Construct · 1 fields · 1 citations

deposit: a standalone construct

One name. One construct. A landmark on the map.

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deposit1 CONSTRUCTSecurity depositWILLIAMSON · SECURITY

A single standalone construct; nearby constructs are located against it in the Collider. Tap a field for its definition, unit, and measures.

Contract economics and law

A stake pledged to secure a bargain

A sum handed over up front as security or part payment, held while a bargain is carried out and forfeited to the other party if the payer defaults: a security deposit on a rental or an earnest-money deposit on a sale works this way. Williamson's 1983 Credible commitments: Using hostages to support exchange set out the economic logic of such a pledge, showing how posting a stake that can be lost makes a promise credible and holds a deal together. The referent is a forfeitable stake defined by a contract, returned only if the obligation is met, and unlike a bank deposit it is not an asset the holder owes back but money the payer may lose; it is not a mineral in rock or a layer laid onto a surface.[1]

Unit
A sum given as security or part payment, set as a fixed amount or a fraction of the price
Recovery means
Returned when the obligation is met in full, but forfeited to the other party on default
Measured by
Fixed by contract as an amount or a percentage of the price, and held or escrowed as a recorded balance until the deal closes

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Nearby constructs

liability2 fields · 2 citationsjingle · one word, two constructscollateral3 fields · 3 citationsjingle · one word, three constructsprecipitation4 fields · 4 citationsjingle · one word, four constructs

References

  1. Williamson, O. E. (1983). Credible commitments: Using hostages to support exchange. The American Economic Review, 73(4), 519–540.

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