Category: Contract law

In Lithuania, it is common to sue used car dealers who have sold cars with hidden defects. However, sellers of used agricultural equipment receive significantly fewer complaints from farmers, even though such equipment is also prone to failure. Mantas Baigys, a lawyer at the AVOCAD law firm, explains the legal and practical factors that determine this difference.

According to him, farmers often encounter dishonest sellers, but few seek justice. "Agricultural equipment is often sold with hidden defects, but buyers do not take any action because they believe that they are buying used equipment and must assume all the risks associated with its defects," notes the lawyer.

The laws in force in Lithuania establish a general rule – the seller has a duty to guarantee to the buyer that the goods comply with the terms of the contract and that, at the time of conclusion of the contract, there are no hidden defects in the goods that would render them unfit for the purpose for which the buyer intended to use them, or which would reduce the usefulness of the item to such an extent that the buyer, had they been aware of these defects, would not have purchased the item at all or would not have paid as much for it.

According to the lawyer, the seller, having information about the condition or characteristics of the item being sold that is relevant to the conclusion of the contract, and performing the obligation to ensure the quality of the item, acting in good faith, must disclose this information to the buyer, regardless of whether the buyer requests such information. Failure to provide this information to the buyer shall be considered dishonesty on the part of the seller," emphasizes Mantas Baigys.

Therefore, agricultural machinery, like cars, is subject to the same legal regulations, and farmers have the same rights to defend their interests if agricultural machinery with hidden defects has been purchased and cannot be used for its intended purpose.

How long do I have to make a claim to the seller?

When the warranty period or suitability for use of an item is not specified, the buyer may submit claims regarding defects in the item within a reasonable period of time, but no later than two years from the date of transfer of the item, unless a longer period is provided for by law or contract. This position is also upheld in the practice of the Supreme Court of Lithuania.

What can you demand from the seller?

The farmer may demand that the seller: 1) remedy the defects in the item free of charge (repair the item); 2) to replace the item of inadequate quality with an item of adequate quality free of charge; 3) to reduce the price accordingly; 4) the buyer also has the right to unilaterally terminate the contract and demand a refund of the price paid.

Lawyer Mantas Baigys also notes that in each case, it is necessary to first assess the causes of the defect, the cost of repairing it, and other circumstances, and only then decide which method of legal redress is the most effective and fairest.

What does a farmer need to prove when purchasing substandard agricultural equipment?

The farmer must prove that the item sold is of inadequate quality, i.e. that it cannot be used for its intended purpose, that it does not meet the quality requirements for items of this type, and that at the time of purchase he was not aware and could not have been aware of the defects in the item sold.

"If you suspect hidden defects, it is advisable to immediately contact service providers or specialists who can assess the cause of the defect and record it in a written document," advises the lawyer.

Meanwhile, the seller may avoid liability if he proves that the defects in the item arose after the transfer of the items to the buyer due to the buyer's violation of the rules for use or storage of the item, due to the fault of third parties or due to force majeure.

Can a farmer recover other costs related to defective agricultural machinery?

Expenses incurred by the buyer—legal expenses, transportation costs, expert fees, etc.—are classified as losses and may be compensated in accordance with the general procedure, provided that all conditions of civil liability are proven.

"The general recommendation is to document all expenses incurred with written evidence (e.g., invoices) so that they can be proven in court in the event of a dispute," says M. Baigys.

Farmers have the same rights and opportunities to defend their violated rights when purchasing poor-quality agricultural machinery, but in many cases they become hostages to the situation when they rely solely on the assurances of the sellers themselves that the legislation does not provide farmers with any means of legal protection, so it is recommended in all cases to consult with professionals in this field.

 

With Black Friday approaching and social media advertising at its peak, businesses are increasingly turning to opinion leaders, also known as influencers, to communicate. Such campaigns generate a lot of attention and sales, but they also carry risks - especially when content is created quickly, sometimes without all the details being confirmed. This makes the question of who really owns the content and who is responsible for its accuracy particularly relevant.

Kamilė Žilinskytė, Senior Associate at AVOCAD, stresses that this responsibility is not unambiguous. She says that businesses often make the mistake of believing that only the content creator is responsible for the statements of the opinion-maker, but the legal framework shows that the responsibility is often shared. "Businesses need to be aware that when they work with an opinion-maker they share responsibility for public communication. If there is little or no control over the content, not only consumers but also regulators may have to explain themselves," she says.

The law is clear that advertising on social networks must be identifiable, truthful and not misleading. The Law on Advertising, the Law on Prohibition of Unfair Commercial Practices for Consumers and the guidelines of the State Consumer Rights Protection Authority (SCPRA) stipulate that the content of advertising must not contain unsubstantiated claims, concealment of material facts or artificially induced discounts. The message must be labelled as an advertisement, but labelling alone does not guarantee that the communication will be considered legitimate - businesses need to ensure that the information disseminated by the opinion leader is accurate and substantiated.

