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Earnest Payment

Definition - What does Earnest Payment mean?

Earnest payment refers to a type of a partial payment which is made to prove commitment to the contract. Providing an earnest payment binds the contract. The remainder of the payment is paid off on a future date. This type of payment is usually seen in a real estate transaction.

Justipedia explains Earnest Payment

If future payments are missed, the payment made as an earnest payment is usually kept by the recipient as committed or liquidated (pre-determined) damages.

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