Lay-bys (Consumers)

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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.


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.


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.

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