The Doctrine of Laesio Enormis in Lithuanian Contract Law

Abstract

The authors of this paper analyse different approaches to laesio enormis in the modern contract law. The embodiment of laesio enormis - gross disparity - is examined in the context of the whole Lithuanian Civil Code, particularly in relation to general provisions of voidability of legal transactions. The last part of this article is dedicated to practical application of Art. 6.228 of the Civil Code in the case law of the Supreme Court of Lithuania.

It is concluded that the draftsmen of the Civil Code took intermediate approach to the implementation of the doctrine of laesio enormis by transposing the concept of the gross disparity from the UNIDROIT Principles. Most of the times it requires qualified criteria for its application, but occasionally a contract might be avoided on the grounds of pure (simple) lesion if there is no justification for significant disproportion. The analysis of the remedy of the gross disparity showed that it is the only ground for avoidance of a contract by notice that is incorporated into Lithuanian contract law. The other classic vices of consent (fraud, threat and mistake) were not transposed from the UNIDROIT Principles. These grounds are embodied in the book I of the Civil Code. However, the contract (or any other legal transaction) might be nullified by the application of these grounds only if there is a court judgment declaring a contract void on one of these grounds. This peculiar approach exposes the lack of systematic coherency in the Lithuanian Civil Code.

Taking into account the fact that since the enactment of the Civil Code there is no evidence of practical abuse of the gross disparity remedy, the authors of this paper suggest that the legislator should amend the Civil Code by incorporating provisions which would allow to avoid contracts by notice on the basis of threat, fraud and mistake. The authors also revealed that the case law on application of the gross disparity is not particularly consistent and predisposed to change. There were few questionable decisions concerning interpretation and implementation of the gross disparity. However, the Supreme Court of Lithuania over the years has showcased a better understanding of this remedy.