Down payment

A deposit (formerly deposit, commission, or detention of money ) represents the first installment of at least two installments to be paid the purchase price and is often agreed when signing a sales contract.

Legal bases

Legally, the payment is a partial performance of the debtor, which he generally restricted (§ 266 BGB), because in either case the entire purchase price is payable in a lump sum. Since the debt legal purchase contract also allows different agreements, represents the deposit, the agreement to a partial performance; they may be a sign of concluding the contract ( § 336 para 1 BGB) be, but can not be forfeited as a penalty. It is to serve the evidence and not be about condition or agreed form of contract. The deposit is refunded if the purchase contract is canceled ( § 337 para 2 BGB).

In the cases of daily life (verbally completed ) purchase contract will be designed so that the seller the buyer's down payment allowed, but done the assignment and transfer of the purchased item only when full payment. Then the deposit is to give the buyer a reservation right to the purchased item with the result that the seller will sell the goods otherwise. Here is the down payment the buyer to lender with the typical credit risk up to the risk of insolvency. In this case, the payment a loan from the buyer to the seller is ( § 488 BGB). If, however, already in payment for transfer of ownership and delivery of the goods, the Seller shall pay in advance and granted a credit sale.

In order to protect the buyer against the risk of non-delivery, which could have the effect that a loss of the deposit threatens are often offered by the seller of a bank deposit guarantees in favor of the buyer in commercial transactions. In international business, usually the English term downpayment is used instead of the German word deposit, the deposit guarantee is, according to bond prepayment or advance payment bond.

Down payment

A distinction of the deposit is the down payment. A payment in several installments purchase price eg contracts for work regularly makes a down payment is because it is an anticipated part fulfillment because already made, but not yet charged works are preceded it. So 632a BGB is assumed that these payments offset by an increase in value that is caused by construction services provided for instance in §. The down payment is in return for services provided by the other party and not advance on future maturing services such as the transfer of ownership of a purchased object, so that the rules on loans do not apply. In successive delivery contracts part performance is in fact contract and therefore owed.

Payments are subject to VAT in Germany. On the down payment, the sales tax is always be reported separately and subtracted during the final invoice again.