A lay-by agreement is when you pay for goods in at least two or three instalments, and do not receive the goods until the full price has been paid. Any deposit you pay is considered an instalment.
Lay-by agreements are helpful when you are making a big purchase and don’t want to pay with credit. They allow you to distribute the cost of an item over a longer period – often eight to 10 weeks. The item you want to buy is put aside, so no other customer can buy it while you pay off the cost.
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A lay-by agreement is a form of contract.
Like any contract, lay-by agreements must be in writing and specify all the terms and conditions, including any fees and termination charges.
Some lay-by agreements include service fees and require instalments to be paid on certain dates.
When you enter a lay-by agreement you agree to pay the price of the item at the time you signed the contract. If the item goes on sale later, you are still required to pay the original price you accepted in the agreement.
You must be given a copy of your lay-by agreement. It is your responsibility to read the contract before you sign it. Keep this for your records and in case you need to refer to it during a dispute.
Learn more about contracts.
The business must refund all payments, except for the termination charge. If the lay-by payments paid do not cover the termination charge, they will ask you to pay more.
The business can charge a termination fee if you decide to cancel a lay-by agreement.
The amount of the fee must not be more than the ‘reasonable costs’ relating to the agreement.
For example, if you lay-by a winter coat in June but decide to cancel the agreement in August, it may be more difficult for the store to sell the coat at the end of winter. The termination charge could take into account any need to discount the coat.
A business should not cancel a lay-by agreement unless:
Follow these tips to protect your rights when buying through a lay-by: