Index
What is a reservation contract and why do you need it
Reservation, deposit, and earnest money: they are not the same thing
What a good reservation contract must include
How much to charge as a deposit
What happens when the buyer backs out
What happens when the dealership breaches the agreement
Online and remote reservations
Common mistakes with reservation contracts
Conclusion
Frequently asked questions
Few documents cause as many conflicts in a dealership as a poorly drafted reservation contract. The client leaves a deposit, the dealership takes the car off the market, days pass, and the client decides they no longer want it. The question then is always the same: can I keep the deposit?
The answer depends entirely on how the contract is drafted. A well-crafted reservation contract protects the dealership, makes it clear what happens if someone backs out, and avoids arguments that end in claims or negative reviews. A vague or non-existent contract turns every reservation into a risk.
This article explains how to draft a reservation contract that works in practice, what the difference is between the different types of deposits (which are not legally the same thing), and how to handle common situations: the client who disappears, the one who asks for a refund, and the one who wants to reserve without coming to the dealership.
What is a reservation contract and why do you need it
A reservation contract is an agreement by which the buyer pays a sum of money to the dealership to secure the purchase of a specific vehicle. In exchange, the dealership commits to not selling that car to anyone else for a specified period.
It is not a sales contract. The sale is formalised when the full payment is completed and the ownership of the vehicle is transferred. The reservation is the preliminary step: a mutual commitment with an amount of money as a guarantee.
For the dealership, the reservation serves three essential functions. First, it filters buyers with genuine intent from those who are just browsing. Second, it justifies taking the car off the market (stopping its listing on portals and showing it to other interested parties). Third, it protects the dealership financially if the customer backs out, as the dealership has lost time and sales opportunities during the reservation period.
You can download our Vehicle Reservation Contract template, which helps you easily register, organise, and manage vehicle reservations, ready to use.
Reservation, deposit, and earnest money: they are not the same thing
This is the point where the most confusion exists, and also the one with the greatest legal consequences. The terms "reservation", "deposit", and "earnest money" (arras) are used interchangeably in everyday language, but legally they are different things.
Penitential earnest money (Article 1454 of the Civil Code). These are the most common in vehicle sales. They act as an "exit door" for both parties. If the buyer backs out, they lose the deposit. If it is the seller who defaults, they must return double the amount received. These are the earnest money terms that best protect the dealership, because the consequences of backing out are clear from the start.
Confirmatory deposits. These act as an advance on the price. If the buyer backs out, they do not automatically lose the deposit: the dealership would have to make a legal claim for the actual damages caused by the breach. They are less protective for the seller.
Simple deposit (or advance). If the contract does not specify the type of earnest money, courts tend to interpret the deposit as a simple advance on the price. This means that if the buyer backs out, they can claim the refund of the deposit, and the dealership would have to prove the damages suffered to retain it.
The practical difference is huge. With penitential earnest money, if the customer does not complete the purchase, you keep the deposit, period. With a simple deposit, you could end up in a consumer claim or facing a negative review trying to hold onto money that you are not legally sure you can keep.
Therefore, the recommendation is always to expressly include in the contract that the earnest money is penitential and to reference Article 1454 of the Civil Code. If the contract does not specify this, the protection you have is much lower.
What a good reservation contract must include
For a reservation contract to be valid, clear, and protective of the dealership, it must include at least:
Full details of both parties. Full name or company name, NIF/CIF (ID/VAT number), and address of both the buyer and the seller (dealership).
Detailed description of the vehicle. Make, model, version, number plate, chassis number (VIN), year of first registration, mileage, and colour. The more specific, the less room for later arguments. The chassis number is the most important detail because it is the unique identifier.
Deposit amount and payment method. The exact amount, how it is paid (cash, bank transfer, card), and the date of payment.
Type of earnest money. Express mention that it is penitential earnest money (arras penitenciales) in accordance with Article 1454 of the Civil Code. This phrase is what protects you: without it, interpretation is left to a judge.
Total price of the vehicle. The agreed sale price, making it clear whether or not it includes VAT, transfer fees, and other expenses.
