NSW
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.
This page has information on:
- what to expect
- cancelling a lay-by agreement
- advice if you have a problem
- advice to be a savvy consumer
What you can expect
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.
Cancelling a lay-by agreement
If you cancel
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.
If the supplier cancels
A business should not cancel a lay-by agreement unless:
- 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.
Have a problem?
- Contact the business in the first instance and explain the problem. If the matter is complicated and not urgent, you could write an email or letter. We have tips and sample letters to help you.
- If you’re unable to resolve the matter with the provider, you can contact us for help on 13 32 20 or make a complaint online.
Be a savvy consumer
Follow these tips to protect your rights when buying through a lay-by:
- Before signing the agreement and paying your deposit, make sure you read and agree with the terms and conditions, including payment dates and amounts, and any extra charges you’ll have to pay if you decide to cancel.
- Keep a copy of the agreement, as well as your receipts for the deposit and all instalments in case there is an issue later.
Further information
NSW law https://www.fairtrading.nsw.gov.au/buying-products-and-services/ways-to-shop-and-pay/lay-by
Tasmania
Rules for lay-by agreements
A lay-by is an agreement between a consumer and a business where:
- the goods will be paid for over a period of time
- the consumer agrees on a fixed sale price and payment conditions
- the consumer does not take the goods until the payments are finalised.
Make sure you read the terms and conditions before signing anything or paying any money.
The lay-by period could be one week, up to many months. The business must then hold the goods for that period of time.
An agreement is classed as a lay-by if:
- the goods are paid for in three or more instalments; or
- the business calls the agreement a lay-by, even if the consumer pays in only two instalments.
When a business starts a lay-by agreement, a business must ensure the customer knows about the terms and conditions
Agreements must be in writing and should contain:
- what goods are being sold
- how much they cost
- how much deposit the customer paid
- how long the lay-by will last (maximum)
- what cancellation and refund policies apply.
Cancelling a lay-by
If you cancel a lay-by agreement, the business must refund the money paid. The business may charge a termination fee if it was a term of the agreement.
There is no set amount or percentage for a termination fee, but it must not be more than the business’s ‘reasonable costs’ relating to the lay-by agreement (for example, storage and administrative costs that apply to the lay-by agreement). What is ‘reasonable’ will depend on the circumstances and a business needs to be prepared to justify those costs.
Besides the termination charge, a business is not entitled to damages or any other remedy for the termination of the lay-by agreement.
A business is not allowed to break a lay-by agreement unless:
- the consumer breaks one of the terms of their agreement; or
- the business closes down; or
- the goods are no longer available for reasons the business can’t control (they can’t choose to remove the goods from sale).
You are entitled to a full refund if:
- the business closes down; or
- the goods are no longer available for reasons they cannot control.
Related information
- Australian Competition and Consumer Commission (ACCC)
- ACCC publication: Sales practices - a guide for businesses and legal practitioners
Tasmanian Law - https://cbos.tas.gov.au/topics/products-services/business-practices/schemes
South Australia
Lay-by agreements
A lay-by agreement lets the customer pay for a product in two or more instalments before taking it home. The deposit is the first instalment. Any purchase paid for with at least three instalments is legally considered a lay-by.
The customer must be given a copy of the agreement that shows all terms and conditions, including cancellation fees.
Record of payments
Customers must be given a copy of the lay-by docket or a receipt that shows:
- the item
- the start date, due date of last payment and pick up date
- lay-by number
- record of the deposit or payments
- what happens if the customer doesn't pay on time
- the procedure if the business cancels the contract.
Cancelling the lay-by
A business can cancel a lay-by if the customer breaks the agreement - eg a missed payment.
If a customer cancels the lay-by, the business can charge cancellation fees to cover costs that can be proven, but only if the fees have been written into the agreement. Costs can include things like storage, depreciation and administration.
Tips for using lay-bys
When using lay-by to buy something:
make sure you read all of the contract and agree with the terms and conditions before you sign and pay your deposit
keep copies of the contract and all payment receipts
talk to the business if you have a problem with a lay-by agreement and refer to your contract and receipts as evidence.
South Australian Law - https://www.sa.gov.au/topics/rights-and-law/consumer-rights/buying/lay-by-sales
Queensland
Rules for lay-bys
A lay-by is an agreement between you and a customer where you:
agree on a fixed sale price and payment conditions
hold the goods until the customer finalises the payments
do not charge interest on the outstanding debt.
The lay-by can be anything from 1 week to many months. You and the customer are free to decide. You will then hold the goods for that period of time.
An agreement is a lay-by if:
the customer pays in 3 or more installments
you call it a lay-by, even if the customer pays in only 2 instalments.
Terms and conditions
When you start a lay-by agreement, you must make sure the customer knows the terms and conditions.
Agreements must be in writing and should contain:
what goods you’re selling
how much they cost
how much deposit the customer paid
how long the lay-by will last (maximum)
what cancellation and refund policies apply.
