{"id":547,"date":"2024-03-05T09:27:35","date_gmt":"2024-03-05T08:27:35","guid":{"rendered":"https:\/\/vraneseviclaw.com\/?p=547"},"modified":"2024-03-25T13:10:50","modified_gmt":"2024-03-25T12:10:50","slug":"all-about-deposits","status":"publish","type":"post","link":"https:\/\/vraneseviclaw.com\/en\/all-about-deposits\/","title":{"rendered":"All about deposits"},"content":{"rendered":"<p><span data-contrast=\"none\">In establishing a contractual relationship, both parties share the common objective of fulfilling their respective contractual obligations. To ensure the fulfillment of these obligations, legal provisions exist for securing contractual performance, which can take either personal or property-related forms. In this discourse, we shall elucidate one of the most prevalent methods for securing contracts &#8211; the deposit.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335557856&quot;:16777215,&quot;335559738&quot;:0}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">In practice, there exists significant ambiguity surrounding the concept of a deposit, often leading to confusion with advance payments or misconceptions about rescission fees, as evidenced by numerous examples from legal proceedings.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<h2><span class=\"TextRun SCXW132405155 BCX8\" lang=\"SR-LATN-RS\" xml:lang=\"SR-LATN-RS\" data-contrast=\"none\"><span class=\"NormalTextRun SpellingErrorV2Themed SCXW132405155 BCX8\">What<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW132405155 BCX8\">Constitutes<\/span><span class=\"NormalTextRun SCXW132405155 BCX8\"> a <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW132405155 BCX8\">Deposit<\/span><span class=\"NormalTextRun SCXW132405155 BCX8\">?<\/span><\/span><span class=\"EOP SCXW132405155 BCX8\" data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"none\">As stipulated in our Law on Obligations, if one party, at the time of contract conclusion, provides the other with a specific sum of money or a defined quantity of other exchangeable property items as an indication of contract finalization, the contract is deemed concluded upon the deposit, unless otherwise agreed.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">From this provision, the fundamental characteristic of a deposit is derived &#8211; it serves as a means of securing contractual obligations while also signifying the conclusion of the contract due to its exchange at contract finalization. A deposit is established through a deposit contract specifying that money or other exchangeable property items constitute the deposit. Therefore, a deposit cannot be presumed but must be explicitly agreed upon; otherwise, it would be considered an advance payment.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<h3><span class=\"TextRun SCXW228491615 BCX8\" lang=\"SR-LATN-RS\" xml:lang=\"SR-LATN-RS\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW228491615 BCX8\">Legal Nature <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW228491615 BCX8\">of<\/span><span class=\"NormalTextRun SCXW228491615 BCX8\"> a <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW228491615 BCX8\">Deposit<\/span><\/span><span class=\"EOP SCXW228491615 BCX8\" data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"none\">A deposit is considered an ancillary legal transaction that mirrors the fate of the main contract. As an accessory and ancillary agreement, a deposit cannot exist independently of the main contract. Hence, the absence of a main contract precludes the existence of a deposit contract at the contract conclusion moment. The provisions governing deposits under our law pertain not to the return of received amounts but rather to unjust enrichment.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">For instance, in the case G\u017e. 1077\/11, the Higher Court in Pan\u010devo declared the ancillary deposit contract null due to the non-execution of the main contract, obligating the defendant to reimburse the received funds as part of the purchase price due to lacking legal grounds.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Similarly, by the decision of the Supreme Court Rev. 108\/2005, it was affirmed that a real estate sales contract lacking certification by the competent authority does not hold legal force, thereby invalidating the deposit made during the conclusion of the uncertified pre-contract as a means of securing contractual performance.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Regarding the execution of the main contract, the deposit must either be returned or credited towards obligation fulfillment. In the absence of contrary agreements, the party making the deposit cannot unilaterally withdraw from the contract, leaving the deposit with the counterparty, nor can the counterparty do so by returning double the deposit amount.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<h3><span class=\"TextRun SCXW90061995 BCX8\" lang=\"SR-LATN-RS\" xml:lang=\"SR-LATN-RS\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW90061995 BCX8\">Basic <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">Principles<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">of<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">the<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">Deposit<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">Concept<\/span><span class=\"NormalTextRun SCXW90061995 BCX8\"> in <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">Case<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">of<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW90061995 BCX8\">Non-Performance<\/span><\/span><span class=\"EOP SCXW90061995 BCX8\" data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"none\">Article 80 of the Law on Obligations addresses this issue. Should a breach occur due to the depositor&#8217;s fault, the aggrieved party may opt for either contract enforcement, if feasible, or seek damages, with the deposit being deducted from the compensation, refunded, or retained as already received.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">The Supreme Court, in the case Rev. No. 1086\/02, clarified that a deposit signifies contract finalization, requiring written formality for construction contracts. Consequently, the deposit must be agreed upon in writing; thus, the lower courts rightly dismissed the plaintiff&#8217;s claim for deposit return, given their responsibility for contract non-performance.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Conversely, if the party receiving the deposit is accountable for contract non-performance, the other party may also pursue contract enforcement, damages, deposit refund, or demand double the deposit amount.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">It is essential to note that opting for contract enforcement entitles the aggrieved party to compensation for damages due to the counterparty&#8217;s delay.