The confirmatory deposit (Article 1385 of the Civil Code) is the sum of money that one party delivers to the other, at the time of the contract of sale, and it works as a “deposit” to guarantee the fulfilment of contractual obligations.

Refund of the confirmatory deposit 

If the party who paid the deposit becomes in default, the other party can withdraw from the contract and withhold the deposit as compensation for the damage, without needing to prove the amount of damage suffered.

However, if the defaulting party is the one who received the deposit, the other party may withdraw from the contract and demand payment of double the deposit.

When both parties are in compliance with the obligations arising from the contract, the deposit will be returned.

Alternatively, and this is the most common option, the same will be charged to the service, for example by deducting it from the price of a sale

The form of the deposit

Regarding the form of the down payment agreement, the consecration in particular formulas is not required, nor a specific signing of the parties, if it is included in the general clauses of the contract, unless it is not vexatious.

However, it is necessary that the agreement between the parties be clearly expressed: in fact, in order for the agreement relating to the payment of a sum of money to be qualified as a confirmatory deposit, an express formulation is required, otherwise taking the form of a mere advance payment for the property.

Preliminary contract of sale

As a rule, the agreement by which the giving of a sum of money is qualified as a confirmatory deposit is included in the preliminary sale.

In this contract, an article with the following content must be inserted:

“Tizio delivers the sum of euro ____________ as a confirmation deposit to Caio, who receives it and issues a receipt.

As a result, in the event of Tizio’s default, Caio has the right to withhold the aforementioned sum or to return it and act pursuant to art. 1453 of the Italian Civil Code; in case of non-fulfillment by Caio, he will have to repay Tizio double the aforementioned sum. While, if both parties are compliant, the sum paid as a deposit will be attributed to the price of the sale.

Confirmation deposit received

For greater scruple and in order to avoid any problems of any nature later on, whoever pays the confirmatory deposit can request the release of a specific receipt, with which the other party certifies that he has actually received the sum that has been paid to him. 

In the event of non-fulfillment of the contractual obligation, the code provision distinguishes, on the basis of the person who defaults, two hypotheses: if the non-fulfillment is attributable to the party who paid the deposit, the other may decide to withdraw from the contract and to keep the deposit paid; if, on the other hand, the non-fulfillment is attributable to the party who received the deposit, the other party always has the right to withdraw from the contract and to request double the deposit paid.

Confirmation deposit and right of withdrawal 

In both cases, the non-defaulting party can still decide not to exercise the right of withdrawal, opting instead for the execution or termination of the contract, without prejudice, however, to the right to compensation for damage according to the general rules provided for by the art. 1223 of the Italian Civil Code.

Confirmation deposit and penitential deposit

There is a fundamental difference between the confirmation deposit and the “penitential deposit” governed by art. 1386 of the Italian Civil Code. 

It is sufficient to observe that while the first has the function of self-protection and preventive liquidation of the damage in the event of default by the counterparty, without having to propose a judicial request and not placing limits on the compensable damage, the second constitutes a consideration for the right of withdrawal provided for in favor of one or both contractors and predetermined by them.

Difference between deposit and down payment 

The confirmatory deposit must also be kept separate from the deposit.

The down payment, in fact, is the advance payment of a part of the agreed price for the purchase of a specific asset and does not provide any other guarantee than to testify to the seller the actual will to conclude the contract. Unlike the deposit, the down payment has no compensatory function and, if the contract is not concluded, it must simply be returned, without any right for the seller to retain it or for the buyer to demand double, in the event that the deal fails due to the responsibility of the other party.

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