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.
