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Commentary

53.4 Drafting points—deposit clauses

BOILERPLATE AND COMMERCIAL CLAUSES vol 4(3)
| Commentary

53.4 Drafting points—deposit clauses

| Commentary

53.4 Drafting points—deposit clauses

If a clause allows for an advance payment, the contract drafter may need to consider the following:

  1. (a)

        What is the purpose of the advance payment? Is it a means to show that the buyer of the goods or services is in earnest, or to enable the supplier to pay for materials to be used by it in the performance of the contract (so the payment is in reality a part-payment1)?

  2. (b)

        Will the advance payment be retained by the supplier if there is a default by the buyer? In what circumstances will it be retained?

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