A nonrefundable deposit agreement is a type of contract that a buyer and seller sign about the sale of a particular asset. The type of asset can vary but is usually something that the buyer cannot immediately afford and intends to purchase either on credit or after raising enough cash. Because of the delay, however, the buyer wants assurance that the sale will go through. The solution is a deposit agreement which meets the requirements of both sides.
The non-refundable deposit agreement typically begins with party specifications, which identify both the buyer and the seller. The buyer is identified specifically by name and often with an address for ongoing communication. The seller is usually a particular business or even an agent of that business. This section ensures that the deal offered does not apply to any other buyer and that the deposit will not be passed on to any other business.
Next, the agreement addresses the purchase directly. This identifies the deposit itself, sometimes a percentage of the total price. It also specifies the particular item that the deposit will secure. This is often a particular piece of equipment or furniture, or a certain model of car. The buyer wants to make sure that it is the exact good he wants, not simply any similar good, so model numbers and other key specification information may be included.
Actions of Seller
The seller, in signing the agreement, agrees to accept the deposit and hold the particular item for the buyer, not offering it for sale to any other customer and often removing it from the sales floor. Sellers only agree to hold items for a specific amount of time, such as a few days or potentially a week or two. Sellers rarely agree to hold items for any longer, because there is always the potential to sell it to another buyer than lose money by holding it too long.
Obligations of Buyer
The buyer agrees that the deposit will be kept by the seller even if the buyer is unable to pay for the good and receive it. This way sellers are compensated for the wasted potential when holding the item. Buyers also agree to not hold the seller responsible legally for holding the deposit or selling the item after the waiting period is over. This removes the possibility of a lawsuit.