Paid a 30% Deposit to a Chinese Supplier? Only 20% Can Be Doubled, and Only If the Contract Says 定金

A payment to a Chinese supplier is a deposit in the legal sense only if the contract calls it 定金 (dingjin, earnest money), and only up to 20% of the contract price (Civil Code art. 586). Within that 20%, if the supplier's breach defeats the purpose of the contract, it must pay back double; if you are the one who walks away, you lose it (art. 587). Anything above 20%, and any payment labelled 订金, prepayment or advance, is simply part of the price: refundable when the contract ends, plus proven losses, but never doubled (SPC Interpretation on the general part of contracts, art. 67). If you are about to pay, decide which of the two you want and put the Chinese word in the contract and on the remittance.

The line usually sits at the bottom of the proforma invoice: "Payment: 30% T/T deposit, balance before shipment." Buyers read "deposit" as money they can ask for back if things go wrong. Under Chinese law that word on its own decides very little. A Chinese court will look at the Chinese wording, the amount and what the parties agreed would happen if the order fell through.

定金, 订金 or prepayment: why one Chinese character matters

Chinese has two words pronounced exactly the same way, dìngjīn. One is 定金, a legal term. The other is 订金, an everyday word for money paid when you place an order. Only the first carries the double-or-lose rule.

定金 is security for the contract. Article 587 of the Civil Code says that when the contract is performed, the deposit is credited against the price or returned. If the party that paid it fails to perform so that the purpose of the contract cannot be achieved, it cannot ask for the deposit back.

If the party that received it fails in the same way, it must return double. The deposit contract only exists once the money is actually paid, and the amount cannot exceed 20% of the value of the main contract; any excess "does not have the effect of a deposit" (art. 586).

Everything else is a prepayment of the price. Article 67 of the Supreme People's Court's 2023 Interpretation lists the labels: retention money, security money, guarantee money, signing money, 押金 and 订金. If the parties did not agree that the payment has the nature of a 定金, the court will not apply the deposit penalty. A prepayment is refunded when the contract is terminated, and the buyer can claim the losses it can prove. Nobody gets double.

Then there is the English word. "Deposit" in an English-only contract or on a proforma invoice does not tell a Chinese judge which of the two the parties meant. If the Chinese version of your contract says 定金, you have a 定金. If it says 订金 or 预付款, or there is no Chinese version and nothing about doubling, expect a court to treat the money as a prepayment. Our article on which language prevails in a bilingual contract explains why the Chinese text usually ends up deciding.

What happens to a 30% deposit when the supplier does not deliver

Take an order of USD 50,000 with a 30% deposit, so USD 15,000 paid up front. The supplier misses the delivery date by two months and stops answering, and you terminate.

If the contract calls the whole USD 15,000 a 定金, only USD 10,000 (20% of the price) counts as one. The supplier must return double that, USD 20,000, and must also refund the other USD 5,000 as prepaid price. You recover USD 25,000 without proving any loss.

If the contract calls the USD 15,000 订金, a prepayment or simply a "deposit" with nothing more, you recover the USD 15,000 and whatever losses you can prove: the extra cost of buying from another supplier, for example, or air freight you paid to keep stock in place. If the contract has a liquidated damages clause for late delivery, you can use that instead.

You cannot stack everything. Where a contract has both a 定金 and liquidated damages, article 588 lets the innocent party choose one of them. If the deposit does not cover the loss, the party can claim the loss above the deposit amount. Two more limits come from article 68 of the Interpretation.

If both sides committed a breach serious enough to defeat the contract, neither can invoke the deposit penalty. And if the supplier delivered part of the order and you accepted it, the penalty applies only in proportion to the part not delivered, unless the missing part made the whole contract pointless.

When the buyer loses the 定金: a Foshan hoist sale

The 定金 rule cuts both ways. A case the Nanhai District People's Court in Foshan published shows a buyer on the losing side of it, and the 20% cap rescuing part of the money.

In September 2011 a buyer agreed to purchase used construction hoists from a Foshan equipment company for RMB 121,500 and paid a 定金 of RMB 30,000. Delivery was set for around 15 October, with the balance due "when the goods arrive at the site". The contract never said where the site was. The buyer did not name one, did not collect the goods, and two years later sued for double the deposit, RMB 60,000, plus interest.

The court held the buyer was the party in breach ((2013) Fo Nan Fa Gui Min Er Chu Zi No. 429, judgment of 24 October 2013). Because the place of delivery was unclear, the goods were to be handed over at the seller's place of business. The buyer knew where that was, had seen the hoists there, and never arranged to take them. The claim for double was rejected. The court then applied the 20% cap.

The 定金 could be at most RMB 24,300; the other RMB 5,700 was prepaid price, and with the contract terminated the seller had to refund it. On appeal, the Foshan Intermediate People's Court upheld the judgment and added that the seller's sole shareholder was jointly liable for the RMB 5,700, because he could not show that the company's assets were separate from his own ((2013) Fo Zhong Fa Min Er Zhong Zi No. 1122, January 2014).