According to AVOCAD lawyer, this trend is confirmed by the recent case law of the Supreme Administrative Court of Lithuania, which notes that not only the advertiser but also the advertiser may be held liable for the dissemination of misleading advertisements, provided that three conditions are met: (1) the disseminator knew or should have known that the advertisement used did not comply with the requirements of the law; (2) the disseminator knew or should have known that the requirements of the law were violated as a result of his/her actions in the production or dissemination of the advertisement; (3) the disseminator is unable to provide evidence that would allow the identification of the advertiser (producer). This means that both the brand and the opinion-maker can be seen as jointly liable entities, and it is not enough for a business to formally state that certain information was an "influencer's interpretation".

The question is whether a business must review every social media post and story. According to Kamilė Žilinskytė, the law does not directly impose such an obligation, but it is up to the business to ensure content control mechanisms. "Businesses are not obliged to check every post to the minute, but there must be a clearly agreed procedure: what can be posted, what information must be checked, what phrases cannot be used. If everything is left to 'free creation', the responsibility often falls on the shoulders of the business", she stresses. This is especially true during Black Friday, when campaigns are intense, discounts change several times a day and mistakes can lead to both financial and reputational losses.

An opinion-maker can be considered a brand spokesperson even if he or she does not have official status. It is sufficient that he or she uses the brand's visual style, speaks in an "us" form, refers to information provided by the brand, or communicates in accordance with the brand's clearly defined instructions. In this case, the content he or she produces is seen as part of the brand's communication and therefore becomes a shared responsibility.

To defend yourself in a dispute, documentation is key. Contracts, briefs, content guidelines, a history of approved records and written communications about discounts, codes, stock or product features are key evidence that the business gave the right instructions. If the inaccurate information is due to carelessness, error or self-interpretation on the part of the opinion-former, it is these documents that can help the business to prove it.

In preparation for the intense Black Friday sales, it is important for businesses to develop a clear process for controlling content, to address all aspects of communication in contracts and to monitor the reputation of the opinion leader. Each statement, visual or discount reflects not only their creativity but also the values and responsibilities of the business itself.

"Every word in the recording is a communication on your behalf. Therefore, the content must not only be attractive, but also legally safe," stresses AVOCAD Senior Associate Kamilė Žilinskytė.

When the responsible insurer delays inspecting the property and assessing the damage after the accident has been reported, the victim is left in a quandary - what to do: wait or act? According to Julius Sakalauskas, attorney at law and insurance law expert at AVOCAD, when the responsible insurer fails to make the necessary efforts to determine the consequences of the insured event and the amount of the insurance claim after the notification of the accident, and fails to inspect the damaged property within 3 working days of the notification of the injured party, and calculates the insurance claim at an unreasonable amount, the injured party has the right to turn to a property appraiser, and the insurer is obliged to compensate for the costs of the injured party.

The insurer delayed and underestimated the damage

The lawyer gives the example of a case in which it was established that the plaintiff's Volvo S60 had been hit by a BMW driven by a drunken driver in a yard. The accident was recorded by the police and the damage had to be compensated by the insurance company with which the perpetrator's civil liability was insured.

The claimant submitted the accident report and all documents in its possession, including photos of the damage to the car, via the insurer's self-service system. However, although the responsible insurer had doubts as to the extent of the damage to the applicant's car, it failed to inspect the damaged car within 3 working days of receiving the applicant's written notification of the accident and provided a damage estimate which did not reflect the applicant's actual loss at all.

Disagreeing with the insurer's calculation of the amount of damage, the claimant engaged an independent valuer of movable property, who found that the actual replacement value of the car was much higher. Although the insurer recalculated the damage and paid higher amounts after receiving the appraiser's estimates, the insurer still refused to reimburse the costs incurred by the claimant for the appraisal services.

The claimant had taken the claim to court and the final judgments of the courts had established that the insurer had failed to fulfil its obligation to inspect the damaged property within 3 days, and the claimant was justified in seeking the services of an independent expert and had the right to engage a lawyer as a representative, and the claimant was therefore justified in deciding that the costs of the appraiser and the lawyer were to be compensated.

The court's interpretation: the insurer must act quickly and in good faith. And how does this work in practice?

The Court stressed that according to the Law on Compulsory Motor Third Party Liability Insurance, if the authorised person of the liable insurer has not arrived within 3 working days from the date of receipt of the written notification of the accident by the injured third party and the inspection has not been carried out remotely, the injured third party has the right to obtain the valuation of the property in order to establish the amount of the damage caused to the property. In such a case, the responsible insurer must also reimburse the costs of the property valuation services incurred by the injured third party at market prices.

