Civil Code does not set out how compensation is to be calculated and we are not aware on any cases on this issue to date|
An agent is entitled to bring a claim for damages on termination. This claim is distinct from its claim for either compensation or an indemnity
1) Under Lithuanian law is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?
It is possible to have a restraint of trade clause operating during the agency agreement, provided this term of the agreement is in writing. In addition, there is a general duty on the agent to be loyal to their principal. This duty implies, among other things, an obligation of non-competition. However, the law does not specify the details of the agent’s non–compete obligation. Therefore it is advisable for parties wanting a restraint of trade clause to expressly specify the terms of a restraint of trade clause.
2) Under Lithuanian law is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?
It is possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement. It is, however, valid only if and to the extent that:
- it is made in writing;
- the restraint of trade clause does not exceed two years after the termination of the agency; and
- it applies to a territory, or category of goods or services, or a group of customers entrusted to the agent during the agency agreement.
If there exists a restraint of trade clause, then the agent has a right to be compensated for the entire period agreed under the restraint of trade clause (subject to the two year maximum). The amount of compensation must be fixed by the parties in the restraint of trade clause.
If the agency is terminated as a result of the agent’s actions then the agent’s right to compensation under the restraint of trade clause is removed.
A principal’s right to rely on the restraint of trade clause is removed where:
- the principal terminates the contract without the agent’s consent and breaches the terms of notice stipulated in the agency agreement, or under the law/legislation;
- the agent terminates the agency agreement as a result of breaches of the agency agreement by the principal, and the agent informs the principal of this; or
- the agency agreement is terminated by a court judgment for reasons for which the principal is held liable.
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