Earnest money (extra payment)

An amount paid by a buyer to a seller as a sign of completion of the transaction (a partial payment made to evidence good faith that the buyer will complete the purchase transaction at the time the contract is signed). – Such a payment is required by name from an unknown buyer who wants to have purchased goods picked up and then pay for them when they are taken away. The deposit thus serves as security for the seller that the goods will actually be collected; see the legal definition of the deposit in § 908 ABGB. – The amount of the deposit is usually calculated (especially at auctions of all kinds) as a percentage of the purchase price and is due immediately. – If the buyer withdraws from the contract, the deposit is usually forfeited; in contrast to an advance payment (prepayment), where the amount paid in advance, intended as a partial fulfillment of the contract, is refunded. The loss of the deposit is also called “forfeit money” and “Wandelpön” in the legal literature. – Thus, the forfeit money is to be distinguished from the down payment, which plays a role especially in sales contracts. In case of doubt, the amount of the payment in relation to the total price is the most important factor in determining whether an amount has been paid as a down payment. Amounts that exceed ten percent of the total service and are not expressly designated as a down payment constitute a down payment according to established case law (constant jurisdiction). – In particular, payment that hotels, especially in Austria, require upon acceptance (booking) of a reservation and that is usually forfeited if the registered guest does not arrive on schedule (does not arrive at schedule). – In older documents also said to an allowance, to a payment by courtesy, in varying nuances of meaning. – See Abstandsgeld, Douceur, Einschuss, Ingeld, Kaution, Reuegeld, Rückvergütung, Schmiergeld, Waarborgsgeld.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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