Your business partner entered the word “deposit" on the pro forma invoice and claims they can keep your money. They cannot — and not because it was actually an advance payment. Keeping a deposit requires two conditions to be met simultaneously, and your business partner meets neither of them. The paradox of this case is that the absence of a written contract, which your business partner was relying on, actually works against them.
Payments made against a pro forma invoice without a written contract are commonplace in Polish B2B transactions. Arrangements are made over the phone, money is transferred, and when the transaction falls through — a dispute begins over what exactly the payment was. According to the PARP report “The State of the SME Sector 2023", as many as 42.4% of the surveyed businesses identify late payments by business partners as a problem. Lost prepayments are a separate, often overlooked category of losses.
In this article, I will explain how to recover money paid against a pro forma invoice when the transaction falls through. You will learn why the word “deposit" in someone else’s document does not deprive you of the right to a refund, how to structure your arguments in a demand letter, and what to do to avoid ever falling into this trap again.
Before you begin — terms you need to know
Before we move on to the specific steps, it is worth clarifying a few terms. The distinction between them determines whether you will recover your money.
| Term | What it means | Legal basis |
|---|---|---|
| Advance payment | Part of the price paid in advance. If the contract is not performed — it must always be refunded, regardless of the reason | No separate regulation in the Civil Code — the provisions on unjust enrichment apply |
| Deposit | An amount paid upon conclusion of a contract as security for its performance. It may be retained only if two conditions are met simultaneously: the payer fails to perform the contract AND the recipient withdraws from the contract | Article 394 §1 of the Civil Code |
| Pro forma invoice | An informational document — it is not a VAT invoice, does not create a tax liability, and does not entitle the recipient to deduct VAT | biznes.gov.pl |
| Undue performance | A performance rendered without a valid legal basis or where its intended purpose was not achieved — it must be returned | Article 410 §2 in conjunction with Article 405 of the Civil Code |
| Standard contract terms (GTC) | Rules or general terms and conditions. They are binding only if they were provided to the other party before the contract was concluded | Article 384 §1 of the Civil Code |
Why the word “deposit" on a pro forma invoice proves nothing
This is the most common misunderstanding in disputes over prepayments. A business partner issues a pro forma invoice, labels the payment a “deposit" and, after the transaction falls through, claims the right to keep the money. This argument does not withstand legal scrutiny for several reasons.
A pro forma invoice is not a contract
A pro forma invoice is an informational document. It does not create a tax liability, is not a VAT invoice and — most importantly — does not constitute a contract between the parties (biznes.gov.pl). The label given to a payment in someone else’s document is, at most, one piece of interpretative evidence, but it does not automatically determine that Article 394 of the Civil Code applies.
The payment reference carries more weight than someone else’s pro forma invoice
The payment reference is usually the only document in which the payer personally described the purpose of the payment. If you entered “advance payment for…" or “prepayment for…", your description reflects your understanding of the transaction. The court will take this into account when determining the nature of the payment.
Ordinary court case law confirms that where a contract does not expressly identify a payment as a “deposit", the prepayment is treated as an advance payment (I C 136/21, XV GC 2847/15). Article 394 of the Civil Code is a default provision — it applies “in the absence of a different contractual stipulation or custom" (Civil Code — consolidated text).
Even if it were a deposit — your business partner does not meet the conditions for retaining it
Article 394 §1 of the Civil Code requires both of the following conditions to be met before the recipient may retain the deposit:
- Failure to perform the contract by the party that paid the deposit
- Withdrawal from the contract by the party that received the deposit
If either condition is not met, there is no right to retain the deposit. If your business partner never submitted a notice of withdrawal from the contract, never raised any objections, and assured you over the phone that the money would be refunded — there are no grounds for retaining the deposit. Their own silence and assurances become arguments against their defence.
How to recover your money — a two-tier argument structure
An effective demand for payment should not revolve around a dispute over whether the payment was a deposit or an advance payment. The strongest position is achieved through a two-tier argument structure.
Primary argument: the purpose of the payment was not achieved
The proper basis for demanding a refund is undue performance due to the intended purpose of the performance not being achieved (Article 410 §2 in conjunction with Article 405 of the Civil Code). You paid the money to receive goods or services. The goods were not delivered, or the service was not provided. The purpose of the payment ceased to exist — the money must be refunded.
This argument applies regardless of whether there is a written contract and regardless of how the payment was labelled.
Fallback argument: even a deposit cannot be retained
Even if the court classified the payment as a deposit, your business partner would still have to demonstrate that both conditions under Article 394 §1 of the Civil Code were met. If it was the business partner that failed to perform the contract (by not delivering the goods) and, in addition, did not submit a notice of withdrawal — they have no right to retain the payment.
