In the lead up to Christmas, the Federal Court has found that Chrisco’s lay-by agreements for their Christmas hampers included an unfair term. Chrisco offers its customers an option to pay for Christmas hampers in instalments, where the hamper is delivered to them once they have made the final payment.

In November 2015, the Federal Court ruled that the agreement included an unfair term that breached the Australian Consumer Law. The term allowed Chrisco to continue receiving direct debit payments even after the customer had made the final payment for the goods. The term placed the responsibility on the customer to ‘opt-out’ of the payment plan to avoid further debits.

The court also found that the Cancellation Policy in previous lay-by agreements stated that the customer could not cancel their order after they had made the final payment. However, customers can cancel lay-by agreements at any point before the items are delivered.

What Does This Mean for Businesses Offering Lay-By Agreements?

Make sure that your written agreements are clear. They should not include unreasonable terms that may breach Australia’s Consumer Law.

You must provide your customers with a written lay-by agreement and give them an opportunity to read the terms. Further, you should include termination clauses in the agreement, clearly setting out how customers can terminate the agreement and under what circumstances your business can cancel the lay-by. 

You will need to include whether you intend to charge termination fees where the customer ends the agreement.The termination fee cannot be unreasonable, and it cannot be more than what it costs you to store the items, or arrange for the lay-by.

What Should Customers Know About Lay-By Agreements?

Before signing a lay-by agreement, you should make sure to read the terms carefully. Shops offering lay-by agreements are required to give you a written agreement that clearly expresses the conditions. If you don’t understand what the agreement says, you should seek advice before signing. If you are unsure about your rights and obligations, or the shop’s, it is sensible first to check and clarify what they are to know where you stand.

Many people who agreed to Chrisco’s lay-by agreement may not have known that they agreed to an ‘opt-out’ direct debit arrangement, or that it was a term that would be considered unfair.


Lay-by agreements do not escape Australia’s Consumer Law. If you are a business, it is sensible to have a consumer lawyer draft or review your agreement to ensure it is compliant. 

If you are a customer, and on the other side of the agreement, you will want to take steps ensuring that you understand what you’re signing. 

You should clarify with the business any terms that seem unclear or unreasonable. Don’t let those retail stores steal your Christmas spirit!

Questions? Get in touch on 1300 544 755.

Dhanu Eliezer
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