Two Chinese words, pronounced the same, with different legal effects.
定金 is earnest money under the Civil Code: it exists once actually paid, it is capped at 20% of the contract price, and the excess has no effect as earnest money (art. 586). If the supplier’s breach defeats the purpose of the contract, it must return double; if you are the one who fails, you lose it (art. 587). If the contract has both earnest money and liquidated damages, you choose one (art. 588).
订金 is not a legal term at all. It is treated as an advance on the price: refundable when the deal fails, never doubled. If you want the doubling, the contract and the remittance note have to say 定金.
Deposit, 订金, payment
A common situation: the English contract says deposit, the Chinese version says 订金, and the remittance note says payment. When the factory fails, the buyer asks for double and finds there is nothing to double. An English “deposit” does not settle the question; what matters is the Chinese word and whether the parties actually agreed on earnest money.
Two more points come up in practice. Earnest money and liquidated damages do not stack: where both are agreed you choose one (art. 588), so with a strong delay penalty the doubling may be the weaker remedy. And doubling needs a breach that defeats the purpose of the contract (art. 587). A delay of a few days usually does not reach that line. A factory that stops answering and gives your production slot to someone else usually does.
Wording for the contract and the wire
In the contract:
“The Buyer shall pay USD [ ] as earnest money (定金) within [5] days of signing. The earnest money does not exceed 20% of the contract price and shall be applied towards the price on delivery.”
On the remittance note: “Earnest money (定金) under Contract No. [ ]”. The bank record then says the same thing as the contract.
Related terms
Read next
- Paid a 30% Deposit to a Chinese Supplier? Only 20% Can Be Doubled, and Only If the Contract Says 定金
- Chinese Supplier Breached the Contract: What Can a Foreign Buyer Do?
Sources
- Civil Code of the PRC (effective 1 January 2021), articles 586, 587 and 588, full text on the Ministry of Justice site ↗
- Translations are mine and unofficial.
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