Article 137

What it means when you sign

This article covers earnest money, meaning a sum paid when a contract is made. Paying it indicates that the contract has become final and that neither side may withdraw, unless the agreement or custom says otherwise.

If the parties agree that the earnest money is a penalty for withdrawing, each of them has the right to withdraw. A party who paid the earnest money and withdraws loses it. A party who received it and withdraws must return it together with an equivalent amount.

When you are about to sign, this article means that a payment described as a deposit or earnest money can carry real weight. Without an agreement saying otherwise, it signals that the deal is final. If the contract says the payment is the price of withdrawing, then walking away costs the payer the sum, and costs the receiver double. The wording of the clause, and whether it calls the payment earnest money, a deposit or an advance, is therefore worth checking closely.