down payment
A down payment is an initial payment of a portion of a purchase price, paid by a buyer to a seller upon the execution of a sale agreement (note: agreement and contract are synonymous for purposes of this definition). A down payment serves both as partial performance and as security for the full performance of the agreement. If performance is not completed as required by the contract , the down payment may be forfeited or returned, depending on which party is deficient in their performance.
See also earnest payment .
[Last reviewed in June of 2021 by the Wex Definitions Team ]
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