Earnest-money, withdrawal of a bid and deposit as institutes of contract law

Earnest-money has a wide range of application in a practice if we are talking about two-sided contract law agreements. It is a kind of a true, real guarantee of fulfilling the agreed obligations. Earnest-money realizes its function of a guaranteed obligation in the sense of a psychological pressure on a debtor to fulfill his obligation. The realization of the earnest-money depends on the realization of the main contract. The party providing earnest-money is obliged to give it to the other party at the time of signing a contract. The abandonment should be paid only if there is an usage of the right to the abandonment of the contract. The agreed punishment serves as a compensation for a damage which a creditor has suffered because of a breach of contract. So, besides a preventive effect, it has a repressive one too.