Validity period. Deadline to complete the purchase. Usually, this is between 7 and 15 working days. Longer periods (30 days or more) increase the risk of the buyer changing their mind or you losing sales opportunities.
Vehicle conditions. The condition in which the car is delivered, warranty included (if any), equipment, and any agreement regarding repairs or preparation prior to delivery.
Consequences of breach of contract. What happens if the buyer does not complete the purchase (loses the deposit) and what happens if the dealership does not comply (returns double).
Signature of both parties. With date and place. If remote, electronic acceptance with IP registration and date is valid.
How much to charge as a deposit
There is no fixed amount, but there is a range that balances dealership protection and accessibility for the buyer.
The usual: between 5% and 15% of the vehicle's price. On a 12,000-euro car, that means between 600 and 1,800 euros. Many dealerships work with a flat rate (300, 500, or 1,000 euros) regardless of the car's price, for simplicity.
Too low (less than 3%). It does not act as a real barrier for the buyer. If they only pay a 100-euro deposit on a 10,000-euro car, it is easy for them to back out: they lose very little. For the dealership, the cost of having taken the car off the market for one or two weeks is higher than the deposit collected.
Too high (more than 20%). It may deter the buyer from reserving, especially if they have not yet finalised financing or are still comparing options. Furthermore, an excessively high deposit may be challenged by consumer protection bodies as disproportionate.
The sweet spot depends on the price of the car and your customer profile, but between 5% and 10% is usually the most balanced range.
What happens when the buyer backs out
This is the most common situation and the one that causes the most problems if the contract is not properly drafted.
With penitential earnest money (well-drafted contract). The dealership retains the deposit. There is no argument: Article 1454 of the Civil Code clearly establishes this. The buyer loses the deposit as compensation for the breach, and the dealership can put the car back up for sale.
With a simple deposit or ambiguous contract. The buyer may claim a refund of the deposit, arguing that it was not specified as non-refundable. If the matter goes to consumer arbitration or court, the dealership might have to prove the actual damages suffered (lost sales opportunities, stock holding costs during the reservation period). It is more complicated, slower, and riskier.
Practical example. A customer reserves a Seat León for 14,000 euros with a 1,000-euro deposit (penitential earnest money). The dealership takes the car off Coches.net, AutoScout24, and Wallapop. After 10 days, the customer says they found another cheaper car. The dealership retains the 1,000 euros and relists the car. Without a contract or with a simple deposit, the customer could claim back the 1,000 euros, and the dealership would have lost 10 days of visibility without compensation.
What happens when the dealership breaches the agreement
If it is the dealership that sells the car to someone else or cannot deliver on what was agreed:
With penitential earnest money. The dealership must return double the deposit to the buyer. If the customer paid a 1,000-euro deposit, the dealership returns 2,000 euros to them.
With a simple deposit. The dealership must return the full deposit, and the buyer may also claim compensation for damages.
The recommendation for the dealership is not to accept a reservation unless you are certain you can fulfill it. If the car has any pending issues (MOT, repair, documentation), it is better to resolve them before signing the reservation or state clearly in the contract that delivery is subject to that condition.
Online and remote reservations
It is increasingly common for buyers to want to reserve a car without traveling to the dealership, especially if they are in another city. Remote reservations are perfectly valid, but they require a slightly more careful process.
Sending the contract by email. You can send the contract as a PDF to the buyer, who signs it digitally or prints it, signs it by hand, and returns it scanned. For greater legal security, use electronic signatures (there are free and paid tools that generate a signature certificate).
Payment of the deposit by transfer or payment gateway. A bank transfer leaves a record of the transaction and reference. If you use a payment gateway (card), keep the receipt with the amount, date, and payer details.
Collect online deposits for your dealership with Dealcar. Learn more at dealcar.io/dealcar-pay.
Written confirmation. Send the customer a confirmation via email or WhatsApp with the summary of the reservation (vehicle, price, deposit paid, deadline). This reinforces the validity of the agreement and reduces claims.
