A forfeiture of deposit clause stipulates that if a party fails to fulfill its contractual obligations, any deposit made will be forfeited as compensation to the other party. This clause acts as a financial deterrent, ensuring compliance and providing a remedy for breach of contract.
3.cForfeiture of Deposit Notwithstanding Clause 3.1, the whole of the Deposit may in the Landlord's sole discretion be forfeited to the Landlord if the Tenant goes into liquidation or if a person, is made a bankrupt, or have any order made or resolution passed for its winding-up or shall otherwise become insolvent or make an assignment or arrangement for the benefit of its creditors. For the avoidance of doubt, it is hereby agreed and declared that the Deposit does not constitute a penalty or liquidated damages and that any forfeiture of the Deposit by the Landlord shall be without prejudice to any other rights or remedies that the Landlord may be entitled to.
The lock-in period represents the term during which termination will result in the forfeiture of deposit, which is typically one or two months’ rent.
Section 2.02 Forfeiture of Deposit. If the transaction contemplated by this Agreement is not completed by reason of default by the Purchaser, then the Deposit including any interest accrued thereon become non-refundable, and the Vendor shall be entitled to retain the Deposit together with any interest accrued thereon, without limiting any other rights and remedies which it may have in law and in equity against the Purchaser. In the event the Purchaser does not deliver a Waiver Notice, or advises that it will not be doing so ("Non-Waiver Notice") prior to the Due Diligence Date, provided that the Purchaser is not in default, any Deposit shall be returned in full within five (5) business days after the earlier of: (i) the Due Diligence Date, (ii) or the date when such Non-Waiver Notice is provided. If the transaction is not completed by reason of default by the Vendor, the Deposit shall be returned to the Purchaser without limiting any other rights and remedies which it may have in law and in equity against the Vendor. The Deposit Holder is hereby authorized and directed to pay the Deposit to the Vendor or the Purchaser, as the case may be, in the circumstances described in this Section 2.02.
Refund / Forfeiture of Deposit (i) In the event the SFC does not approve the Application or the Purchaser serves three (3) Business Days’ prior written notice to the Vendor to terminate the SPA within the first 6 months from the date of the signing of this Agreement, the Vendor shall refund partial Deposit for the amount of HK$1,000,000 (without interest) to the Purchaser, and the remaining balance of the Deposit of HK$710,000 shall be forfeited by the Vendor absolutely to compensate the Vendor on its loss of opportunity and need not be refunded to the Purchaser and this Agreement shall cease to have effect.
Brand Management. Distributors must comply with our brand management policies and store management guidelines. We may impose penalties, forfeiture of deposit, suspend supply of products and terminate the agreement in the event of any breach of such policies.
Termination. We may generally terminate the distribution agreements and seek indemnification in the event of breach by distributors. In the event of some types of breach, we may not terminate the agreement but have other remedies. For example, if a distributor fails to order all products provided for under the distributorship agreement, we may instead impose forfeiture of deposit or withhold certain benefits.
Forfeiture of Deposit refers to a legal clause often included in contracts, particularly in real estate, rentals, and sales agreements, where the buyer or tenant forfeits their deposit if they fail to meet certain conditions specified in the agreement. This condition typically arises when a party does not fulfill their obligations, such as failing to close a deal by a specified date or breaching the terms of the contract.
You should consider using a Forfeiture of Deposit clause in situations where:
Forfeiture of Deposit is commonly used in real estate transactions, event bookings, and high-value sales where the stakes are considerable.
When drafting a Forfeiture of Deposit clause, it is important to:
Example clause:
“Upon execution of this Agreement, the Buyer shall deposit the sum of $10,000, which shall be held in escrow by the Seller’s broker. In the event that the Buyer fails to close the purchase by the agreed-upon date, the deposit shall be forfeited as liquidated damages.”
Forfeiture of Deposit clauses are typically found in the following types of contracts:
These clauses serve as a precautionary measure in contracts to mitigate the risks associated with non-performance by holding a portion of funds until obligations are met.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A forfeiture clause is a provision in a contract that stipulates the loss or surrender of rights, property, or money if one party fails to fulfill predetermined conditions or obligations. It serves as a penalty or consequence for non-compliance, ensuring that parties adhere to the contract's terms.
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