The right to inspect the damaged property remotely cannot be interpreted in isolation from the insurer's obligation to inspect the property within the time limit laid down in the Law, i.e. within 3 working days. Irrespective of the manner in which the insurer carries out the inspection of the damaged property, whether in person or remotely, it must be carried out within the time limit laid down in the Act, by means of a document of one kind or another (inspection report, technical inspection report, etc.).

In the case of compulsory insurance, insurers are obliged to calculate the costs of necessary repairs to the victim's damaged property on the basis of the average rates for the work and the parts and/or components to be replaced, corresponding to the level of technology in accordance with the recommended time standards, and not on the basis of the lower rates offered by the responsible insurers' partner garages, which may not even have the equipment to carry out the required level of repair, or the discounts that they offer to insurers.

"This decision very clearly draws the line once again: insurers cannot delay investigations of insured events and cannot abuse their position by offering to pay clearly unjustified insurance benefits to victims", notes Julius Sakalauskas.

"A fair assessment of damages should not be a subject for negotiation, but a legal obligation. Insurance companies that ignore this duty risk not only financial losses but also their reputation. If an insurer increases the payout several times only after a claim, it is a sign that the assessment of the damage has not been carried out properly," the lawyer concludes. This is an important legal balance between the businessman, the professional insurer, and the victim, who often does not have the knowledge and time to argue with the insurer over every single bolt in the repair estimate, and ends up throwing up his hands in the end.

This precedent strengthens the position of victims in disputes with insurance companies, as the courts have emphasised not only the formal observance of the time limits for investigating insured events, but also the insurer's professional duty to act diligently, proactively and in good faith. Thus, according to AVOCAD's counsel, if the responsible insurer or its authorised person does not inspect the damaged property within 3 working days of the victim's notification of the accident, the victim has the right to obtain a valuation of the property in order to establish the amount of the damage caused to the property, and in such a case, the responsible insurer is obliged to compensate for the cost of the valuation of the property incurred by the injured third party, which is at the market price.

When buying a used car that is no longer covered by the manufacturer's warranty, buyers are often tempted by additional offers such as "3 months warranty", "5,000 km warranty", "6 months trouble-free". Such promises may sound attractive, but from a legal point of view, what matters is not what the seller promises, but what the seller's real obligations are under the law, and what these additional "commercial" guarantees actually mean. "The seller's obligation to guarantee the quality of a used car is a legal one - it cannot be replaced or limited by short-term warranties. However, in practice we often see that warranties of a few months protect the seller rather than the buyer," says Mantas Baigys, a lawyer at AVOCAD.

Seller's obligation to ensure quality

According to the Civil Code of the Republic of Lithuania, the seller of a used car must guarantee that the item sold is of the right quality, i.e. that it is free from hidden defects of which the buyer has not been informed. Whether or not an additional commercial guarantee has been given. According to an AVOCAD lawyer, if after the purchase it turns out that the car had hidden defects that the buyer was not informed of - for example, defects in the engine or gearbox - the buyer has the right to claim, at his or her own option:

• free of charge to fix defects,
• reduce the purchase price,
• reimbursement of repair costs;
• replacing your car (if possible);
• or, if the defect is material, terminate the contract and refund the money.

"It's important to understand that this obligation is not an additional service - it's a statutory responsibility. The buyer does not lose the right to claim, for example, reimbursement of the costs of repairing hidden defects in the car, just because the 'commercial' warranty of a few months or the mileage specified in it has expired," notes Baigys.

Commercial guarantees - attractive but limited

Used car dealers often offer short-term warranties such as "5,000 km warranty" or "6 months protection". These warranties usually cover only a few parts of the car, and the exceptions sometimes outweigh the real benefits. "A typical case is a buyer purchasing a car with a 5,000 km warranty. A month later, after a little more driving, the car breaks down (e.g. engine failure) and the seller declares that the warranty is no longer valid. However, if the breakdown is caused by a defect that existed at the time of sale, the seller is liable for it, whether or not the commercial warranty was provided," says the lawyer. Such so-called commercial warranties often give the false impression that the buyer's rights also end at the end of a specified period or number of kilometres. "This is not true. The law protects the buyer against hidden defects regardless of the terms of the additional commercial guarantee. It cannot exclude the seller's liability for a defective product," stresses Baigys.

Can I take legal action if the guarantee has expired?

According to the lawyer, this is one of the most frequent questions from buyers. "Yes, you can," the lawyer makes clear.If the defect is due to a cause that existed at the time of sale and was not brought to the buyer's attention, the buyer can go to court and claim, for example, the cost of repairs, even if the warranty has technically expired or the "warranty" mileage is exceeded.

