The contract under the law should be understood as the agreement of two or more persons in order to create, change or stop civil legal relations, when one or several persons undertake to make certain actions (or to refrain from certain actions) in relation to other person or persons, and the last get the right of the requirement.
The parties can’t change, limit or eliminate with the agreement imperative rules of law.
Imperative setting means, that the subject of law itself can’t choose option of other behavior, and has to behave as specified in imperative rule of law (the resolution of the Supreme Court of Lithuania in a civil case No. 3K-3-905/2000). Setting of circumstances, significant for an explanation of the contract, allows us to define specifically the legal obligation of each party on the basis of the reached agreement.
Rules of explanation of contracts are regulated by Civil Code of the Republic of Lithuania 6.193 article.
The general rule, that for explanation of the contract not only the text of the contract is important, but also the actual circumstances, related to conclusion of the contract, performance and other actions of the parties.
On February 10, 2009 the Supreme Court of Lithuania by the resolution in a civil case No. 3K-3-60/2009, kat. 42.8, explained, that:
According to these rules contracts have to be explained honestly – terms of the contract have to be explained so, that the result of an explanation wouldn’t mean dishonesty in relation to one of the parties. Firstly, true intentions of the parties have to be investigated, all terms of the contract have to be explained, taking into account relations between them, essence of the contract and the purpose, circumstances of the conclusion, negotiations of the parties because of the conclusion of the contract, behavior of the parties after the conclusion of the contract. At an explanation of the contract it is necessary to consider also usual conditions though they also aren’t specified in the contract.
In all cases the contract has to be interpreted in favor of consumers and the party, which signed the contract in the way of accession.
By contract of insurance the insurer undertakes to pay for the insurance fee, set in the contract, to the insurer or the third party, in favor of whom the contract was signed, in the law or in the contract of insurance the set insurance payment, calculated in the order, set in the law or in the contract of insurance, if there is an insured event, set in the law or in the contract of insurance.
Probably, all of us know, how lovely and pleasantly the insurer or his representatives speak and how much they promise before signing of the contract of insurance, however in real life it occurs or can occur like this, if there is an insured event, the same conditions will be interpreted and explained in a different way, and the person, who “put in” the contract in general will be eliminated from the solution of any arisen questions and will submit this case for administration to the “responsible” person. Therefore the resolution of the Supreme Court of Lithuania 2003, December 1 is very important (The Civil case No. 3K-3-1150/2003) in which it was explained, that:
When the respondent (insurer) or his representative explains favourably for the claimant (insurer) an insurance condition, however, if there is an insured event, that condition explains differently, in the favorable way for him, it has to be estimated as dishonest insurance in relation to the insurer as weaker party of the contract.
Explaining terms of the contract of insurance, it is necessary to be guided by the general principles of the right and the term of the contract, approved in the Civil Code, and to explain conditions of contract in favor of the consumer (the resolution of board of courts of the Supreme Court of Lithuania of department of Civil cases on June 24, 2002, adopted in a civil case No. 3K-3-911/2002, the resolution on April 5, 2004, adopted in a civil case No. 3K-250/2004); besides, terms of the contract have to be explained in this way, when the result of explanation wouldn’t mean dishonesty in relation to one of the parties (the resolution of board of courts of the Supreme Court of Lithuania of department of Civil cases on September 8, 2004, adopted in a civil case No. 3K-3-424/2004; (the resolution on September 19, 2005, adopted in a civil case No. 3K-3-406/2005; the resolution on May 10, 2007, adopted in a civil case No. 3K-3-203/2007).