Order Down Payment

Order Down Payment refers to a portion of the payment that the buyer pays in advance to the seller after the contract is signed and before the goods are produced or delivered, according to an agreed percentage, usually 10%-30% of the total order amount. Its core functions are to lock in the transaction, share risks, and serve as a guarantee of the buyer's performance. Use cases include: customized product production, large orders, cooperation with new customers, or when the buyer's credit is unclear. Precautions: 1) The down payment percentage must be negotiated by both parties; too high may affect the buyer's cash flow, too low may lose its binding force; 2) It should clearly stipulate whether the down payment is refundable, whether it offsets the balance, and how default is handled (e.g., the 'deposit penalty rule' may apply); 3) It must be distinguished from 'earnest money'—earnest money is usually refundable and has no guarantee nature, while a down payment has legal guarantee effect; 4) It differs from 'advance payment'—advance payment is part of the goods payment paid early and has no punitive nature, while a down payment is non-refundable if the buyer defaults and must be returned double if the seller defaults. In addition, in international trade, attention should be paid to differences in how different legal systems recognize down payments; it is advisable to specify the applicable law and dispute resolution method in the contract.