The case was decided under the old Guarantee Law and Contract Law. The Civil Code kept the same 20% cap in article 586, and the sole-shareholder rule now sits in article 23 of the revised Company Law. Read from a buyer's side, it says three things. A 定金 is a two-way risk, not a refund guarantee. The party that fails to do its own part on paper, here naming a delivery site, can lose the deposit even when the goods never moved. And anything paid above 20% comes back as price.

Five things to settle before the 30% goes out

Decide which one you want before you pay. If your main fear is a supplier taking the money and not delivering, and you are confident the order will go ahead, a 定金 gives you real leverage: the supplier risks paying double. If there is a fair chance you will cut or change the order, because samples might fail or a marketplace listing might stall, a prepayment is safer, since a 定金 would make you the party who loses it.

Write the Chinese word and the consequence. A word in English is not enough. The Chinese version should say 定金 for the deposit part and 预付款 for the rest, and should state what happens to each if the contract ends. A clause that only says "deposit" leaves the decision to a judge reading article 67.

Keep the 定金 at or below 20% and split the rest. With a 30% up-front payment, call 20% the 定金 and 10% a prepayment, and give the prepayment its own refund deadline. Calling all 30% a 定金 adds nothing; the excess is treated as price anyway.

Do your own part in writing. The Foshan buyer lost because the contract left the delivery site blank and the buyer never filled it in. Put the delivery terms, the inspection date and the address for notices in the contract, and send written notice when the supplier is late before you terminate.

Pay the company you signed with, and say what the money is. The remittance note should carry the contract number and the words deposit (定金) or prepayment (预付款). Payment to a different company or a personal account turns a simple refund claim into an argument about who received the money; see what to do when a supplier changes its bank account. If the supplier is a company with a single shareholder, note it: under article 23 of the Company Law that shareholder can be made liable for the company's debts unless he can prove the assets were kept separate.

Clause wording to ask for

• Deposit part: "Of the advance payment, USD [amount], not exceeding 20% of the Contract Price, is paid as a deposit (定金) under Article 586 of the Civil Code of the PRC and shall be credited against the price on delivery."
• Prepayment part: "The remaining USD [amount] is a prepayment of the price (预付款). If this Contract is terminated other than for the Buyer's breach, the Seller shall refund it within [10] days of termination."
• Late delivery: "If the Seller fails to deliver within [15] days after the agreed delivery date, the Buyer may terminate this Contract by written notice and the Seller shall return double the deposit and refund the prepayment."
• Remittance note: "Contract No. [number]: deposit (定金) USD [amount]; prepayment (预付款) USD [amount]."

Sources

• Nanhai District People's Court, Foshan, buyer v. Foshan Nanhai equipment company and its shareholder, sale of goods dispute, (2013) Fo Nan Fa Gui Min Er Chu Zi No. 429 (24 October 2013); Foshan Intermediate People's Court, (2013) Fo Zhong Fa Min Er Zhong Zi No. 1122 (January 2014); published as a typical case on 18 May 2015, fayuan.nanhai.gov.cn/cms/html/3337/2015/20150518093455290757108/20150518093455290757108_1.html
• Civil Code of the PRC, articles 586, 587 and 588 (adopted 28 May 2020, effective 1 January 2021), as published in the Gazette of the Supreme People's Court, gongbao.court.gov.cn
• Supreme People's Court, Interpretation on Several Issues Concerning the Application of the General Part of the Contracts Book of the Civil Code, Fa Shi [2023] No. 13, articles 67 and 68 (effective 5 December 2023), court.gov.cn/fabu/xiangqing/419382.html
• Company Law of the PRC (revised 29 December 2023, effective 1 July 2024), article 23
• Translations are mine and unofficial.

Frequently asked questions

• Is a 30% deposit to a Chinese supplier normal? Yes, 30% up front and 70% before shipment is a common term. The question is not the percentage but what the contract says the money is and what happens to it if the order fails.
• Can I get my deposit back if I cancel the order? If it is a 定金 and you cancel without a breach by the supplier, usually not. If it is a prepayment or 订金, it is refundable, but the supplier can set off losses it proves, such as materials bought for your order.
• The contract is in English only and says "deposit". Is that a 定金? A Chinese court will look for an agreement that the payment carries the double-or-lose consequence. Without it, expect the payment to be treated as a prepayment under article 67 of the 2023 Interpretation.
• Can I claim double the deposit and liquidated damages together? No. Article 588 makes you choose one. If the deposit does not cover your loss, you can claim the loss above the deposit amount.

Related service: NNN, Purchase & Manufacturing Agreements ↗

Related reading

• Your Chinese Supplier Says It Has a New Bank Account: How to Verify Before You Pay
• English or Chinese: Which Version of Your China Contract Prevails?
• Chinese Supplier Breached the Contract: What Can a Foreign Buyer Do?

This article is general information on PRC law as of 24 October 2026 and does not constitute legal advice. The answer in any matter depends on its documents and facts.