Applicable conditions of margin penalty:
1, there must be a breach of contract. The existence of breach of contract is the premise of applying the down payment penalty. Breach of contract is an act of not performing the debt as agreed in the contract, which has various forms, including non-performance, delayed performance and incomplete performance.
2. There must be the fact that the purpose of the contract has failed. The failure of the purpose of the contract means that the purpose of the contract cannot be achieved, which is the basic condition for applying the penalty of deposit. The purpose of the contract only refers to the direct purpose and main purpose of the main contract;
3. There is a causal relationship between breach of contract and failure of contract purpose. Breach of contract or failure to achieve the contract purpose does not necessarily lead to the application of down payment penalty, but only if there is a causal relationship between them, that is, only if the contract purpose cannot be achieved due to breach of contract can the down payment penalty be applied.
Legal basis:
Article 586 of the Civil Code of People's Republic of China (PRC)
The parties may agree that one party shall pay a deposit to the other party as a guarantee for the creditor's rights. The deposit contract is established when the deposit is actually paid.
The amount of the deposit shall be agreed by the parties; However, it shall not exceed 20% of the subject matter of the main contract, and the excess shall not have the effect of deposit. If the actual amount of deposit paid is more than or less than the agreed amount, it shall be deemed as a change of the agreed amount of deposit.