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Good Faith Deposit Contract Template for India

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Key Requirements PROMPT example:

Good Faith Deposit Contract

"I need a Good Faith Deposit Contract for a commercial property purchase in Mumbai, where my company will deposit 5% of the purchase price (₹50 lakhs) to secure the deal until the final purchase agreement is signed by March 2025."

Document background
The Good Faith Deposit Contract is essential in significant commercial transactions under Indian law where parties need to demonstrate serious commitment before proceeding with the main transaction. This document is commonly used in real estate deals, corporate acquisitions, major procurement contracts, and other high-value transactions where parties seek mutual assurance of intention to proceed. The contract defines the deposit amount, typically ranging from 1% to 10% of the total transaction value, and establishes clear mechanisms for its payment, holding, and eventual release or forfeiture. It includes provisions compliant with Indian banking regulations, contract law, and financial transaction requirements, while also addressing specific conditions that trigger release or forfeiture of the deposit. The document serves as a critical risk management tool, protecting both parties' interests during the preliminary stages of significant transactions.
Suggested Sections

1. Parties: Identification of all parties to the agreement, including full legal names and addresses

2. Background: Context of the agreement, including reference to any underlying transaction and purpose of the good faith deposit

3. Definitions: Definitions of key terms used throughout the agreement

4. Deposit Amount and Payment: Specifies the deposit amount, payment method, and timing of the deposit

5. Purpose of Deposit: Clear statement of why the deposit is being made and what it secures

6. Holding of Deposit: Details of how and where the deposit will be held, including any interest arrangements

7. Release Conditions: Specific conditions under which the deposit will be released to either party

8. Forfeiture Conditions: Circumstances under which the deposit may be forfeited

9. Representations and Warranties: Basic representations by both parties regarding authority and capacity

10. Notices: Process and requirements for giving formal notices under the agreement

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

12. Execution: Signature blocks and execution requirements

Optional Sections

1. Escrow Arrangements: Required if an escrow agent is holding the deposit, detailing the escrow agent's roles and responsibilities

2. Interest Provisions: Required if the deposit will earn interest and specifying how interest will be handled

3. Underlying Transaction: Detailed reference to related transaction documents when the deposit is part of a larger transaction

4. Tax Provisions: Required if there are specific tax implications or requirements related to the deposit

5. Force Majeure: Optional clause dealing with circumstances beyond parties' control affecting the deposit or underlying transaction

6. Confidentiality: Required if there are sensitive terms or information that need to be kept confidential

7. Assignment: Required if there's a need to restrict or permit transfer of rights under the agreement

8. Dispute Resolution: Optional detailed dispute resolution procedures beyond simple jurisdiction clause

Suggested Schedules

1. Schedule 1 - Payment Details: Bank account details and payment instructions for the deposit

2. Schedule 2 - Release Mechanism: Detailed procedure and documentation required for release of the deposit

3. Schedule 3 - Related Transaction Documents: List and details of any underlying or related transaction documents

4. Schedule 4 - Authorized Representatives: List of authorized persons who can give instructions regarding the deposit

5. Appendix A - Form of Release Notice: Template for the formal notice requesting release of the deposit

6. Appendix B - Form of Receipt: Template for acknowledging receipt of the deposit

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions




























Clauses































Relevant Industries

Real Estate

Mergers and Acquisitions

Construction

Manufacturing

Infrastructure Development

Commercial Leasing

Joint Ventures

Hospitality

Retail

Technology Services

Private Equity

Investment Banking

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Business Development

Operations

Corporate Development

Procurement

Real Estate

Project Management

Relevant Roles

Legal Counsel

Corporate Lawyer

Transaction Manager

Chief Financial Officer

Finance Director

Business Development Manager

Real Estate Manager

Procurement Manager

Contract Administrator

Compliance Officer

Treasury Manager

Investment Manager

Project Manager

Operations Director

Risk Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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