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Are you extremely organised and already started doing your Christmas shopping? Perhaps you have found the perfect presents guaranteed to make your loved one’s smile. The only problem is, you don’t have enough money right now. Many retail stores conveniently offer an arrangement where you can purchase an item by paying the amount in instalments instead of upfront. This is called lay-by.

This article is for customers who are considering purchasing items on lay-by. It will help with understanding what to look out for in a lay-by agreement, and ensuring you know your rights.

What is a Lay-By Agreement?

A lay-by agreement is when a store allows you to pay for items in at least two or three instalments. Under a lay-by agreement, you will not receive the item until you have paid the full price.

The lay-by agreement itself will set out the terms of the arrangement including the the payment plan and a termination fee if you cancel the agreement.

What is in a Lay-By Agreement?

The store is required to give you a written agreement that sets out the terms and conditions. Read the agreement carefully so that you know what are your rights and obligations. If you don’t understand some of the requirements, make sure you clarify. The business is obligated to give you a clear, simple written document outlining the terms and conditions.

How Can I Cancel the Lay-By Agreement?

If you decide you don’t want to purchase the item anymore, you can cancel the agreement at any point before you actually receive the goods. This may involve a termination fee, but you will receive all other money paid back.

What if They Ask for a Termination Fee?

If the business plans to collect a termination fee where you cancel the agreement, this should be set out in the lay-by agreement.

Remember that the store is not allowed to charge an unreasonable amount for the termination fee. As a guideline, it shouldn’t be more than an amount equal to the ballpark of their costs to store the item or make arrangements for the lay-by.

Can the Store Cancel the Lay-By Agreement?

Unlike you, the store can only cancel the lay-by agreement in certain situations. It is important for you to know that the business can cancel the lay-by if you have broken the agreement. For example, if you have not paid the instalment as required. 

The business is also able to cancel the agreement if they are no longer trading, or if the product is not available anymore for reasons outside of their control.

Conclusion

Before you sign the lay-by agreement or pay a deposit, read the lay-by agreement carefully. Note payment dates and amounts, and consider whether you can keep your end of the agreement. It is sensible to keep copies of the agreement and your payments, in case there are issues further down the track. If you need any assistance in understanding your rights under a lay-by agreement, have it reviewed by a lawyer.

Questions? Get in touch on 1300 544 755.

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