Failure to refund deposits in goods transactions is a common dispute that causes losses for many buyers. Understanding the legal regulations on deposits, as well as the rights and obligations of the parties, is essential to protect legitimate interests.
Failure to refund deposits in goods transactions is a common dispute that causes losses for many buyers. Understanding the legal regulations on deposits, as well as the rights and obligations of the parties, is essential to protect legitimate interests.
I. Current situation of non-refundable goods deposits
In goods trading transactions, particularly those involving high value or special characteristics, deposits are commonly used as a measure to secure contractual performance. However, non-refundable goods deposits remain frequent, causing frustration for buyers and undermining market trust. Common scenarios include:
- Seller’s failure to deliver goods: The seller fails to deliver goods on time, in the agreed quantity or quality, yet refuses to refund the deposit.
- Buyer’s unilateral termination: The buyer unilaterally terminates the contract without legitimate grounds, resulting in loss of the deposit.
- Impossibility of performance due to both parties: Due to objective or subjective factors, both parties are unable to perform contractual obligations, but there is no clear agreement on how the deposit should be handled.
- Unclear contractual terms: Deposit agreements contain ambiguous provisions, making interpretation and enforcement difficult, leading to disputes.
- Seller’s abuse of dominant position: The seller imposes unfavorable conditions or intentionally delays refunding the deposit.
II. How is non-refundable goods deposit understood?
1. When does the seller have the right not to refund the deposit?
Pursuant to Article 328 of the Civil Code 2015, a deposit is a sum of money or property provided by the buyer to secure contract performance. The seller may retain the deposit in the following cases:
- Breach by the buyer: The buyer fails to fulfill payment or receive goods in accordance with the agreement.
- Explicit contractual provision: The deposit agreement clearly stipulates that the deposit is non-refundable if the buyer cancels the transaction without valid reasons.
- Actual damage: The seller proves actual losses caused by the buyer, such as storage costs or lost business opportunities (Clause 2, Article 419 of the Civil Code 2015).
2. What situations lead to non-refundability of the deposit?
Based on Article 328 of the Civil Code 2015 and judicial practice, common situations include:
- Refusal to enter into or perform the contract: After making a deposit, if the depositor (buyer) refuses to conclude or perform the contract (e.g., failing to receive goods or pay on time), the deposit belongs to the receiving party (seller).
- Other agreements: Parties may agree on additional circumstances where the deposit is lost, provided such agreements comply with civil law principles and do not violate prohibitions or social ethics.
It should be noted that determining whether a deposit is non-refundable depends on the specific terms of the deposit agreement, the sale contract (if any), and evidence of breach.
III. Legal regulations on non-refundable goods deposits
1. Must the deposit agreement clearly stipulate non-refundability?
To minimize disputes, deposit agreements should clearly and specifically define circumstances in which the depositor loses the deposit. It is based on voluntary agreement but must not contravene the law.
Article 328 of the Civil Code 2015 provides: “Where a contract is concluded and performed, the deposit shall be returned or deducted from the payment obligation; if the depositor refuses to conclude or perform the contract, the deposit shall belong to the deposit recipient, unless otherwise agreed”.
Thus, parties are free to agree on deposit handling, and such agreement is binding. However, provisions violating prohibitions of law, social ethics, or third-party rights may be declared invalid by the Court (Article 407 of the Civil Code 2015).
2. If the contract is terminated, must the seller retain the deposit?
Whether the deposit is refunded depends on the reason for termination:
- Termination of the contract due to the fault of the buyer: If the buyer breaches the contract and the seller has the right to terminate the contract in accordance with the law or the parties’ agreement, the buyer shall lose the right to recover the deposit according to Article 328 of the Civil Code 2015.
- Termination of the contract due to the fault of the seller: If the seller breaches the contract and the buyer has the right to terminate the contract, the seller must refund the deposit and pay an additional amount equivalent to the value of the deposited property to the buyer in accordance with Article 328 of the Civil Code 2015, unless otherwise agreed by the parties.
- Termination of the contract due to force majeure: If the contract cannot be performed due to force majeure (such as natural disasters, epidemics, etc.), the handling of the deposit shall be subject to the parties’ agreement or governed by legal provisions on liability for breach of obligations under Article 351 of the Civil Code 2015.
3. Can the buyer sue the seller for failing to refund the deposit?
If the seller unlawfully refuses to refund the deposit or breaches contractual commitments, the buyer may initiate civil proceedings at a competent People’s Court to claim refund and damages.
This right is grounded in Article 328 and Article 584 of the Civil Code 2015. Jurisdiction is determined under Articles 35 and 39 of the Civil Procedure Code 2015 (amended 2025).
4. What factors influence the decision on not refunding a goods deposit?
The decision on not refunding a deposit is typically influenced by the following factors:
- Agreement in the deposit contract: It is the most critical factor, as the parties have voluntarily agreed on the circumstances under which the deposit may be lost.
- Breach of contract by the buyer: The severity of the breach and the actual damages caused by such breach will affect whether the seller is entitled to retain the deposit.
- Evidence proving the breach: The seller must possess sufficient evidence to demonstrate that the buyer has breached the contract and caused damage.
