What is a deposit?

A deposit is a form of financial security provided to support performance of a contract, legal obligation, or liability (for example, rent payment).

This is an agreement in which one person, known as a guarantor, agrees to take responsibility for fulfilling certain commitments in the event that the principal person fails to do so.

Provides security and confidence to the creditor, as it ensures that there will be compensation in case of default.

Related concepts

• What is the difference between a deposit and a guarantee?
• Good faith
• Creditor