Right of withdrawal. If the reservation is made remotely (without physical presence at the dealership), the buyer may be entitled to a 14-day cooling-off period under the General Law for the Defence of Consumers and Users. This applies to sales to final consumers (individuals, not businesses). This is a point worth consulting with your legal advisor to include the appropriate clause in the contract.
To manage the entire reservation process paperlessly, we recommend our article on the benefits of having a website for your dealership, where we explain how to integrate online reservations into your site.
Common mistakes with reservation contracts
Not specifying that the earnest money is penitential. If the contract only says "deposit" or "reservation" without more, the default interpretation does not favour you. Always include the reference to Article 1454 of the Civil Code.
Not putting a validity period. Without a deadline, the reservation remains open indefinitely. The buyer could take weeks to decide, and you have a car off the market without being able to sell it. Always establish a timeframe (7-15 days) and make clear what happens if it expires without completing the purchase.
Accepting verbal reservations. A reservation without a written contract is a ticking time bomb. If the customer pays 500 euros in cash without signing anything and then backs out, you have nothing to justify keeping that money. Always a signed contract, always.
Not describing the car in sufficient detail. If the contract says "white Seat León" and it turns out you have two, there is a problem. The chassis number (VIN) is mandatory to identify the vehicle unambiguously.
Not including the total price or expenses. If the deposit is 1,000 euros on a price that has not been made clear, or if the buyer thought the transfer fees were included and they were not, you have a conflict. Get everything in writing: car price, VAT, fees, warranty.
Refunding the deposit due to social pressure. If the contract specifies penitential earnest money and the customer backs out, you have the right to keep the deposit. Returning it because the customer gets angry, threatens a bad review, or insists a lot is a legitimate commercial decision, but it is not a legal obligation. Know your position before you decide. To protect yourself against these situations, we recommend consulting our guide on how to avoid claims after selling a used car.
Conclusion
A well-drafted reservation contract is one of the simplest and most effective tools to protect a dealership. The key lies in three points: specifying that the earnest money is penitential (Article 1454 of the Civil Code), setting a clear validity period, and describing the vehicle with its chassis number included. With that, conflicting situations are resolved without ambiguity.
More than 750 dealerships already use Dealcar to manage their business.
From the platform, you can register a car reservation, link it to the file with the customer's details and the amount, and generate the contract with the correct legal clauses. All in one place, with no loose templates or lost papers. If you want to see how it works, you can discover Dealcar's sales file module.
If you want more information, request a demo at dealcar.io
Frequently asked questions
How much is usually charged as a deposit for a car?
Between 5% and 15% of the vehicle's price, or a flat rate of between 300 and 1,000 euros. The amount should be enough for the buyer to show real commitment, but not so high as to deter them from reserving.
Can I keep the deposit if the client backs out?
Yes, provided that the contract expressly specifies that it consists of penitential earnest money in accordance with Article 1454 of the Civil Code. If the contract does not clarify this, withholding it can be disputed.
Is it mandatory to sign a reservation contract?
It is not legally mandatory, but it is highly recommended. Without a signed contract, if a conflict arises, you have nothing to back up your position. The contract protects both parties.
What happens if I sell the reserved car to someone else?
If there is penitential earnest money, you must return double the deposit to the original buyer. Additionally, the buyer could claim further damages. Do not sell a reserved car unless the deadline has expired.
Can a reservation be made via WhatsApp or email?
Yes. A remote reservation is valid if there is a signed contract (which can be digital) and a registered payment. The important thing is that there is a document detailing all conditions (vehicle, price, deposit, deadline, type of earnest money) and acceptance from both parties. Bear in mind that remote sales to consumers may be subject to a 14-day right of withdrawal.
Does the reservation contract replace the purchase agreement?
No. They are different documents. The reservation secures the commitment to purchase. The purchase agreement is formalised when payment is completed and ownership is transferred. Ideally, the purchase agreement should be signed at the time of vehicle delivery. To find out what to include in the sales contract, consult our legal guide to sales contracts for professionals.
