Will I lose my deposit if I back out of a contract?
It depends whether you paid a deposit (zadatek) or an advance (zaliczka). They're two different things. A deposit (art. 394 of the Civil Code) has a securing function: if you don't perform the contract, the other side can withdraw from it and keep the deposit; if the party who received the deposit doesn't perform, you can claim double. An advance, by contrast, is an ordinary payment towards the price — on withdrawal it's refunded and has no "penalty" function. When the contract is performed, both the deposit and the advance are credited towards the price. What's stated expressly in the contract is key — paying money alone doesn't decide whether it's a deposit or an advance, so name the payment precisely.
📋 The rules
- A deposit (art. 394 CC) has a securing function
- Your non-performance: the other side keeps the deposit
- Non-performance by the deposit-holder: you claim double
- An advance: an ordinary payment, refunded on withdrawal
- On performance, both are credited towards the price
🔓 Exceptions
- Termination by mutual consent or for reasons beyond control: the deposit is refunded
- No statement in the contract: in a dispute the court assesses the payment's nature
- An advance doesn't protect against breaking the contract — it has no penalty function
⚠️ Penalties & fines
The most common problem is an unclear clause: if the contract doesn't call the payment a deposit, in a dispute it may be treated as an advance (refundable). With a deposit you risk losing it when you back out, or paying double when the other side does — that's a real cost. If the contract is terminated by mutual consent or for reasons neither side is responsible for, the deposit should be refunded. To avoid trouble: in the contract expressly state whether you're paying a deposit or an advance and the amount, describe the consequences of backing out, keep a receipt for the payment, and for big transactions (e.g. buying a flat) consider having the contract reviewed by a lawyer or notary.
📎 Official sources
❓ Frequently asked
How does a deposit differ from an advance?
A deposit has a securing function: if you don't perform the contract, the other side keeps the deposit, and if they don't perform, you can claim double. An advance is an ordinary payment towards the price, refunded on withdrawal — it has no penalty function.
Will I lose the deposit if I back out?
Yes, if you're the one who doesn't perform the contract, the other side can withdraw and keep the deposit. But if the contract is terminated by mutual consent or for reasons neither side is responsible for, the deposit should be refunded in the same amount.
Is an advance refunded?
Yes. As a payment towards the price, an advance is refunded on withdrawal from or non-performance of the contract — regardless of which side backed out. Unlike a deposit, an advance doesn't secure performance and doesn't involve forfeiture or paying double.
How do I record a deposit in a contract?
Expressly state in the contract that you're paying a "deposit" (zadatek) of a set amount, and describe the consequences of non-performance. Handing over money alone doesn't settle the payment's nature — without a clear clause it may, in a dispute, be treated as an advance. Keep a receipt too.
What if the contract doesn't specify the payment type?
In a dispute over the payment's nature the court decides, assessing the whole contract and circumstances. Often, absent a clear clause, the payment is treated more favourably for the payer, i.e. as a refundable advance. So, for certainty, name the payment unambiguously in the contract.
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