Every business is likely to encounter money or advance payments. Spending money as one of the means of securing the obligations provides additional guarantees or obligations to the parties to the contract. In this way, the borrower is encouraged to properly discharge the obligation, and the creditor receives more guarantees that his claim will be satisfied. The parties that have concluded a money-deposit agreement show each other serious intentions that the obligation assumed will be duly fulfilled.


The amount of money given by one contractor to a second party to prove the existence of a contract and to ensure its fulfillment is considered as an on-call duty.

depositary has three functions

payment - money transfer at the expense of payables

evidential - money transfer to prove the conclusion of the contract

guarantee - money transfer to ensure the fulfillment of the main obligation

The Civil Code stipulates that if a counterparty is liable for a failure to fulfill the contract by the issuing country, the deposit remains the second party, and if the party who receives the deposit is liable for the failure of the contract, it must pay the second party the double amount of the deposit.

Meanwhile, the advance is not directly enshrined in the law, but in the case law it is understood that it also performs a payment function like a buyback, which is included in future contributions, can perform a probative function, but does not perform a guaranteed function, i.e. the party who has paid the advance has the right to demand repayment in all cases of contractual defaults, and the country, after receiving the advance payment, in no circumstances has to repay it twice. However, in the case-law of the cassation court, it is indicated that the parties to the contract can agree that the advance will perform the payment-settlement function and will be credited to the price of the executed contract and that the violations committed by the party discussed in the contract are not returned to the person who paid it - in this case, the advance is a fine.

However, a bankrupt company may, after paying the advisor to the seller, but ceasing to be able to continue the contract for the bankruptcy proceedings instituted against it, may request the repayment of the advance paid, even if the contract provides for the seller not to return it.


So what can you do to avoid such business situations? The most important thing is to properly assess the solvency of your business partner or client during the pre-contractual relationship. This can be seen in the evaluation of information on legal entities' debts and court proceedings, changes in employees, executives, shareholders, reviews in the public space, information about the property to be registered, its restrictions, etc. Such an analysis is a considerable amount of time consuming work, but it can be used to prevent significant losses.