In deciding on the quality of the sold item, the case law of the Supreme Court of Lithuania has noted that the buyer must prove that the sold item is of inadequate quality, i.e. that it cannot be used for its intended purpose, that it does not meet the quality requirements for items of this kind, and that at the time of the purchase the buyer did not know and could not have been aware of the defects in the sold item. However, it is for the seller to prove that the defects in the goods sold arose after the conclusion of the contract of sale or through the fault of the buyer, that those defects are not attributable to causes which arose before the sale of the goods, that the buyer, as an average and prudent buyer, should have been aware of the possible defects in the goods sold, and so on, that is to say, that those defects reduce the seller's responsibility for the quality of the goods sold.

"The seller is not liable because the warranty has or has not expired, but because he sold a poor quality car. This is a matter of law, not a matter of contract," emphasises Mr Baigys.

When does a guarantee really make sense?

Additional guarantees can only be useful if they complement, not replace, the buyer's rights under the law. For example, if they provide real benefits - faster service or a wider service network, or remedying defects in the car that are not related to hidden defects - they have real value. But when a formal commercial guarantee becomes a way of limiting the seller's liability for the quality of the item, it loses its meaning.

"Short-term guarantees often look attractive, but their aim is not to guarantee quality but to create an illusion of security. A short warranty or a few thousand "warranty" kilometres does not change anything - if the car was sold with a defect, the buyer has the right to claim, for example, reimbursement of the costs, whether or not there was an additional commercial warranty," says Mr Baigys.

Finally, one key piece of advice - in all cases, assess what your legal rights are and then assess whether, for example, the seller's refusal to repair hidden defects in the car, e.g. under the guise of a commercial warranty, is actually in line with the legal framework.

 

 

Owners of multi-apartment buildings exercising their right of shared ownership and having a legitimate need to use a parking space in the yard, even if it belongs to another owner, can claim the use of the parking space and the compensation to be paid. This was stated by the Supreme Court of Lithuania in a ruling issued on 6 May 2025.

Often, when developers are developing apartment or townhouse projects on their own land, there are cases where the spaces used to serve the main facilities, such as parking lots or access roads, are not allocated proportionally to the residents when the apartments or houses are sold. According to Eimantas Čepas, an attorney at law at AVOCAD, this decision of the Court of Cassation is an important signal for both residents and property developers. "This case becomes a precedent for a clearer definition of the legitimate grounds for the use of infrastructure belonging to another entity, especially when it comes to long-term use and public interest," the lawyer notes.

Who has the right to use the yard?

The circumstances of the case before the Supreme Court revealed that the parking lot adjacent to the apartment building is owned by a private legal entity, UAB, but has been used for many years by the residents of the apartment building, as the detailed planning documents, in implementing the requirement to provide a certain number of parking spaces, envisaged that it would serve the main building, an apartment building. The UAB claimed that the residents had illegally occupied their territory and demanded that they stop using it.

However, the Supreme Court noted that in such situations it is important to assess the reasons for the residents' use of the parking lot, whether it is necessary for the proper operation of the apartment building, and whether there is a legal basis for declaring the parking lot to be an appurtenance of the apartment building.

Proportionality and fairness are key

The Court clarified that the mere fact that a parking lot is not a common facility does not automatically mean that the residents are not entitled to its use.

"The use by residents of a parking lot belonging to another legal person may be justified on the basis of the principles of justice, reasonableness and fairness, where such use is necessary for the functioning of the apartment building and the owner is compensated for the damage," the ruling states on .

The Court stressed that it is necessary to assess all the circumstances - whether the site is actually needed for the residents' needs, whether the residents were willing to agree on the compensation, and whether the compensation is reasonable.

According to lawyer Eimantas Čeps, in situations where the owner of the land or building agrees to the use and the parties agree on reasonable compensation, the use arrangement is considered legal and reasonable.

In his view, this ruling of the Supreme Court of Lithuania may have significant consequences for the residents of cities throughout Lithuania, especially in densely urbanised areas where infrastructure development, ownership and actual use of land or buildings often intersect. Despite the fact that the land or structures serving the main buildings sometimes remain outside the common ownership of the residents after the real estate projects are realised, the actual use or purpose of such land or structures may provide a legal basis for declaring them to be subordinate and for deciding their legal status and fate accordingly.

"The Supreme Court of Lithuania recognises in this decision the legal significance of such a factual practice if it complies with the principles of reasonableness, fairness and proportionality, and promotes constructive solutions between communities and owners of private land or buildings," says the lawyer.

This decision sends a clear message: urban infrastructure and land use must be addressed through dialogue, consensus and fair compensation. Residents, developers and municipalities alike are encouraged to strike a balance between property rights and the public interest, and the Supreme Court's jurisprudence provides a valuable basis for finding lasting solutions in an urbanised environment.

"The principle of justice should not be limited to cadastral maps, but should also reflect the reality of people's lives," notes AVOCAD's lawyer.