A deposit is an action taken in many contractual transactions to ensure transparency and the fulfillment of commitments between the parties. When the depositor gives the recipient a sum of money or other valuable assets, it creates trust and responsibility in the conclusion of the contract.
The deposit period is usually clearly stipulated in the contract and can be used to ensure both parties comply with their commitments. After the contract is successfully executed, the deposit will be returned or deducted from other fees. In the event that either party fails to comply with the contract, the deposit can be used to compensate the injured party.
Under what circumstances is the seller obligated to return the security deposit?
Article 328 of the 2015 Civil Code stipulates that, in the event a contract is concluded, if the depositor refuses to conclude or perform the contract, the property used as collateral will belong to the recipient of the deposit. However, if the recipient of the deposit refuses to conclude or perform the contract, they must return to the depositor the entire deposited property and an amount of money corresponding to the value of the deposited property (unless otherwise agreed in the deposit contract).
In cases where the individual involved in the contract has passed away, or the legal entity has terminated the contract, or the contract is invalid due to the illegality of its subject matter, the parties will return the deposit and terminate the contract.
If the party receiving the deposit does not wish to continue with the contract, they can negotiate with the depositor to return the deposit and terminate the contract. However, in this case, the party receiving the deposit may be penalized for returning the deposit.
If both parties do not wish to continue with the contract, they can directly negotiate the return of the deposit and termination of the contract. However, in this case, the party who made the deposit will usually lose it, unless they reach an agreement with the recipient of the deposit regarding its return.
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