Pre-empting your business partner’s defence
Your business partner may attempt to argue that they “no longer have the money" (Article 409 of the Civil Code — loss or consumption of the benefit). This defence applies only if the recipient should not have expected to be required to return it. It is worth stating pre-emptively in the letter that, once the collection deadline passed without effect, the business partner should have expected to be required to make a refund — which rules out this line of defence.
Anatomy of an effective pre-litigation demand letter
A pre-litigation demand for payment serves two purposes. First — it gives your business partner one last opportunity to make a voluntary refund. Second — it satisfies the requirement under Article 187 §1 point 3 of the Code of Civil Procedure to include information in the statement of claim about an attempt to resolve the dispute out of court.
Standard structure of the letter
| Element | What it contains | Why it is needed |
|---|---|---|
| Identification of the parties | Full details of the creditor and debtor | Identifies the parties to the dispute |
| Demand with a deadline | Amount, deadline of 7 days from receipt, bank account number for the refund | Makes the claim due and starts the accrual of interest (Article 455 of the Civil Code) |
| Facts of the case | Chronological description: arrangements → payment → non-performance → earlier demand | Builds the evidentiary narrative |
| Legal basis — primary argument | Article 410 §2 in conjunction with Article 405 of the Civil Code | Failure to achieve the purpose of the payment |
| Legal basis — fallback argument | Article 394 §1 of the Civil Code — conditions for retention not met | Counters the “it was a deposit" argument |
| Exclusion of Article 409 of the Civil Code | Identification of the point from which the business partner should have expected to make a refund | Blocks the “I spent the money" defence |
| Warning of legal action | Notice that the matter will be referred to court | Increases the pressure to make a voluntary refund |
| Classification of the letter | “Final pre-litigation demand" and “attempt to resolve the dispute out of court" | Satisfies Article 187 §1 point 3 of the Code of Civil Procedure |
| Attachments | Payment confirmation, pro forma invoice, correspondence | Evidence |
Interest — from when and at what rate
For an obligation with no specified due date, the claim becomes due only upon demand (Article 455 of the Civil Code). Without a demand, no interest accrues. The letter should therefore set a specific deadline — typically 7 days from receipt — and state that statutory interest for late payment will accrue after that deadline (Article 481 of the Civil Code).
In a B2B relationship (a commercial transaction), you may claim interest on commercial transactions, which is higher than ordinary statutory interest for late payment. For the period from 1 January to 30 June 2026, the rate is 14% for standard commercial transactions (Announcement in the Official Gazette of the Republic of Poland “Monitor Polski" 2025, item 1257).
| Type of interest | Calculation formula | Rate (first half of 2026) |
|---|---|---|
| Statutory interest for late payment | NBP reference rate + 5.5 percentage points | Variable — depends on the NBP rate |
| Interest on commercial transactions | NBP reference rate + 8 percentage points | 14% |
| Maximum interest | Twice the statutory interest rate for late payment | Article 481 §2¹ of the Civil Code |
Limitation period — how much time you have
A claim for the return of undue performance (Article 410 of the Civil Code) is subject to the general limitation periods under Article 118 of the Civil Code. In B2B transactions — where the claim is connected with business activity — the limitation period is 3 years. The period expires on 31 December of the relevant year (Civil Code — consolidated text).
The period begins on the earliest date on which the claim could have become due (Article 120 §1 of the Civil Code):
- If the contract was never concluded — from the date of payment
- If the legal basis ceased to exist later (e.g. withdrawal from the contract) — from the date of that event
Delaying the demand does not postpone the start of the limitation period. The court will adopt the earliest objectively possible due date (Supreme Court II CSKP 1908/22). Therefore, the sooner you send the demand, the more time you will have to pursue the claim.
When to submit a notice of withdrawal from the contract
If the parties concluded a reciprocal contract (even orally) and your business partner failed to perform their obligation — it is worth considering withdrawal from the contract under Article 491 of the Civil Code.
The safest sequence is as follows:
- Demand setting an additional deadline — give your business partner a specific deadline to perform the obligation, with a warning that you will withdraw from the contract
- Notice of withdrawal — once the deadline passes without effect, submit a notice of withdrawal from the contract
- Demand for a refund — under Article 494 of the Civil Code, demand the return of your performance and set a payment deadline
Steps 2 and 3 may be combined in a single letter — which is both permissible and practical (I C 41/24).
If the demand is prepared by an attorney, check whether the scope of the power of attorney includes making declarations of intent, including notices of withdrawal. A common mistake is to grant authority to withdraw without actually including the notice in the letter — or vice versa.
