You paid security — a few percent of the transaction value — and are waiting for it to be returned. The counterparty remains silent for months, then replies: we closed the transaction ourselves, we are retaining the security, and you must pay the shortfall.
This is no accident. It is a recurring pattern wherever one party controls the wording of the standard terms, the timing of the settlement and the documentation, while the other controls only its own correspondence.
If your company pays deposits or other forms of security to counterparties operating under their own standard contract terms — in foreign exchange transactions, commercial leases, contractor agreements or on platforms — this article explains two things. First: how to challenge a refusal to return the funds once it has happened. Second: which clauses to negotiate before signing to prevent this scenario from occurring at all.
The entire difference between a months-long dispute and recovering your money within a few days comes down to a few sentences in the agreement that must be read before you sign — not after your claim has been rejected.
Earnest money, advance payment, security deposit — three terms, three different consequences
Before taking action, establish one thing: what exactly did you pay? The name and legal structure of the payment determine who must prove what — and that determines the outcome of the dispute.
| Type of payment | Effect upon termination of the agreement | Burden of proof | Legal basis |
|---|---|---|---|
| Earnest money | The party that failed to perform the agreement forfeits the earnest money or must return twice the amount received. Retaining it does not require proof of any loss. | The party seeking repayment must prove that the other party failed to perform its obligation | Article 394 of the Civil Code |
| Advance payment | It must be returned in full as a portion of the price that was not “used up” through performance of the agreement | The party retaining the payment must prove the grounds for doing so (e.g. performance of a service) | No separate regulation — the general provisions apply |
| Security deposit | An ancillary benefit that secures specific claims. It may be used only to the extent that the secured receivable has actually arisen. Any surplus must be returned. | The party retaining the funds must identify and prove the receivable and its amount (Article 6 of the Civil Code) | No statutory definition — case law of the Supreme Court (I CSK 1005/14, V CSK 481/15) |
Why this matters. Counterparties are keen to describe payments as “earnest money” — because retaining earnest money does not require proof of any loss or its amount. The opposite applies to a security deposit: the party retaining the funds must identify and prove a specific receivable. If it fails to do so, it must return the entire amount.
The Supreme Court has confirmed this legal structure: a security deposit is a causal and ancillary benefit with the characteristics of an irregular deposit — it does not permanently become part of the counterparty’s assets and is neither remuneration nor a fee (Supreme Court judgments of 19 November 2015, I CSK 1005/14, and 25 May 2016, V CSK 481/15).
Check your agreement. If the payment is described as “security”, a “deposit” or a “security deposit” — and the agreement does not expressly refer to Article 394 of the Civil Code — it is highly likely to be a security deposit rather than earnest money.
Six areas in which counterparties most commonly abuse standard terms
A refusal to return security is rarely based on a single argument. The counterparty will usually combine several mechanisms — each of which can be challenged separately.
No receivable justifying retention
The counterparty claims that “the balance is negative”. But a mere assertion is not a settlement statement. A proper settlement statement must include: the date, the exchange rate applied, how that rate was determined, the result calculated according to the contractual formula and an indication of whether there was a positive balance.
If the counterparty has not provided such a settlement statement, it has not proven its receivable. The case law of the ordinary courts confirms that a contractor seeking repayment must prove the agreement, the payment and the fact that repayment is due; the client retaining the funds must prove a specific receivable and its amount — failure to provide such proof results in an obligation to return the full amount (I ACa 743/14, XIII Ga 1125/15).
Transaction closing date selected rather than established
The counterparty claims that it closed the transaction on the date when the exchange rate was most favourable to it. But the closing date is the date on which the declaration reached the other party (Article 61 § 1 of the Civil Code) — not the date of an internal decision, a system entry or a spreadsheet printout.
Moving the closing date to the date on which the declaration was actually made can be worth more than ten percent of the amount in dispute. If the counterparty states “as a precaution” that its letter constitutes a declaration that the transaction is being closed, this proves that no earlier closing took place. The other party’s own wording disproves its claimed date.
Added exchange-rate margin
A margin of three groszy per unit of currency on an amount in the hundreds of thousands of euros comes to several thousand zlotys — nearly 30% of the amount the counterparty has claimed. You will not spot it unless you run the calculations yourself.
Check whether the agreement permits the addition of a margin or spread. If not, every grosz above the reference rate is an amount with no contractual basis.
Legal fees outside the list of permitted deductions
The counterparty adds several thousand zlotys in its own legal fees to the settlement. After these costs are deducted, the result changes from “we will refund the surplus” to “you must pay the shortfall”.
The list of permitted deductions from the security under standard terms is usually exhaustive — it covers amounts resulting from the settlement of the transaction, default interest, losses and costs incurred in connection with closing the transaction. The fees of the counterparty’s lawyer in a dispute with you do not fall within any of these categories. The counterparty may not add new items — and it is obliged to return any surplus remaining after the deductions.
An “at its discretion” clause does not mean “arbitrarily”
A provision that makes the due date or amount of a benefit dependent on the debtor’s unfettered discretion is contrary to the nature of an obligation (Article 353¹ of the Civil Code). The Supreme Court confirmed this in Resolution III CZP 40/22: a provision allowing one party to determine an exchange rate unilaterally without objective and verifiable criteria is contrary to the nature of the legal relationship.
A breach of Article 353¹ of the Civil Code results in invalidity under Article 58 § 1 or § 2 of the Civil Code. In B2B relationships, Article 385¹ of the Civil Code (consumer protection) does not apply — but Article 353¹ of the Civil Code protects every party to an agreement.
Unilaterally drafted standard terms — construed against their author
Any doubts concerning standard terms are resolved against their author — this is the in dubio contra proferentem principle, an objective method of interpretation under Article 65 of the Civil Code (resolution of a panel of 7 Supreme Court judges of 29 June 1995, III CZP 66/95; Supreme Court judgment of 10 January 2018, I CSK 225/17).
If the counterparty narrows the contractual phrase “evidence or information” to two arbitrarily specified documents, challenge this immediately in your first letter. Do not spend months explaining the absence of an addendum that never existed.
Sequence of actions — from the initial request to a lawsuit
If the counterparty refuses to return the security, follow the correct sequence. Each step gives you an argument in court and eliminates an objection that the other party could otherwise raise.
| Step | What you do | Why |
|---|---|---|
| 1. Request to close the transaction and demand for repayment | Submit a written request containing five elements: the contractual basis, justification that the relevant condition has been met, your own balance calculation using a reference rate and identifying its source, a demand for repayment with your bank account number, and a request for a full settlement statement by a specific deadline | A claim for the return of security has no fixed due date — it becomes due after a demand setting a specific deadline (Article 455 of the Civil Code); without this, there is no delay and no interest under Article 481 of the Civil Code |
| 2. Complaint under the contractual procedure | Exhaust the complaint procedure provided for in the standard terms (typical deadline: 15 business days, maximum 35 days) | This forces the counterparty to state its position, removes the objection that the lawsuit was premature and provides a separate procedural argument if the counterparty extends the deadline without identifying specific circumstances |
| 3. Assessment of the counterparty’s response | Recalculate every item in any settlement presented by the counterparty — an exchange-rate margin will not be apparent unless you run the calculations yourself | Arithmetic is the strongest argument in negotiations. You should also verify whether the “offer to discuss the matter” is a genuine offer or merely the same refusal in different words |
| 4. Final pre-litigation demand | Send a demand for payment specifying the amount and a firm deadline | This conclusively establishes that the claim is due and provides evidence of an attempt to resolve the dispute out of court, as required by Article 187 § 1(3) of the Code of Civil Procedure |
| 5. Lawsuit — ready before it is needed | Set out the other party’s position in the statement of claim and rebut it | In commercial proceedings, all assertions and evidence must be included in the statement of claim (Article 458¹⁰ of the Code of Civil Procedure) — a reply will be too late |
Three additional applications to consider including with the statement of claim:
- An order for payment in writ-of-payment proceedings
- An order requiring the defendant to submit a full settlement statement and documentation (Article 248 § 1 of the Code of Civil Procedure)
- Security for the claim by attachment of receivables held in bank accounts (Article 730¹ and Article 747(1) of the Code of Civil Procedure) — the strongest grounds for demonstrating a legal interest are documented risks that enforcement will be ineffective: arrears owed to multiple creditors or disposal of assets. A mere delay in payment does not automatically establish a legal interest.
Note on proof of delivery. Send letters in parallel by registered post with acknowledgement of receipt and by email to the contractual correspondence address, with delivery and read receipts enabled. An email read receipt is subject to the court’s free assessment of evidence (I C 186/20), but when combined with server headers and a reply from the recipient, it strengthens the evidence that the message was received. A read receipt generated from the other party’s domain (sent at 15:33, read at 15:40) may be stronger evidence than a postal item for which a collection notice was left.
Clause checklist — what to negotiate before signing
A dispute over retained security is a dispute over gaps in standard terms that no one reviewed from the right perspective. The clauses below eliminate those gaps. Each addresses one specific risk.
Name and nature of the payment
State expressly that the payment is a security deposit and is not earnest money within the meaning of Article 394 of the Civil Code, is neither remuneration nor a fee, and must be returned after settlement. This one sentence determines the burden of proof.
Exhaustive list of permitted deductions
Negotiate an exhaustive list of permitted deductions from the deposit, expressly excluding legal fees related to a dispute and stating that any items not included in the list must be pursued separately. The counterparty should not be able to add new items after the fact.
Closing date and reference rate
State in the agreement that the transaction is closed when a written declaration is delivered and that the exchange rate applicable on the date of delivery will be used for the settlement. Replace discretionary rates with an objective reference rate (e.g. the central bank’s published average exchange rate from a specified date and table). Prohibit the unilateral addition of a margin or spread — or, if a margin is to apply, specify its maximum numerical value.
Settlement formula
Set out the settlement formula as an equation, with a numerical example in an appendix. Add an obligation to provide a settlement statement specifying the date, the rate, how it was determined and the result — within a specific period after closing.
Repayment deadline and interest
Introduce a specific deadline for returning the deposit (e.g. 3 business days after settlement) and default interest. Otherwise, the claim has no fixed due date and a demand must be issued before any delay can arise.
Eliminating discretionary clauses
Remove “at its discretion” and “with the counterparty’s consent” clauses from the standard terms, replacing them with objective criteria or a deadline. Add a deadline for considering a request (e.g. 10 business days), with silence resulting in automatic closure under the agreement on the terms applicable on the date of the request.
Segregation of funds
Introduce an obligation to hold the deposit in an account segregated from the counterparty’s own funds and to identify that account upon request. In the event of a dispute, this provision can determine whether recovery is realistically possible. It is worth knowing that mere entry in the register of bureaux de change under the Foreign Exchange Law does not create an obligation to segregate client funds — the obligation to safeguard funds arises only once the activity is classified as a payment service under the Payment Services Act.
Language version and governing law
For bilingual agreements, specify which version will prevail in the event of discrepancies, as well as the governing law, the court with jurisdiction and the language of the proceedings.
The internal problem — when the risk does not lie with the counterparty
A refusal to return security is an external problem. But sometimes the real risk lies within the company.
If one person initiates, approves and handles a financial transaction worth hundreds of thousands of euros without leaving a documentary trail, the problem is not the counterparty but the procedure. This is particularly true where the same person blocks supplier diversification and their family relationship with the supplier’s beneficial owner has never been disclosed to the company’s governing bodies.
What to implement:
- Four-eyes principle — every financial transaction above an established threshold must be approved by someone other than the person who initiates it
- Exposure limit — no single hedging transaction may exceed an established threshold of documented foreign exchange exposure
- Declaration of relationships — obtain from the FX service provider (and every financial service provider) a declaration of personal and capital relationships with individuals on your company’s side, updated annually
- Prohibition on concentration — use at least two financial service providers
- Document archiving — retain documents confirming the foreign exchange exposure and its cessation (contract, orders, business correspondence, termination notice) from the date of the transaction. They will later be the only evidence of the underlying commercial rationale
- Mailbox retention — extend the retention period and secure attachments in a separate repository. A seven-day retention period can delete correspondence from the other party — its contents will then be known only from the lawyer’s summaries
The liability of a person who entered into a transaction while subject to a conflict of interest depends on their status. For an employee, the Labour Code applies — Article 114 (liability for loss caused by culpable failure to perform duties) and Article 122 (full liability for intentional loss). For a management board member — the Commercial Companies Code. For an attorney-in-fact representing both parties — Article 108 of the Civil Code: as a rule, the transaction remains provisionally ineffective until ratified by the principal.
Training that prevents losses
Three distinctions that everyone in your company who signs agreements involving security payments or approves financial transactions should understand:
| Distinction | Error | Consequence |
|---|---|---|
| Earnest money vs advance payment vs security deposit | Signing an agreement in which a payment is described as “earnest money” when the parties intend it to serve as security | The counterparty retains the funds without proving any receivable |
| Date of decision vs date of delivery of the declaration | Accepting the date shown in the counterparty’s system instead of the date on which the declaration was delivered | The counterparty selects the exchange rate from the date on which it was highest |
| Exhaustive vs non-exhaustive list | Accepting standard terms with a non-exhaustive list of deductions | The counterparty adds new items after the fact (margin, legal fees) |
These are the areas where losses arise. Training the sales team, finance team and management board on these three distinctions takes a few hours. Failing to provide that training leads to a months-long dispute and frozen funds.