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<h3><span class=\"TextRun SCXW199627846 BCX8\" lang=\"SR-LATN-RS\" xml:lang=\"SR-LATN-RS\" data-contrast=\"none\"><span class=\"NormalTextRun SpellingErrorV2Themed SCXW199627846 BCX8\">Partial<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW199627846 BCX8\">Fulfillment<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW199627846 BCX8\">of<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW199627846 BCX8\">Contractual<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW199627846 BCX8\">Obligations<\/span><\/span><span class=\"EOP SCXW199627846 BCX8\" data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"none\">In instances of partial fulfillment, the deposit must not be retained by the recipient but can be pursued for the remaining obligation fulfillment and compensation for any delay or damages resulting from incomplete performance. In either scenario, the deposit shall contribute to the overall damages.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Should the creditor terminate the contract and return partial performance, they retain the rights accorded to them when a contract remains unfulfilled due to the counterparty&#8217;s fault, as previously discussed.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<h2><span class=\"TextRun SCXW201237471 BCX8\" lang=\"SR-LATN-RS\" xml:lang=\"SR-LATN-RS\" data-contrast=\"none\"><span class=\"NormalTextRun SpellingErrorV2Themed SCXW201237471 BCX8\">Distinction<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW201237471 BCX8\">Between<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW201237471 BCX8\">Deposit<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW201237471 BCX8\">and<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW201237471 BCX8\">Advance<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW201237471 BCX8\">Payment<\/span><\/span><span class=\"EOP SCXW201237471 BCX8\" data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"none\">Differentiating between a deposit and an advance payment often poses challenges in practice. A common misconception associates deposits with contract finalization indicators. However, the deposit&#8217;s purpose lies in securing contract performance, signifying a concluded contract. Failure to conclude the contract renders such payments advances rather than deposits.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Advance payments, like deposits, involve transferring a sum of money or property items before or at contract conclusion, serving as partial obligation fulfillment. Failure to categorize a payment as a deposit precludes the application of legally prescribed deposit rules regarding non-performance.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">For example, in the case P\u017e 163\/19, the Commercial Court in Belgrade ruled on the plaintiff&#8217;s advance payment for an oral vehicle sale contract, ordering the defendant&#8217;s refund due to non-performance. The court rejected the appellant&#8217;s deposit claim, emphasizing the factual advance payment nature.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<h2><span class=\"TextRun SCXW213199433 BCX8\" lang=\"SR-LATN-RS\" xml:lang=\"SR-LATN-RS\" data-contrast=\"none\"><span class=\"NormalTextRun SpellingErrorV2Themed SCXW213199433 BCX8\">Distinguishing<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW213199433 BCX8\">Deposit<\/span><span class=\"NormalTextRun SCXW213199433 BCX8\"> from <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW213199433 BCX8\">Rescission<\/span> <span class=\"NormalTextRun SpellingErrorV2Themed SCXW213199433 BCX8\">Fee<\/span><\/span><span class=\"EOP SCXW213199433 BCX8\" data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"none\">As initially mentioned, the law stipulates that, absent contrary agreements, the depositing party cannot unilaterally withdraw from the contract, nor can the counterparty do so by returning double the deposit.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Provisions concerning rescission fees accompany deposit regulations, allowing parties to repudiate the contract by serving a notice of rescission fee. Upon receipt of such notice, the counterparty forfeits the right to demand contract performance. The rescission fee is declared concurrently with the contract performance repudiation. This right ceases upon the commencement of contractual obligations fulfillment.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Therefore, while a deposit and a rescission fee are distinct legal constructs, they may be contractually intertwined. If a deposit includes a withdrawal clause, the deposit effectively serves as a rescissionfee. Withdrawal by the depositing party results in deposit forfeiture, while withdrawal by the recipient necessitates double deposit repayment.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">The decision of the Supreme Court of Cassation in case Prev. 252\/17 affirmed that when a withdrawal right is associated with a deposit, such right equitably belongs to both contracting parties, with withdrawal consequences equally distributed. Consequently, should the deposit-receiving party rescind the contract, merely returning the deposit does not impact their assets, as they are reimbursing what they received from the other party. Only double the deposit amount would reduce their assets by the agreed withdrawal deposit sum.<\/span><span data-ccp-props=\"{&quot;134233118&quot;:false,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335557856&quot;:16777215,&quot;335559739&quot;:0}\">\u00a0<\/span><\/p>\n<p><span class=\"TextRun SCXW142072749 BCX8\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW142072749 BCX8\">Please note that this piece does not offer legal advice but rather <\/span><span class=\"NormalTextRun SCXW142072749 BCX8\">represents<\/span><span class=\"NormalTextRun SCXW142072749 BCX8\"> the author\u2019s standpoint.<\/span><\/span><span class=\"TextRun SCXW142072749 BCX8\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW142072749 BCX8\">\u00a0<\/span><\/span> <span class=\"EOP SCXW142072749 BCX8\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335557856&quot;:16777215,&quot;335559738&quot;:300,&quot;335559739&quot;:300,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In establishing a contractual relationship, both parties share the common objective of fulfilling their respective contractual obligations. To ensure the fulfillment of these obligations, legal provisions exist for securing contractual performance, which can take either personal or property-related forms. In this discourse, we shall elucidate one of the most prevalent<\/p>\n","protected":false},"author":2,"featured_media":545,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[231,142,130,131,230,232],"class_list":["post-547","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-advance-payment","tag-contract","tag-contract-law","tag-contracts","tag-deposit","tag-rescission-fee"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>All about deposits - Law firm Vranesevic Grbic Belgrade<\/title>\n<meta name=\"description\" content=\"Advokatska kancelarija Vrane\u0161evi\u0107 Grbi\u0107 Beograd -pravne usluge iz: krivi\u010dnog, imigracionog, ugovornog, IT, korporativnog i privrednog prava.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/vraneseviclaw.com\/en\/all-about-deposits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"All about deposits - 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