Lay-by agreements allow consumers to pay for goods by instalments and receive them when the total price has been paid. These agreements are common and legal. However, to protect consumers, the ACL contains a number of provisions regulating their use. These require the business to:
- record the agreement in writing
- give a copy of the agreement to the consumer
- express the agreement clearly and in language that is easy to understand
- not require the consumer to pay a termination charge unless the agreement is terminated by the consumer and the supplier is not in breach of the agreement
- if a termination charge is payable, charge no more than the business's reasonable costs.
The consumer may terminate a lay-by agreement at any time before the goods have been delivered and for any reason. Following termination:
- if the business has not breached the agreement, the consumer can be required to pay any reasonable termination charge provided for in the agreement
- the business is entitled to recover any unpaid termination charge if the amounts paid by the consumer are insufficient to cover the charge. However, the supplier is not entitled to any other remedy
- if the business is in breach, the consumer does not have to make such a payment
- the business must refund to the consumer all the amounts they have paid, other than any termination charge that is payable. Failure to do so is a criminal offence.
The business may terminate an agreement only if:
- the consumer is in breach of the agreement
- the business is no longer trading, or
- the goods are no longer available.
It is a criminal offence for a business to terminate an agreement for any other reason.