Legal Question in Business Law in California

Re: Deposit as Contract

It depends in part on your understanding with the would-be seller. If you were under contract to buy that car, and the "security" aspect of the deposit was to assure your performance, then your subsequent failure to complete the purchase is a breach of contract.

At that point, the remaining question would be whether the deposit was reasonable as a measure of the seller's damages. If the deposit was in the range of 1% - 5%, it might be reasonable, especially if it was a hard to sell car. However, my guess is that forfeiture of a 10% deposit would be unreasonable.

It's also possible that you're not locked into a contract, either because some condition such as passing an inspection wasn't met, or because the deposit wasn't a down payment but rather a refundable security for a test drive or something of that sort.

If you feel you are entitled to the return of part or all of your deposit, either because you weren't obligated by contract to buy or because forfeiture of the entire deposit would be an excessive penalty for breach of contract, this might be a suitable small-claims case.