Lay-by agreements

A 'lay-by' is essentially a contract where you pay a trader for a product over a period of time rather than upfront.

Under the Australian Consumer Law, a lay-by agreement exists when you:

• pay for the goods in at least two instalments (when the agreement is called a lay-by); or
• pay for the goods in at least three instalments (when the agreement is not specifically called a lay-by agreement); and
• do not receive the goods until the full price has been paid.

Any deposit you pay is also considered to be an instalment.

Documentation

When you enter a lay-by agreement it must be in writing and specify all the terms and conditions, including any termination charge.  The trader must give you a copy of the agreement.

Termination charge

The trader may charge a termination fee if you decide to cancel a lay-by agreement (unless the trader has breached the lay-by agreement).  The amount of the fee must not be more the trader’s ‘reasonable costs’ relating to the agreement.

Cancelling a lay-by agreement

If you cancel a lay-by agreement, the trader must refund all amounts you have paid, except for the termination charge.  If the lay-by payments paid do not cover the termination charge, the trader can recover the outstanding amount as a debt.

A trader can only cancel a lay-by agreement if:

• you have breached a term of the agreement (such as missing a scheduled payment);
• they are no longer trading; or
• the goods are no longer available due to circumstances outside the trader’s control.

More information

For further information on your consumer rights and options, contact the ACCC or your local consumer protection agency. Your local office may also be able to conciliate (help you negotiate with the trader).