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Paying a deposit is common when buying a product, booking a venue, hiring a service or starting work. But not every advance payment is legally considered a deposit.
Lawyer Manal Dhahi explains that Bahrain’s Civil Code, under Articles 52, 53 and 54, sets out the legal consequences of deposits and contract withdrawal.
When can you lose the deposit?
Under Article 52, a deposit generally gives either party the right to withdraw from the contract, unless the agreement or custom provides otherwise.
If the person who paid the deposit withdraws, the deposit may be forfeited. For example, a BD500 deposit could be lost if the buyer backs out, subject to the contract and applicable law.
What if the seller withdraws?
If the party who received the deposit withdraws, they must generally return the deposit and pay an equal amount. A BD500 deposit would therefore mean returning BD500 and paying another BD500.
What about delays or cancellation?
Failure to perform an obligation on time may allow the other party to treat the situation as a withdrawal, depending on the circumstances and legal requirements.
If the contract becomes impossible to perform because of one party, it may also be treated as a withdrawal. If the impossibility results from an external cause beyond both parties’ control, the deposit must be returned to the person who paid it.
Does dissatisfaction mean you get your money back?
Not necessarily. Simply being unhappy with a service does not automatically entitle a customer to recover a deposit.
However, if the service does not meet the agreed specifications or contractual conditions, this may constitute a breach of contract, with different legal consequences.
Key takeaway: Before paying, check whether the amount is legally a deposit or simply an advance payment, and carefully review the contract and withdrawal terms.