Cancelled lay-bys
The customer cancels
If the customer cancels a lay-by agreement, you:
must refund the customer’s money
may charge a termination fee only if it was in the agreement.
A termination fee can only cover the costs of the lay-by.
You cancel
You aren’t allowed to break a lay-by agreement unless:
the customer breaks one of their terms
you close down
the goods are no longer available for reasons you can’t control.
You can’t choose to remove the goods from sale.
The customer is entitled to a full refund if:
- you close down
- the goods are no longer available for reasons you can’t control.
- Queensland law
Reference https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/queensland-laws-and-regulations/selling-your-products-and-services/sales-practices/rules-for-lay-bys
Western Australia
Lay-bys (Consumers)
A ‘lay-by’ agreement exists when you:
pay for the goods in at least three instalments (when the agreement is not called a ‘lay by’ agreement) or in at least two instalments (when the agreement is called ‘lay-by’); and
do not receive the goods until the full price has been paid.
Any deposit you pay is also considered to be an instalment.
Example:
Ordering a Christmas hamper in advance and agreeing to pay for it by weekly instalments is a lay-by agreement.
Contract requirements
Lay-by agreements must be in writing and must specify all the terms and conditions, including any termination charge. The trader must give you a copy of the lay-by 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.
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
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.
Traders cancelling a lay-by agreement
A trader must not cancel a lay-by agreement unless:
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.
Last modified:
Canberra
Lay-by agreements
A lay-by agreement is a type of contract where consumers pay for goods in two or more instalments, and do not receive the goods until the full price has been paid.
Businesses must provide consumers with a written copy of any lay-by agreement that sets out any terms and conditions including termination fees. Termination fees can’t be more than the business’s reasonable costs in relation to the agreement.
A consumer can cancel a lay-by agreement at any time before they receive the products. If they cancel the agreement, the business must refund their deposit and anything else they have paid, minus any termination fee mentioned in the agreement. If the payments already made by the consumer are less than the termination fee, the consumer must pay the difference.
A business can only cancel a lay-by agreement if:
the consumer has broken the agreement, for example by not paying instalments
the business is no longer trading
the product is no longer available and this is outside the business’s control.
If you have a debt from using one of these payment methods, you have rights under the law. See Debt for more information.
Contact the business
If you think you have been misled by a business, or a business has not met the requirements for surcharging or a lay-by agreement, your first step is to contact the business to explain the problem.
If the business doesn’t resolve the problem, there are more steps you can take.
Canberra ACT LayBy law - https://www.accc.gov.au/consumers/buying-products-and-services/payment-methods#toc-lay-by-agreements
Northern Territory
Lay-by agreements
Lay-by sales are contracts between a retail store and a consumer. The trader holds onto the goods while the consumer pays in regular instalments until the full price is paid.
Terms and conditions
Stores must display their lay-by terms and conditions. Make sure you understand those conditions before you lay-by any goods.
The lay-by agreement must be in writing and state the terms and conditions. They should include all of the following:
the amount of deposit and the date you must pay it off by
the regular amount you must pay
their cancellation policy, which should include how much money they will keep if you cancel the lay-by, also known as the termination fee.
You should make sure you keep the receipts each time you make a payment.
Cancellation policy
The store may cancel the lay-by if you don’t pay it off in time. They must write to you and give you 14 days to reply or pay the amount owing.
If you can’t afford to pay the full amount by the due date, phone the store to discuss. Most stores will come to an agreement for payment.
If you decide to cancel the lay-by the business must refund any money you have paid, minus any termination fee as specified in the lay-by agreement.
Cancellation of the lay-by should be the last resort.
For more advice contact NT Consumer Affairs.
Northern Territory Lay By Law - https://nt.gov.au/law/rights/lay-by-agreements
Victoria
Lay-by agreements
An agreement is considered to be a ‘lay-by’ if the consumer:
pays for the products in at least three instalments (when the agreement is not stated to be a ‘lay-by’ agreement) or in two instalments (when the agreement is called a ‘lay-by’ agreement), and does not receive the products until the full price has been paid.
Any deposit paid by the consumer is an instalment.
Case Study
Example only (outcome may differ in individual cases):
Emily orders a Christmas hamper in advance and agrees to pay for it by weekly instalments. This is a lay-by agreement.
Lay-by agreements that are standard form contracts may be covered by unfair contract terms provisions in Part 2-3 of the Australian Consumer Law.
Contract requirements
Lay-by agreements must be in writing and be transparent (expressed in plain language, legible and clearly presented). The agreement must specify all terms and conditions, including any cancellation fee (also known as a termination charge).
A copy of the lay-by agreement must be given to the consumer.
Cancellation fee
The supplier may impose a cancellation fee (also known as a termination charge) if a consumer decides to cancel a lay-by agreement (unless the supplier has breached the lay-by agreement).
There is no set amount or percentage for a cancellation fee, but it must not be more than the supplier’s ‘reasonable costs’ in relation to the agreement. What is ‘reasonable’ will depend on the circumstances, and suppliers should be prepared to justify their claims for reasonable costs.
