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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

Updated: 29 Nov 2022

This page has been produced and published by the Consumer Building and Occupational Services Division of the Department of Justice. Although every care has been taken in production, no responsibility is accepted for the accuracy, completeness, or relevance to the user's purpose of the information. Those using it for whatever purpose are advised to verify it with the relevant government department, local government body or other source and to obtain any appropriate professional advice. The Crown, its officers, employees and agents do not accept liability however arising, including liability for negligence, for any loss resulting from the use of or reliance upon the information and/or reliance on its availability at any time.