Both the advance and the deposit are a certain amount of money that the buyer gives to the seller before the seller hands over the goods to the buyer. Both the deposit and the advance can be credited by the seller to pay for the goods under the contract.
However, there are several differences between a deposit and an advance:
1. Every deposit is an advance, but not every advance is a deposit🤔 This means that a sum of money can only be a deposit if the parties have explicitly stated in the contract or receipt that the buyer has transferred the deposit. If there is no such direct indication, then the amount of money is an advance.
2. The deposit can be transferred only under the contract which is already concluded. That is, you cannot give a deposit as a guarantee that you will buy something. You can give a deposit only as a guarantee that you will accept the product in the future and pay for it. If the contract is not concluded, then no matter how hard you try to call the transferred amount of money a deposit, it will still remain an advance.
3. The main difference between the deposit and the advance in the consequences of breach by the parties of their agreements:
If the seller took deposit, but did not transfer the goods, he is obliged to return to the buyer the amount of the deposit in double amount.
If the seller took advance, but does not transfer the goods, it simply returns this advance to the buyer.
If the seller transfers the goods, but the buyer refuses to accept it, then deposit remains with the seller.
If the buyer gave advance, not a deposit, then even if the buyer refuses to accept the goods, the seller must still return the advance.
