Corporate Counsel Team: Huaicheng lawyers
Author | Huaicheng lawyer Sun Wei
Sun Wei
Liaoning Huaicheng Law Firm
Contract disputes, civil litigation, labor disputes
Anyone who has signed a contract knows a common sense.
The difference between the words "deposit" and "deposit" is very different from the legal effect.
The deposit is an idiomatic term, not a legal concept.
Under normal circumstances, it does not have the function of guarantee, and its legal consequences should be determined in combination with the content of the contract and transaction customs.
The deposit has the nature of guaranteeing the performance of the contract.
According to Article 587 of the Civil Code, if the debtor performs its obligations after the deposit is paid, the deposit shall generally be offset against the price or recovered.
If the party paying the deposit fails to perform the contract, resulting in the failure to achieve the purpose of the contract, it is not entitled to claim the return of the deposit;
If the party receiving the deposit fails to perform the contract, the deposit shall be returned double.
The above rules are referred to as "deposit penalties" and generally apply to breaches in the performance of a contract.
I don't know if you have ever encountered that after the deposit is delivered, if the two parties fail to agree on the terms of the contract, the final contract is not signed.
In this case, can the deposit penalty still apply?
1
Whether the deposit penalty applies
Depend upon?
There is such a case:
In September 2021, Su and Wei reached a consensus through consultation, and Su leased the shop under his name to Wei, and the two parties reached a preliminary oral agreement.
In the same month, Wei paid a deposit of 5,000 yuan to Su.
Subsequently, the two parties did not reach an agreement on the lease term, lease fee, shop decoration cost and other related issues, resulting in the failure to sign a written lease contract.
The two parties communicated many times on the deposit issue, but Su refused to return the deposit to Wei.
Wei asked Su to return the deposit twice, and the two went to court for this.
After the trial, the court held that the evidence provided by Su and Wei could not prove that the other party had malicious negotiation and unreasonably refused the other party to sign the contract, so the deposit penalty was not applicable in this case, and Su should return the deposit of 5,000 yuan collected from Wei.
2
Deposit penalties apply
There are 3 conditions
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In general, the application of the deposit penalty is conditional:
1. The premise for the application of the deposit penalty is that the deposit contract shall be legal and valid, and the deposit has been actually delivered.
2. After paying a deposit, if there is evidence to prove that one party deliberately refused to conclude the contract on the grounds that the negotiation failed on the terms of the contract, the deposit penalty may be applied.
Otherwise, the deposit penalty does not apply.
3. If one party has a legitimate reason due to force majeure, unexpected events or policy adjustments, the deposit penalty shall not apply.
3
Huaicheng lawyer suggested
In view of the deposit issues and risks, combined with cases and practical experience, Huaicheng lawyers remind and suggest that:
1. The deposit penalty may be applied to the "deposit", but the "deposit" is not.
2. When paying the deposit, you can sign an appointment contract, stipulating under what circumstances the deposit can be confiscated, under what circumstances the deposit should be refunded, and under what circumstances the deposit should be doubled.
3. According to the relevant provisions of the judicial interpretation on the sale and purchase of commercial housing, if the contract for the sale and purchase of commercial housing cannot be concluded due to reasons not attributable to both parties, the seller shall return the deposit to the buyer.
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Applicable Law:
Civil Code of the People's Republic of China
Article 587:Where the debtor performs its debts, the deposit shall be offset against the price or recovered. If the party paying the deposit fails to perform its debts or its performance does not conform to the agreement, resulting in the inability to achieve the purpose of the contract, it shall not have the right to request the return of the deposit;
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