Payment & Finance

Deposit / Advance Payment Agreement

A Deposit and Advance Payment Agreement documents the terms of an upfront payment. Protects service providers from cancellations and clients from losing deposits unfairly.

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Drafted to comply with Kenyan law and international common law standards.

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What this document covers

Service provider and client details
Deposit amount
What the deposit secures (reservation of capacity, materials)
Whether the deposit is refundable or non-refundable
Conditions for refund if any
How the deposit is applied to the total fee
Cancellation policy
Governing law clause

Frequently Asked Questions

Is a deposit refundable in Kenya if the project is cancelled?
This depends entirely on what the agreement says. If the deposit is stated to be non-refundable (as is common for freelancers and service providers who reserve capacity), the client cannot demand it back simply by cancelling. If the agreement is silent, the default position under contract law is that a deposit may be retained as liquidated damages for the cancellation.
What is the difference between a deposit and a down payment?
In practice, both terms are used interchangeably, but legally a deposit is typically non-refundable and serves as security for performance, while a down payment (or advance) is part of the purchase price that may be refunded if the contract falls through. The agreement should state the intended effect clearly.
Is a deposit agreement enforceable in common law countries?
Yes. Common law courts consistently enforce clear deposit provisions. The key is that the deposit amount must not be a penalty (i.e. a genuine pre-estimate of loss from cancellation, not an extravagant punishment). Courts in the UK, Australia, and Kenya may reduce unconscionable deposit forfeitures.