The confirmatory deposit
The deposit, within the meaning of ‘ art. 1385 of the Civil Code, is the amount of money (or the amount of fungible things) that one part to another delivery, together with the conclusion of a contract, to ensure the execution of the obligations assumed by the latter (eg .: the purchase of a property).
In case of proper fulfillment of the obligations stipulated in the contract, in fact, the deposit must be returned to the party who has paid or “attributed to the benefit due” ( eg: is deducted from the final amount due ), as envisaged in the 1st paragraph of art. 1385 cc
On the contrary, in case d ‘ breach of the obligation by one of the parties, the other party has the right to withdraw from the contract and retain the sum received as a deposit or, if the defaulting party is the one that has receipt, from the latter require double the amount paid (art. 1385, 2nd paragraph, cc).
Form and legal nature of the deposit
According to case law and the majority doctrine, the deposit has real nature, because it assumes, for its effectiveness, that the agreed amount (or the amount of fungible things) is effectively delivered to the other party, together with the completion of the contract.
The minority doctrine, however, believes that it has nature consensual , that is, it is enough to simply agree to set up the legal transaction, without the need for the delivery of the money or other fungible things.
A regardless of the orientation to which it wants to join, so that agreement may be classified as deposit (and not as a mere deposit on the performance to be executed), it is necessary that the parties so mention formally in the main contract, by inserting inside the same a clause specification.
The failure
As has been mentioned at the beginning, if a party fails to fulfill its obligation provided in the main contract, the other party ( provided that it is not also defaulting ) has the right to withdraw from the latter and retain the deposit or – if defaulter is the part that has received it – to exact double.
Article. 1385 Civil Code, providing for the 3rd paragraph of the possibility for the non-defaulting party, to take another ‘s execution of the contract or the resolution of the same, allowing the first to undertake the process extra-judicial or the court .
In the first case, the deposit would have the dual function (as well as to guarantee the future performance of the main contract obligations):
- to allow the non-defaulting party to terminate the contract without the need to apply to the court;
- of ” preventive and lump liquidated damages “, deriving from the recess which the part has been forced because other contracting party of the failure (Cass. n. 6463/2008; Cass. n. 11356/2006; n. 4411/2004 ).
In the second case, instead, the non-defaulting party would forego the deposit for two main reasons:
- interest in the execution of the main contract;
- the right to a compensation for the loss of value greater than the amount of the deposit received (or double that paid).
In the latter case, the non-defaulting party can not forfeit the deposit, but retain it as a guarantee of the compensation claim, or as a deposit on what assigned to it as an integral compensation of damages assessed the outcome of the judgment.
The difference with the penitential deposit and liquidated damages
The deposit is to be distinguished from the point of view of substance, of two similar legal transactions: the penitential deposit and liquidated damages.
The penitential deposit (under Article. 1386 cc) is a sum of money that one party pays the other in consideration of the right to withdraw from the main contract (regardless of any default by one of the parties).
In the penitential deposit, then, one who exercises the right to withdraw from the main contract loses the deposit paid or has an obligation to return twice that received.
The penalty clause (predicted. 1382 cc art), however, consists in the agreement whereby the parties establish that anyone who fails to fulfill its obligations (or fulfills late) is obliged to perform a certain performance (eg .: the payment of a sum of money already established) to the other party.
The function of penalty clause, therefore, is twofold:
- predetermine and limit the compensation to a specified service, unless it was agreed the Recoverability of further damage;
- dispense the non-breaching party from the burden of prove the damage, since the penalty due to the fact of the failure itself, or the delay.
IN SUMMARY
The deposit, in accordance with art. 1385 cc, is a sum of money (or a quantity of fungible things) that one part to another delivery, together with the conclusion of a contract, to ensure the execution of the obligations assumed by the latter. In case of fulfillment of the obligations, the deposit must be returned to the party which has paid or “imputed to the benefit payable” (paragraph 1).
In case d ‘ breach of its obligation by one of the parties, the other party has the right to withdraw from the contract and retain the sum received as a deposit or – if the defaulting party is the one that has received the deposit – require the double of the amount paid (section 2).
According to the majority held that the deposit is a real contract (that presupposes the delivery of the amount of money or fungible things) that the parties must be mentioned formally in the main contract, inserting inside the same one clause specifies.
It is distinguished by:
- The penitential deposit , which consists of a sum of money that one party pays the other in consideration of the right to withdraw from the main contract.
- the penalty clause : the agreement whereby the parties stipulate that those who fail to perform its obligations (or fulfills late) is required to perform a particular service to the other party.
