Lay-bys

Buying goods using instalment payments

A 'lay-by' is when you choose goods, and pay a deposit and the balance in instalments before you receive them. It is a form of free credit, i.e. you don't pay any interest.

You should ask for any lay-by agreement in writing, This should include:

a description of the goods;
the total price of the item;
the deposit you paid;
how much payments will be and the dates you have to make them;
the date of the final payment; and
the signatures of both you and the seller.

Deposits on lay-bys are generally 10 to 20 percent of the total price, but you can negotiate this.

While the goods are on lay-by, the price cannot be changed.

The shop may sometimes add a storage charge, but this must be stated in your original written agreement.

A lay-by is a legally binding contract. Therefore, if you change your mind about the purchase or don't make the payments, the trader has a right to "fair damages".

This doesn't mean you would lose all the money you'd paid, but the trader could claim enough to cover storage costs or the cost of re-selling the item. The trader must be able to prove such losses.

If the trader breaches the contract (i.e. sells the goods to someone else and can't supply them to you), you are entitled to a refund of all money paid. You may also be entitled to "fair damages", such as any additional cost of buying the same goods elsewhere. Similarly though, you would have to back up your claim with proof.