- Supreme Court of Lithuania
LONG-TERM CONTRACTS - CONSTRUCTION CONTRACT - BETWEEN TWO LITHUANIAN PARTIES - REFERENCE TO UNIDROIT PRINCIPLES TO CONFIRM THE SOLUTION ADOPTED UNDER APPLICABLE DOMESTIC LAW (LITHUANIAN LAW).
HARDSHIP - PRESUPPOSES FUNDAMENTAL ALTERATION OF CONTRACTUAL AGREEMENT - ARTICLE 6.204 OF THE LITHUANIAN CIVIL CODE INTERPRETED IN ACCORDANCE WITH ARTICLES 6.2.1, 6.2.2 OF THE UNIDROIT PRINCIPLES
HARDSHIP - INSOLVENCY OF ONE PARTY - ADAPTATION OF CONTRACT JUSTIFIED ONLY IF INSOLVENCY CAUSES FUNDAMENTAL INCREASE OF THE COST OF INSOLVENT PARTY'S PERFORMANCE OR DECREASE IN VALUE OF OTHER PARTY'S COUNTER-PERFORMANCE
Two Lithuanian companies concluded a construction contract in which they agreed that the contractor would not be paid in money but with goods produced by the customer (i.e. plastic windows). When subsequently the contractor became insolvent and terminated its activity, it requested revision of the agreed method of payment and to be paid in money for the work it had already done.
In rejecting the contractor’s claim, the Court pointed out that according to Article 6.2.2 of the UNIDROIT Principles and Article 6.204 of the Lithuanian Civil Code, for there to be hardship there must be a fundamental alteration of the equilibrium of the contract, and that the supervening insolvency of the contractor would not justify a revision of the agreed method of payment as the contractor had not proved that the originally agreed method of payment had fundamentally increased the cost of its performance or diminished the value of the counter-performance.