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Lay-by Tips For A Merry Christmas

Delia Rickard
15th November, 2015

With Christmas just around the corner, you may be paying off or buying presents using lay-by. But, what are your consumer rights if you want to cancel the purchase?

Entering into a lay-by agreement

It doesn’t matter whether or not the business calls the purchase a ‘lay-by’, your rights under the Australian Consumer Law may still apply.

Say you want to purchase a new mountain bike, it is a lay-by agreement if you:

  • pay for the bike in at least two instalments (when the purchase is called a ‘lay-by’), or
  • pay for the bike in at least three instalments (even if the purchase is not specifically called a ‘lay-by), and
  • do not receive the bike until the full price has been paid.

Any deposit you pay on the bike counts as an instalment.

In any of these scenarios, the bike retailer must provide you with a written lay-by agreement, which should specify all the terms and conditions, including any termination fee in plain language.

Cancelling a lay-by agreement

The deposits and instalments you pay are refundable if you cancel the lay-by.

However, be aware that you may incur a termination fee if you cancel (if the agreement provides that one is payable).

There is no set amount or percentage for a termination fee, but it shouldn’t be more than the businesses ‘reasonable costs’ to cover things like storage or administration costs.

Termination fees only apply if you cancel the lay-by. While it’s possible for a business to cancel a lay-by agreement in certain circumstances, they cannot charge you a termination fee and must refund all payments made.

ACCC’s lay-by tips

  1. Before signing the agreement and paying your deposit, make sure you readand agree with the terms and conditions, including payment dates, amounts and any extra charges you’ll have to pay if you decide to cancel.
  2. Keep copies of the agreement and receipts for the deposit and all instalmentsin case there is a problem later.
  3. If you have a problem with a lay-by agreement, try to resolve it by discussingit with the business first. Refer to your written agreement and receipts for evidence if necessary.
  4. Remember all your usual consumer guarantee rights apply. This means if thegood you bought is faulty or does not do what you asked for, you may be entitled to a remedy which includes a right to a repair, replacement or refund.
  5. Delia Rickard
    Deputy Chair
    Australian Competition and Consumer Commission

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