July 6, 2016

In tight financial situations, old-fashioned lay-by appears to be a preferred option.  It is an easy way of buying something without having to pay for it all at once and without any interest or fees.   A layby sale is a far better option than hire purchase if consumers know that they can pay for the goods within a short period of time.  

 A lay-by sale requires paying a deposit where the salesperson will put the goods aside till the full amount is paid. You only receive and own the goods when the goods are paid off within that agreed time frame.

While some traders and retailers who provide lay-by sales have their terms and conditions clearly stated in their agreement dockets, but there are others that deal verbally with their buyers. Lay-by terms and conditions should clearly state the name and contacts of the buyer and seller; product and cost; date and time period for clearing the item; cancellation fees and any other terms set by the seller.

The Consumer Council of Fiji is advising consumers when opting for lay by purchases, be cautious demand for a written lay by agreement where all terms and conditions are clearly stated to avoid disputes later.

The Council has received 73 complaints over the last four years on lay by sales that went wrong. These grievances related to traders’ refusal to refund any money after cancellation of lay-by sale; seller deducting an unreasonable sum when the lay-by sale is cancelled; wrong item or damaged item provided when full and final payment is made.

In a recent case handled by the Council, a consumer from Ba, felt cheated when she received the goods after paying $260. Ms. Savita bought a salwaar kameez on lay by from a well-known retail store. She was disappointed when she saw the salwar kameez given to her which was not the item she had chosen. Another complainant who purchased Kenwood 12 inch subwoofer on lay-by for $65, was astounded that the trader had sold the subwoofer despite the payments being in order.

Your right to cancel a layby sale

The lay-by sale falls under the ambit of the Sale of Goods Act (Cap 230), where both, the buyer and the seller have certain rights and responsibilities when it comes to cancelling the lay-by sale.  

Section 67(1) of the Sale of Goods Act (Cap 230) states “The buyer may, at any time before the purchase price has been paid, cancel the layby sale by giving to the seller oral or written notice of his desire to cancel the sale.”

It is important for you to understand your rights with respect to the written agreement and how you or the seller can cancel the lay-by sale.

You can cancel a lay-by agreement at any time before you receive the goods and you don’t have to give a reason. When cancelling the lay-by sale, you are entitled to refund which must in cash and not a store credit. However, you may not receive a full refund of the payment because the seller can deduct storage and admin cost including any “loss of value” of the item. The trader must not deduct for “loss of value” if you cancel the lay-by within one month of sale.

The costs deducted by the seller should be reasonable. And you have the right to ask the seller to justify the amount deducted after the cancellation.

A seller can also cancel a lay-by agreement only if:

• You break the agreement (for example, by not keeping up the payments). In this case your entitlement to a refund is the same as if you had cancelled.
• They ceased trading or the goods are no longer available due to circumstances outside the seller’s control.  In these cases, full refund must be made to you.

A seller cannot increase the price of layby goods. And you can’t insist on paying reduced price if the item on layby goes on special. You still have to pay the original price. This is because the layby agreement is a contract that can’t be altered unless both sides agree.

Finally, if you’re having trouble meeting payments, please talk to the seller so that you can continue your layby agreement. You can ask the seller to extend the time period so that the amount of each payment is reduced. Sellers don’t have to agree, but it’s a better option for both sides than cancelling the deal.