Article 394 of the Civil Code: earnest money (zadatek)

Article 394 of the Polish Civil Code governs earnest money (zadatek) paid when concluding an agreement.

Non-performance of the agreement

If one party fails to perform the agreement, the other party may withdraw from it without setting an additional period:

• If the party who gave the earnest money fails to perform, the earnest money is forfeited to the recipient.
• If the party who received the earnest money fails to perform, they must return it in double the amount.

Performance of the agreement

Upon performance of the agreement, the earnest money is counted towards the performance, for example the price. If counting it towards the performance is impossible, the earnest money is refunded.

Termination by mutual agreement or absence of fault

The earnest money is returned to the giver in its original amount where the agreement was terminated amicably or where neither party is responsible for its non-performance (or both parties are responsible to the same degree).