The supplier can charge a cancellation fee if:
the store has kept their part of the lay-by agreement, and
the consumer has simply changed their mind and decided they no longer want the lay-by.
The supplier cannot charge a cancellation fee if:
the reason the lay-by was cancelled was not the consumer’s fault and the store has not kept their part of the lay-by agreement. For example, the product was not delivered by the time stated in the lay-by agreement; or
it was the store that cancelled the lay-by.
A cancellation fee needs to be stated clearly and legibly in the lay-by agreement.
Cancellation by the consumer
Consumers can cancel a lay-by at any time before they collect the item.
The supplier must refund all amounts (including ‘deposits’) paid by the consumer under the agreement, except for any cancellation fee.
If the consumer’s lay-by payments do not cover the cancellation fee, the supplier can recover the outstanding amount as a debt. However, the supplier is not entitled to damages or any other remedy.
Cancellation by the supplier
A supplier must not cancel a lay-by agreement unless:
the consumer has breached a term of the agreement (such as missing a scheduled payment), or
the supplier is no longer engaged in trade or commerce, or
the products are no longer available due to circumstances outside the supplier’s control (not because the supplier decided to withdraw the products from sale).
Lay-by price has changed
If the price of the item changes, for example, if the item is now on sale, the consumer still has to pay the price shown in the lay-by agreement, unless the store agrees to sell the product at the new price.
Consumers can choose to cancel the lay-by, but may have to pay a cancellation fee – check the terms and conditions in the lay-by agreement.
Late payment of lay-by
If consumers do not pay the outstanding amount, the store may cancel the lay-by.
If this happens, they must refund any money the consumer has already paid (minus any cancellation fee).
Lay-by warranties
If a lay-by purchase comes with a warranty for a set period (for example, 12 months or three years), the warranty period begins when the consumer finalises the lay-by contract and takes ownership of the product.
National Retailers Association
LAY-BY AGREEMENTS – NATIONAL SUMMARY AS AT JUNE 2017
This fact sheet provides an overview of the requirements for lay-by agreements entered into on or after 1 January 2011.
WHAT IS A LAY-BY AGREEMENT?
Under the Australian Consumer Law (ACL), a lay-by agreement exists where:
• goods are paid for in at least two installments (when the agreement is called a lay-by); or
• goods are paid for in at least three installments (when the agreement is not specifically called a lay-by); and
• the consumer does not receive the goods until the full price has been paid.
Any deposit made by the consumer is considered to be an installment.
MUST LAY-BY AGREEMENTS BE IN WRITING?
A lay-by agreement must be in writing and specify all the terms and conditions that apply, including details about any termination charges. The terms of the agreement must be expressed in plain language, be legible and clearly presented.
A copy of the lay-by agreement must be given to the consumer.
WHAT HAPPENS WHEN A CONSUMER CANCELS A LAY-BY?
A consumer is entitled to cancel a lay-by agreement at any time prior to taking possession of the goods.
In this case, the consumer must be refunded all amounts paid, less any termination fee that was clearly specified in the agreement.
WHAT IS A TERMINATION FEE?
A lay-by agreement may include a term that requires the consumer to pay a termination fee in certain circumstances.
There is no set termination fee but it must not be more than the supplier’s “reasonable costs” relating to the agreement (for example, storage and administrative costs).
If the installments made by the consumer are not sufficient to cover the termination fee, the supplier can recover the outstanding amount as a debt.
However, this must be clearly stated in the terms of the lay-by agreement.
A termination fee must not be charged where:
• the consumer cancels the lay-by because of an act/event caused by the supplier (e.g. the goods are damaged in storage); or
• the supplier cancels the lay-by.
Other than the termination fee, a supplier is not entitled to damages or any other remedy as a result of a cancelled lay-by.
CAN YOU CANCEL A LAY-BY AGREEMENT?
You can only cancel a lay-by agreement if:
• the customer has breached a term of the agreement (e.g. missing a scheduled payment);
• you are no longer engaged in trade or commerce (e.g. entered liquidation); or
• the goods are no longer available due to circumstances outside your control (e.g. your supplier ceases to trade at the same time as the lay-by agreement is entered into).
If you cancel a lay-by agreement, you cannot charge a termination fee.
ARE THERE PENALTIES FOR BREACHING LAY-BY REQUIREMENTS?
A supplier is liable for criminal and civil penalties of up to $30,000 for a body corporate and $6,000 for an individual if the supplier:
• fails to put a lay-by agreement in writing;
• fails to provide the consumer with a copy of the lay-by agreement;
• refuses to refund the consumer’s money (other than the termination charge) on cancellation of the lay-by;
• charges a termination fee that is higher than the “reasonable costs” associated with the agreement; or
• charges a termination fee when the supplier has breached the lay-by agreement.
Retailer Association LayBy summary https://members.nra.net.au/wp-content/uploads/2015/06/ACL-Lay-by-Agreements.pdf