Advance payment, deposit, and earnest money: what to keep in mind when drafting a contract
Events
Maxim Poturaev, Head of Projects at Avelan Law Firm, has answered questions from the online business journal “Secret of the Firm” about the legal intricacies of advance payment, deposit, and earnest money in the contractual relationship between “customer-contractor”.
Problems with the advance payment of goods or services are the cornerstone of most contracts and obligations for both legal entities and individuals.
Maxim Poturaev immediately notes that “different types of services are regulated by separate chapters of the Civil Code — storage, transportation, transport expedition contract, commission, agency services, trust management, etc.”
According to Mr. Poturaev, advance payment, deposit, and earnest money are different words that describe the way of protecting the party providing the service/selling the goods in order to ensure that the consumer/buyer is interested in the transaction, thereby providing financial stability for the continuation of work.
For example, Mr. Poturaev advises always having a written contract or offer that allows the conditions of the transaction to be recorded and reduce risks for all parties.
The full article is available only in Russian language at the link.
