Keywords: contract agreement, liability for breach of contract, deposit penalty
1. The nature of the deposit and the conditions for its application
1. The nature of the deposit
According to Chapter VI of China's "Guarantee Law" deposit
Article 89 The parties may agree that one party shall pay a deposit to the other party as security for the creditor's rights. After the debtor performs the debt, the deposit shall be offset against the price or recovered. If the party paying the deposit fails to perform the agreed debt, it shall not be entitled to demand the return of the deposit; if the party receiving the deposit fails to perform the agreed debt, it shall return the deposit double.
Article 90 The deposit shall be agreed upon in writing. The parties shall stipulate in the deposit contract the time limit for the payment of the deposit. The deposit contract is effective from the date of actual payment of the deposit.
Article 91 The amount of the deposit shall be agreed upon by the parties, but shall not exceed 20% of the amount of the subject matter of the main contract.
It can be seen that the parties to the deposit contract can use the deposit as security for the performance of the deposit contract or the conclusion of the main contract. If one party breaches the contract and fails to perform the relevant provisions of the deposit contract, the non-breaching party shall have the right to confiscate the deposit paid by the breaching party;
2. Lawyer's interpretation
The guarantee function of the deposit has been well known to most people, but there are some detailed legal common sense, but it is often overlooked. These include:
(1) The deposit shall be agreed in writing and shall be subject to actual delivery, i.e., if the full amount is not paid, the amount actually delivered shall be used as the amount of the deposit.
(2) The deposit penalty applies to the non-breaching party, if both parties have different degrees of breach of contract, or due to reasons not attributable to both parties, resulting in the failure to perform the deposit contract, neither party shall bear the deposit liability, and the party receiving the deposit only needs to return the deposit.
(3) Although there is an agreement on the deposit, if the nature of the payment is not clarified through a written agreement in the actual delivery process, the payment may not be considered as a deposit.
(4) The liability for the deposit penalty is a multiple-choice question - either or not, which cannot be partially supported within the scope of the deposit, which is different from the liquidated damages and liability for breach of contract. In order to improve the certainty of compensation, if there is an agreement on both the deposit penalty and the liquidated damages, you can choose to claim liquidated damages or statutory liability for damages for breach of contract, so as to avoid the legal risk caused by the deposit penalty not being supported.
II. Facts of the case (key factual information has been concealed to protect the privacy of the parties)
On August 10, 2019, the plaintiff and the defendant signed the Real Estate Sale and Purchase Contract, stipulating that the two parties should sign the "online signing contract" on August 14, 2019, and at the same time stipulating:
1. Within three days after signing the Real Estate Sales Contract, the defendant shall obtain the basic information on the property rights of the house, and if the information disclosed by the defendant is consistent with the property rights information obtained, the defendant shall have the right to collect the deposit, and both parties shall perform according to the contract; if the information on the property rights of the house obtained by the defendant is inconsistent with the information disclosed at the time of signing the contract, and there are restrictions such as seizure and illegal construction, resulting in the inability of both parties to continue to perform the contract, the defendant shall return the deposit in full, and the two parties shall not pursue each other's liability for breach of contract.
2. On the day of signing the contract, the plaintiff shall pay the defendant a deposit of 200,000 yuan in full.
3. If the defendant fails to sign a formal online contract with the plaintiff and go through the transfer procedures in accordance with the contract after receiving the deposit, the plaintiff has the right to terminate the contract and require the defendant to return the deposit double.
On the day of signing the contract, the defendant provided the information it obtained on August 9, 2019 showing that there was no restriction on the rights of the property, and the plaintiff subsequently paid the defendant 200,000 yuan in three installments within three days, but did not sign the deposit receipt.
On August 14, 2019, the two parties wanted to sign an online signing contract, but found that there was information on the defendant's house that restricted the seizure, and the two parties formed a dispute.
1. Existing obstacles
(1) The plaintiff paid the deposit in three days, which did not comply with the contract and did not sign the deposit receipt, and lacked the defendant's confirmation of the nature of the deposit;
(2) If the housing information disclosed by the defendant is inconsistent with the actual information, is it sufficient for the defendant to return the deposit without liability according to the agreement?
(3) The parties originally agreed to obtain the property rights information from August 10 to 12, 2019, but the information provided by the defendant was August 9, 2019, was the plaintiff negligent?
In addition, in this case, only the penalty for the deposit was agreed, but no liquidated damages were agreed, so the defendant could only claim double the return of the deposit or require the defendant to bear the liability for breach of contract. If a penalty of 200,000 yuan is claimed for double deposit, the amount of compensation is slightly higher according to the performance of the contract, and the degree of no-fault required is high. If liability for breach of contract is asserted, the burden of proof for the direct economic loss caused by the breach of contract is too high and it may be difficult to fully realize it.
2. Lawyer's opinion
(1) Although the plaintiff paid the deposit within three days, which exceeded the agreed time limit, but the purpose of payment clearly stated that it was a deposit, and the defendant did not raise any objection after receiving it, it was deemed that the nature of the payment was recognized as a deposit;
(2) After the two parties signed the Real Estate Sale and Purchase Contract, the defendant provided the production information in accordance with the contract, and the plaintiff had a trust interest in this;
(3) In this case, it was agreed that "there is information on housing restrictions that cause the contract to be failed to continue to be performed and there is no obligation to return it" is limited to "the defendant truthfully discloses the registration of housing property rights", while in this case, the defendant knew but deliberately failed to truthfully disclose the property restriction information, and took advantage of the information asymmetry to collect the plaintiff's deposit. This act clearly violates the principle of good faith, and no liability for return is not applicable, and the deposit penalty and double return liability shall be borne.
(4) Because the standard of proof is too high to claim the statutory liability for breach of contract, the deposit penalty can only be claimed, and the "yes or no" choice question must be faced.
In addition, for this reason, the lawyer retrieved the property right information of the house, and according to the case number displayed in the seizure information, the basis for the seizure was the civil mediation document, which proved that the defendant had reached a "civil mediation letter" with an outsider before signing the deposit contract, and the defendant was undoubtedly fully aware of the housing restrictions, which was a malicious breach of contract.
3. Court rulings
The court held that the defendant, as the seller, should truthfully inform the basic situation of the subject house in accordance with the law, and since it had reached a debt mediation agreement with an outsider before the sale, and knew that the house was subject to judicial restrictions, it could not deny its own behavior of concealing this fact when signing the contract, so the two parties failed to continue to sign the sales contract, so they all supported the plaintiff's claim