Your business partner’s GTC that you never received
Your business partner may try to rely on their rules or general terms and conditions stating that the payment constitutes a deposit or is non-refundable. This defence is ineffective if the standard terms were not provided before the contract was concluded.
Article 384 §1 of the Civil Code is unequivocal: standard terms are binding if they were provided before the contract was concluded. In its judgment I CSK 241/17, the Supreme Court stressed the need to ensure that the other party has an opportunity to review the standard terms before concluding the specific contract.
Hierarchy of effective delivery methods for GTC
| Method of delivery | Level of legal certainty |
|---|---|
| PDF attached to an email before the contract is concluded | High |
| Direct link to a specific version of the document | Medium-high |
| General link to a webpage containing the GTC | Medium — version control issues |
| Reference in an email footer | Low — generally insufficient |
| Reference on a pro forma invoice | Low — the pro forma invoice is sent after the arrangements have been made |
The absence of documents on your business partner’s side works against them. If they did not provide the GTC before the contract was concluded, they cannot rely on them.
Evidence — what to secure before sending the demand
Evidence is particularly important in disputes over prepayments where there is no written contract. Secure it before sending the demand.
Evidence to collect
- Payment confirmation showing the full reference — this is your description of the purpose of the payment
- Your business partner’s pro forma invoice — this will show how the business partner described the payment
- Email correspondence — commercial arrangements, confirmations, assurances of a refund
- SMS and instant messages — these may constitute evidence as text-containing documents (Article 243¹ of the Code of Civil Procedure) or other means of evidence
- Recordings of telephone calls — admissible if the person making the recording participated in the conversation (Supreme Court II PSK 203/21)
- Dates of all agreed collection deadlines — including those that did not materialise (the most commonly missing information)
- Evidence that no written contract existed and no GTC were provided — confirmation that your business partner did not send any documents
A complete message history showing dates, telephone numbers and account identifiers, consistent with the invoices and bank transfers, has the greatest evidentiary value. A screenshot without the source file is weaker evidence.
Cost of pursuing a claim — is it worth going to court over a few thousand zlotys?
Claims of up to PLN 20,000 are heard in simplified proceedings (Article 505¹ §1 of the Code of Civil Procedure). Electronic writ-of-payment proceedings (EPU) make it possible to obtain a payment order remotely — the average waiting time for an order in 2025 was 49 days (gov.pl). This is the time required to issue the order, not to recover the money — if an objection is filed, the case proceeds before an ordinary court.
| Cost item | Approximate amount (claim of PLN 1,500–5,000) |
|---|---|
| Court fee in EPU proceedings | 1/4 of the standard fee, minimum PLN 30 |
| Minimum fee for legal representation | PLN 900 |
| Correspondence and service costs | Several dozen zlotys |
The legal representation fees awarded against the opposing party may not cover the attorney’s actual fee (Journal of Laws 2026, item 215). This is why a pre-litigation demand is so important — it gives you an opportunity to recover your money without incurring litigation costs.
Tax consequences of refunding a payment made against a pro forma invoice
A pro forma invoice is not a VAT invoice and does not entitle the recipient to deduct VAT. If an advance payment invoice was issued after the prepayment was received (Article 106b(1)(4) of the VAT Act), a refund requires the issue of a corrective invoice (Article 106j(1) of the VAT Act). A buyer who deducted VAT on the basis of the advance payment invoice should reduce the input tax after receiving the correction (VAT Act — consolidated text).
If only a pro forma invoice was issued and no advance payment invoice was issued — there is nothing to correct for VAT purposes. The refund transfer itself does not replace a corrective invoice.
The other side of the coin — if you accept prepayments
Exactly the same rules apply in reverse. If your company accepts prepayments without a contract, without providing GTC and without obtaining a written notice of withdrawal from the customer — the absence of documents now works against you.
To protect yourself against multiple refund claims:
- Provide the GTC or rules before the contract is concluded — and retain proof of delivery (a PDF attached to an email, confirmation of receipt)
- Confirm the customer’s cancellation with a written notice of withdrawal — dated and signed
- If the payment is intended to constitute a deposit — state this expressly in the contract with reference to Article 394 of the Civil Code, specify the consequences of non-performance and the rules for crediting it towards the price
- If the payment is intended to be an advance payment — exclude the application of Article 394 of the Civil Code and specify the refund deadline
Checklist: before paying against a pro forma invoice
| No. | Action | Time |
|---|---|---|
| 1 | After a telephone conversation, send a confirmation email specifying the subject matter, price, delivery date and nature of the payment (advance payment or deposit) | 5 minutes |
| 2 | Describe the purpose of the payment in your own words in the payment reference: “advance payment for…", “prepayment for…" — do not mindlessly copy the description from someone else’s pro forma invoice | 1 minute |
| 3 | Check whether your business partner provided you with their GTC/rules before the contract was concluded — if not, retain evidence that they were not provided | 2 minutes |
| 4 | Keep a complete set of documents: the pro forma invoice, payment confirmation, email correspondence and SMS messages | Ongoing |
Checklist: before sending the demand
| No. | Action |
|---|---|
| 1 | Answer four questions: is there a written contract? Did the business partner provide the GTC? What does the payment reference say? Did the business partner submit a notice of withdrawal? |
| 2 | Build the demand around two arguments: the primary argument (Article 410 §2 in conjunction with Article 405 of the Civil Code) + the fallback argument (Article 394 §1 of the Civil Code — conditions for retention not met) |
| 3 | Include a pre-emptive exclusion of the defence under Article 409 of the Civil Code |
| 4 | Set a payment deadline (7 days from receipt), provide the bank account details and specify the basis for interest |
| 5 | Classify the letter as a “final pre-litigation demand" and an “attempt to resolve the dispute out of court" (Article 187 §1 point 3 of the Code of Civil Procedure) |
| 6 | Secure the evidence: payment confirmation, pro forma invoice, correspondence, collection deadline dates |
| 7 | Check that the power of attorney is consistent with the contents of the letter — if the letter contains a notice of withdrawal, the power of attorney must cover it |
| 8 | Go through the checklist: no unfilled placeholders, consistent places and dates, signature consistent with the register, complete attachments, working comments removed |
Organise your purchasing process — before another payment gets stuck with a business partner
A few minutes spent on the process instead of a dispute over several thousand zlotys. Three steps — an email confirming the arrangements, a precise payment reference and one sentence defining the nature of the payment — virtually eliminate the risk of losing a prepayment.
If a business partner is withholding your prepayment — send us the pro forma invoice, payment confirmation and correspondence. We will assess your prospects and prepare a pre-litigation demand together with a special power of attorney.
If you want to organise your purchasing and sales processes — we will prepare concise order confirmation templates, clauses defining the nature of payments, and your GTC with a proper delivery procedure. Contact us.
Frequently asked questions
I paid against a pro forma invoice, but the business partner did not deliver — can I recover the money without a written contract?
Yes. The absence of a written contract does not deprive you of the right to a refund. The proper legal basis is undue performance — the purpose of the payment was not achieved (Article 410 §2 in conjunction with Article 405 of the Civil Code). The absence of a written contract actually works against your business partner, as it makes it more difficult for them to prove that the payment was a deposit.
The business partner wrote “deposit" on the pro forma invoice. Does that mean they can keep my money?
No. The label used in someone else’s document does not determine the nature of the payment. Retaining a deposit requires both conditions under Article 394 §1 of the Civil Code to be met: failure to perform the contract by the payer and withdrawal from the contract by the recipient. If it was the business partner that failed to perform the contract and they did not submit a notice of withdrawal — they have no right to retain the payment, regardless of how it was labelled.
Does what I enter in the payment reference really matter in court?
Yes. The payment reference is often the only document in which you personally described the purpose of the payment. The words “advance payment" or “prepayment" in the reference carry more weight in a dispute than the word “deposit" on someone else’s pro forma invoice. You should therefore describe the purpose of the payment in your own words and not mindlessly copy the description from your business partner’s pro forma invoice.
Do I have to send a demand for payment before going to court?
Strictly speaking, this is not an absolute requirement, but the statement of claim must include information about an attempt to resolve the dispute out of court (Article 187 §1 point 3 of the Code of Civil Procedure). A pre-litigation demand satisfies this requirement. Moreover — where an obligation has no specified due date, the claim becomes due only upon demand (Article 455 of the Civil Code), and interest begins to accrue after the deadline specified in the demand.
The business partner claims they have already spent the money. Is that the end of the matter?
No. A defence based on the consumption of the benefit (Article 409 of the Civil Code) applies only if the recipient should not have expected to be required to return it. If the deadline for collecting the goods passed without effect — from that point onwards, your business partner should have expected to make a refund. It is therefore worth pre-emptively excluding this line of defence in the demand.
How much time do I have to pursue the return of a prepayment?
In B2B transactions, a claim for the return of undue performance becomes time-barred after 3 years (Article 118 of the Civil Code). The limitation period begins on the earliest date on which the claim could have become due — not on the date of the demand. Delaying the demand does not postpone the start of the limitation period.