Reclaiming Your Deposit After the Counterparty Cancels — The buyer transferred a deposit to secure goods and a production slot, then the counterparty announced it was cancelling the contract because it found a cheaper source. The buyer wants all the money back, while the counterparty invokes the very deposit arrangement to keep it. The crux is whether the money is legally a deposit, an advance payment, or a security margin.
Legal basis and the nature of the issue
Article 328 of the Civil Code 91/2015/QH13 defines a deposit as one party handing the other a sum of money or valuable property to secure the conclusion or performance of a contract; if the depositor refuses to conclude or perform, the deposit belongs to the recipient, whereas if the recipient refuses, it must return the deposit plus an amount equal to the deposit’s value, unless otherwise agreed. If the money is merely an advance payment with no deposit agreement, the deposit-forfeiture regime does not apply and repayment follows the restitution principles on contract cancellation plus damages under Articles 427 and 360 of the Civil Code 91/2015/QH13.
Scope of this article and its distinguishing point
This article covers only deposit money where the deposit recipient is the party cancelling, unlike goods-debt articles where the repayment duty arises from delivered value. The focus is distinguishing deposit, advance payment and margin, and the evidence trap where the deposit agreement exists only in messages and transfer slips.
Answering each client question
How do you tell whether the transferred money is a deposit or an advance?
Look at the documents: a contract, annex or receipt stating the word deposit with the purpose of securing conclusion or performance makes it a deposit under Article 328 of the Civil Code 91/2015/QH13; a transfer note reading deposit for a specific contract is also strong evidence. If the documents say only first instalment or advance against the contract value with no security element, courts usually treat it as an advance payment — no double forfeiture, only repayment plus proven damages.
What can be claimed when the counterparty cancels unilaterally?
For a true deposit, the depositor claims the deposit back plus an equal amount — twice the deposit in total — unless the agreement sets a different level. Damages beyond the deposit penalty may also be claimed where real loss is proven and the parties did not agree the deposit penalty is exclusive. For a mere advance, the claim is the full amount paid plus interest and actual losses caused by the cancellation, such as costs already sunk into the order.
Where does the recovery procedure start?
Step one is a written demand for repayment within a set deadline, citing Article 328 of the Civil Code 91/2015/QH13 and the contract clause, sent through a channel with proof of receipt. Step two, if the counterparty stays silent or refuses, is suing at court or arbitration under the dispute clause, with a file of the contract, transfer slips, the counterparty’s cancellation notice and a damages computation. The limitation period for the repayment claim runs from the refusal date or the expiry of the demanded repayment deadline.
What if the counterparty says the deposit was spent on production preparation?
Production preparation costs are the counterparty’s own loss arising from its own cancellation decision, not a ground to keep the other side’s deposit. The deposit regime in Article 328 of the Civil Code 91/2015/QH13 does not let the recipient deduct self-incurred costs when it is itself the party refusing performance. To retain any part, the counterparty needs a separate written agreement or proof that the depositor also contributed fault to the cancellation, in which case a court may apportion consequences by fault.
What the business should do next
Practical steps: review all documents to pin down the money’s legal nature before drafting the demand; cite the correct regime in the demand and state the claimed sum as principal deposit, the equal deposit penalty and any additional damages; set a short, clear repayment deadline; if the counterparty shows signs of dissipating assets, consider interim measures when suing; and from now on, state expressly in the contract and the transfer note that the sum is a deposit under Article 328.
This article has been quality-reviewed by the FLAW AI Legal Council