- Applicable legal provisions: The court will rely on legal regulations governing contracts, civil obligations, and compensation for damages to render a final decision.
- Equity and good faith considerations: In certain cases, the parties may take into account moral considerations and good faith to reach a fair and reasonable outcome.
IV. Clarification of issues related to the non-refund of goods deposits
1. How is liability for damages determined when one party fails to refund a goods deposit?
Liability for damages in cases where one party fails to refund a goods deposit shall be determined based on the following grounds:
- Grounds for liability for non-contractual damages (Article 584 of the Civil Code 2015): Any person who infringes upon the life, health, honor, dignity, reputation, property, or other lawful rights and interests of another and causes damage must provide compensation.
- Liability for breach of obligations (Article 360 of the Civil Code 2015): An obligor who fails to perform or improperly performs an obligation shall take civil liability toward the obligee.
- Compensation for breach of contract (Article 419 of the Civil Code 2015): The breaching party must compensate the injured party for actual and direct damages caused by such breach.
2. Which law applies to the non-refund of goods deposits in international sale contracts?
In international sale of goods contracts, the applicable law governing deposit arrangements and the consequences of non-refund depends on:
- Choice of law by the parties: The parties may agree to apply the law of a specific jurisdiction (e.g., Vietnamese law, English law, Swiss law) or international trade practices (e.g., Incoterms) (Article 683 of the Civil Code 2015).
- Conflict of law rules: In the absence of a choice of law, courts or arbitral tribunals will apply conflict-of-law rules to determine the legal system most closely connected to the contract. Relevant factors may include the place of contract formation, place of performance, or principal place of business of the parties (Articles 672–687 of the Civil Code 2015).
- The 1980 Vienna Convention (CISG): This Convention governs international sale of goods contracts between parties whose places of business are in member states, unless the parties agree to exclude its application.
3. Is the non-refund of a goods deposit considered unlawful appropriation of funds? Why?
The non-refund of a goods deposit is not automatically deemed unlawful appropriation of funds. However, such conduct may constitute the criminal offense of misappropriation of property (including unlawful appropriation of funds) if all elements of the offense under the Criminal Code 2015 (as amended in 2017), particularly Article 175 on “Abuse of trust to appropriate property”, are satisfied:
- The offender has unlawfully retained the deposit (e.g., using it for personal purposes without the ability to repay).
- The offender has employed deceitful means or absconded to appropriate the property, or has used the property for illegal purposes leading to an inability to return it (as guided in Resolution No. 03/2020/NQ-HĐTP of the Council of Judges of the Supreme People’s Court).
- The value of the appropriated property is from 4,000,000 VND or more, or less than 4,000,000 VND but causing serious consequences or involving prior administrative sanctions or criminal convictions for similar acts that have not yet been expunged.
If the matter merely involves a contractual breach (e.g., financial difficulties or disputes over product quality), the non-refund of the deposit will be handled under civil law and does not constitute a criminal offense.
4. How is the situation handled if the deposit recipient goes bankrupt and fails to refund the deposit?
In the case that the deposit recipient becomes bankrupt, the handling of the deposit shall comply with the Law on Bankruptcy 2014 regarding the order of asset distribution:
- The deposit is treated as an unsecured debt of the bankrupt enterprise.
- Asset distribution is conducted according to the priority order set out in Article 54 of the Law on Bankruptcy 2014, including:
+ Bankruptcy expenses;
+ Outstanding wages, severance allowances, social insurance, health insurance, and unemployment insurance owed to employees;
+ Debts incurred after the commencement of bankruptcy proceedings for the purpose of business recovery;
+ Taxes and obligations owed to the State;
+ Other unsecured debts.
Accordingly, the depositor (buyer) may only recover part or none of the deposit if the bankrupt enterprise’s assets are insufficient to satisfy all creditors in order of priority.
5. How is the non-refund of a goods deposit handled in civil transactions without a written contract?
In cases where a civil transaction is not evidenced by a written contract, proving the existence of a deposit agreement and its terms may be challenging. However, if the buyer can provide alternative evidence (e.g., receipts, messages, emails, witness statements) to prove that a deposit was made, they may still request a refund if the seller breaches the agreement.
The resolution of such disputes will be based on general provisions of civil law concerning the obligation to return property and liability for non-contractual damages (Article 584 of the Civil Code 2015). The court will evaluate all evidence submitted by the parties to determine whether a deposit agreement existed, its terms, and whether a breach occurred, thereby issuing a fair and reasonable judgment.
V. Are you looking for a reputable law firm to advise on the non-refund of goods deposits?
If you are facing difficulties in recovering your deposit or require legal advice on issues related to deposit contracts, please contact NPLaw.
NPLaw provides professional legal consulting services to assist clients in:
- Assessing the situation and proposing optimal solutions to protect their rights and interests;
- Drafting petitions, complaints, and litigation documents;
- Representing clients in negotiations, mediation, or dispute resolution before courts or arbitration;
- Carrying out enforcement procedures to ensure that clients’ rights are effectively realized in practice.
Contact NPLaw via hotline or website today for prompt, accurate, and confidential legal support, helping you resolve disputes efficiently and maximize the protection of your lawful rights and interests.
