Legal Definitions - advance

An advance refers to a payment or provision of money or goods made ahead of time, before the full value, service, or consideration is received in return. It is typically given with the understanding that it will either be repaid, deducted from a future payment, or accounted for in a subsequent transaction. Advances serve various purposes, such as securing the delivery of goods or services, covering initial costs, or providing an early payment against a future obligation.

Here are some examples to illustrate the concept of an advance:

• Author's Book Advance: A publishing house offers a new author $10,000 as an advance for their upcoming novel. This payment is given to the author before the book is even written or published, and certainly before any copies are sold. The publisher is providing funds upfront, which the author will keep. However, the author will not receive any further royalties from book sales until the initial $10,000 advance has been "earned out" by the book's sales. This illustrates an advance as money given before the full consideration (royalties) is received, with an expectation of future adjustment (deduction from royalties).

• Construction Project Upfront Payment: A homeowner hires a contractor to build an extension on their house and agrees to pay 20% of the total project cost upfront before construction begins. The 20% payment is an advance because the homeowner is providing a portion of the money before any construction work has been completed or materials purchased. This upfront payment helps the contractor cover initial expenses like purchasing materials or mobilizing equipment, and it also acts as security, ensuring the homeowner's commitment to the project. The remaining balance will be paid as work progresses or upon completion.

• Employee Payroll Advance: An employee faces an unexpected emergency and requests $500 from their employer, which will be deducted from their next two paychecks. This $500 is an advance because the employer is providing money to the employee before it has been earned through work. It's an early payment against future wages. The expectation is that this advance will be repaid by being deducted from the employee's upcoming paychecks, illustrating an advance as an early payment of a debt with a future adjustment.