We can help you
If a counterparty has refused to return your security — we handle the dispute from the initial request and complaint, through the pre-litigation demand, to a lawsuit accompanied by an application for security for the claim.
If you are about to sign an agreement involving a security payment — we review the standard terms with a focus on the deposit clauses, the closing time, the reference rate and the list of permitted deductions. We tell you what to negotiate and help you negotiate it.
If you want to put your internal procedures in order — we implement financial transaction authorisation rules: exposure limits, the four-eyes principle and supplier conflict-of-interest checks.
We work with technology companies, IT/SaaS service exporters and companies that regularly receive foreign-currency payments. We understand time pressure and know that a management board needs a memo with recommendations and an overview of the claims and litigation risks — not a lecture on civil law.
Contractual security in 2026 — key takeaways
A security deposit does not permanently become part of the counterparty’s assets. The party retaining the funds must identify and prove its receivable — you do not have to prove that no such receivable exists.
A refusal to return the funds is usually based on several mechanisms: a closing date that was selected rather than established, an added margin, legal fees outside the permitted list and the absence of a settlement statement. Each can be challenged — provided you follow the correct sequence of actions and have your own calculations.
The best protection consists of clauses negotiated before signing: an exhaustive list of permitted deductions, an objective reference rate, a specific repayment deadline and default interest. The cost of reviewing standard terms is incomparably lower than the cost of a months-long dispute.
If you need an agreement review, support in a dispute over retained security or assistance implementing transaction authorisation procedures — contact us.
Frequently asked questions
I paid a deposit and the counterparty will not return it — who has to prove what?
It depends on how the payment is classified. If it is a security deposit (rather than earnest money within the meaning of Article 394 of the Civil Code), the party retaining the funds must identify and prove a specific receivable and its amount. You must prove the agreement, the payment and that the repayment is due. If the counterparty fails to provide proof, it must return the entire amount.
The counterparty claims that it closed the transaction three weeks ago, although I only learned about it today. Which date counts?
The date on which the declaration reached you in a manner that allowed you to become acquainted with its contents (Article 61 § 1 of the Civil Code) — not the date of the counterparty’s internal decision, an entry in its system or a spreadsheet printout. The exchange rate applied, and therefore the settlement result, depends on this distinction. If the counterparty states “as a precaution” in its letter that the letter constitutes a declaration that the transaction is being closed, this proves that no earlier closing took place.
Can the counterparty deduct its lawyer’s fees for a dispute with me from my security deposit?
Check the list of permitted deductions in the agreement. If the list is exhaustive and does not include legal fees related to a dispute, the counterparty has no contractual basis for the deduction. Items not included in the list must be pursued separately. Set-off (Article 498 of the Civil Code) requires a receivable that is due and whose amount has been established.
Do I have to go through the contractual complaint procedure, or can I go straight to court?
Exhausting the complaint procedure is not an absolute prerequisite for bringing a lawsuit — an objection that the action was premature will not result in dismissal of a well-founded claim. However, bypassing the procedure may result in you being ordered to pay the costs of the proceedings even if you win. A complaint also provides a separate procedural argument: it forces the counterparty to state its position and allows you to demonstrate that extending the deadline without identifying specific circumstances is unjustified.
We have no document confirming why the transaction was entered into in the first place. Does that mean the case is lost?
No, but the absence of documentation confirming the transaction’s commercial rationale is a genuine weakness in litigation. It weakens the claim and allows the other party to allege a breach of the agreement. Instead of explaining the absence of a document that never existed, submit internal documents confirming the foreign exchange exposure and its cessation — in anonymised form and subject to the protection of trade secrets. This is why archiving documents from the date of the transaction is so important — they will later be the only evidence.
The counterparty is proposing amicable discussions — how can I tell whether this is a genuine offer?
Verify the terms. If the discussions are conditional on submitting the same documents whose absence was cited as the reason for the refusal, while the starting position remains “you recover nothing and must pay the shortfall” — this is not an offer to negotiate but a repeated refusal. A genuine settlement offer includes a concession or at least a willingness to change position in exchange for specific action on your part.
