Distinguishing Earnest Money from Withdrawal Money

Legal Article · 12 November 2026
Av. Thomas Andreas Di Constantinople

Money paid at formation is characterised according to the function agreed. Under Article 177 of the Turkish Code of Obligations, unless otherwise understood, it is earnest money evidencing conclusion rather than withdrawal money. The everyday word deposit does not alone determine the result.

Unless contract or local custom provides otherwise, earnest money is deducted from the principal claim. It does not automatically grant withdrawal rights. A payer later wishing to withdraw therefore cannot invariably discharge every duty merely by abandoning the money.

Where withdrawal money is expressly agreed, Article 178 of the Turkish Code of Obligations treats both parties as entitled to withdraw. A withdrawing payer forfeits the payment; a withdrawing recipient returns twice the amount received. This requires a valid withdrawal-money agreement. Invalidity for form or another reason needs separate assessment.

Payment explanations, the text, and intention at formation must be examined together. Penalties, advances, earnest money, and withdrawal money are distinct mechanisms. A refund conclusion cannot be reached without identifying whether the clause grants withdrawal, secures performance, or forms part of the price.

Legal Basis: Turkish Code of Obligations No. 6098, Articles 177 and 178. Official legislative text.

This article has been prepared for general legal information purposes.