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Study on Down Payment Contract

  • DONG-A LAW REVIEW
  • 2020, (86), pp.107-132
  • DOI : 10.31839/DALR.2020.02.86.107
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law
  • Received : January 15, 2020
  • Accepted : February 21, 2020
  • Published : February 28, 2020

Lee Sung Jin 1

1대구가톨릭대학교

Accredited

ABSTRACT

A down payment is any other value of money or other value which is issued from one party to the other when the contract is signed. A down payment contract is an independent contract that is generally concluded for the issue of a down payment, separate from the main contract. Article 565 (1) of the Civil Code provides that: If one of the parties to a contract of sale has delivered, at the time of entering into the contract, money or other things under the name of down payment, assurance deposit, etc. to the other party, unless otherwise agreed upon between the parties, the deliverer by giving up such money, and the receiver by repaying double such money, may rescind such contract before one of the parties has initiated performance of the contract. The down payment may be of any or all of the nature of evidence of contract, penalty, cancellation, advance payment. The agreement of a penalty is presumed to be determined in advance of the amount of damages. Particularly with regard to the nature of the cancellation fee, the down payment is assumed to be a cancellation fee unless the intention of the parties is clear. Article 563 of the Civil Code provides that: A sale shall become effective when one of the parties agrees to transfer a property right to the other party and the other party agrees to pay the purchase-price to the former. The issue of a down payment or an agreement thereon is not essential to the establishment of a sale. The same applies to other typical contracts such as leases, so I think the down payment contract is made on the premise of the existence of the main contract.

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