# Deposit agreement

Source: https://contracko.com/glossary/deposit-agreement

# Deposit agreement

A contract under which assets, funds or documents are held by a custodian under agreed conditions.

## Definition

A deposit agreement governs the holding of money, securities, goods or documents by a custodian on behalf of one or more parties, setting out the conditions for safekeeping and release. It is common where value must be parked safely pending a condition, such as a transaction closing or a dispute outcome, and overlaps with escrow arrangements. Core terms cover the custodian's duties, release triggers, fees and liability.

## Example

> In a share purchase, part of the price is placed under a deposit agreement and released only once warranty claims are cleared after closing.

## Why this is a business risk

Ambiguous release conditions in a deposit agreement can paralyse a transaction if the parties disagree on whether the trigger has been met. If the custodian has wide discretion, a party may find itself unable to access its own funds until lengthy legal proceedings resolve the dispute. A poorly negotiated custodian liability cap can leave depositors without recourse if the custodian misapplies the funds.

## How to manage it

- Define release conditions with objective, measurable triggers so there is no room for disagreement about whether they have been satisfied.
- Specify what happens if a release condition is not satisfied by a long-stop date: whether the deposit is returned, forfeited or held pending further agreement.
- Confirm the custodian's duties, liability and insurance so you understand the level of protection for the deposited assets.
- Track the long-stop date and any interim milestone dates in your contract system so you know when to expect or demand release.

### How Contracko helps

Contracko tracks deposit agreement milestones and long-stop dates as structured obligations with reminders, so the finance team knows when a release condition falls due and can act before the window passes. The searchable repository stores the deposit agreement, any amendment and the release confirmation together so the audit trail is complete.

## Legal references

- [BW 7:600 Dutch Civil Code: safekeeping Dutch law](https://wetten.overheid.nl/BWBR0005290)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Financial Services](https://contracko.com/industries/financial-services)[Legal Services](https://contracko.com/industries/legal-services)[Commercial Real Estate](https://contracko.com/industries/commercial-real-estate)[Software & SaaS](https://contracko.com/industries/software-saas)

## Related clauses

- [Payment Terms Clause](https://contracko.com/clause-library/payment-terms)
- [Conditions Subsequent](https://contracko.com/clause-library/conditions-subsequent)

## Related terms

- [Escrow arrangement](https://contracko.com/glossary/escrow-arrangement)
- [Pledge](https://contracko.com/glossary/pledge)
- [Retention of title](https://contracko.com/glossary/retention-of-title)
- [Bank guarantee](https://contracko.com/glossary/bank-guarantee)

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## Frequently asked questions

Common questions about this term.

- **Q:** What is the difference between a deposit agreement and an escrow?
  **A:** The terms are used interchangeably in the Netherlands. Both involve a neutral custodian holding value pending a condition. "Escrow" is the Anglo-American term; "depot" is more common in Dutch practice, but the legal substance is the same.

- **Q:** Who typically acts as custodian under a deposit agreement?
  **A:** In practice, a notary (notaris) is the most common custodian in Dutch M&A and real estate transactions because the notary has a statutory duty of care and professional indemnity insurance. For software source code, specialist escrow providers are used.

- **Q:** Can a deposit be released without agreement from both parties?
  **A:** Only if the release conditions are met and the agreement gives the custodian authority to release unilaterally on that basis. Otherwise, both parties' instructions or a court order are typically needed.

- **Q:** What happens to the deposit if the underlying transaction falls through?
  **A:** The deposit agreement should specify exactly this: whether the deposit is returned to the depositor, forfeited as a break fee, split, or held pending a dispute resolution mechanism. Without a clear long-stop clause the funds can be frozen indefinitely.

- **Q:** Is interest on a deposited amount paid to the depositor?
  **A:** Only if the deposit agreement provides for it. The interest allocation (who receives it, at what rate, when) should be addressed explicitly, especially for large amounts or lengthy holding periods.

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