Lay-by Sales Agreement
A Lay-by Sales Agreement is used between a supplier of consumer goods and a consumer. This can be used for the sale of goods in return for an amount paid in instalments.
4.0 (4 reviews)
Last updated December 18, 2024
Under 10 minutes
Suitable for Australia
Written by
Edwin Montoya Zorrilla
Reviewed by
Damin Murdock
Document Overview
This lay-by agreement between a supplier of consumer goods and a consumer can be used for the sale of goods in return for an amount paid in instalments. The main concept behind a lay-by agreement is that until the purchase price has been paid in full, the supplier remains in possession of the goods.
Legislative requirements for a Lay-by Sales Agreement
Lay-by agreements in Australia are governed by the Australian Consumer Law (ACL) which, among other things, prescribes the following:
A lay-by agreement must be in writing and a copy of the agreement must be provided to the consumer.
A consumer may terminate a lay-by agreement at any time prior to the delivery of the goods. In these circumstances, the supplier may not charge a termination fee unless the agreement is terminated by the consumer and there has been no breach of the agreement by the supplier. Any termination fee must not exceed the recovery of the supplier’s reasonable costs incurred as a result of the termination of the agreement.
A supplier’s right to terminate a lay-by agreement is limited to circumstances where:
there has been a breach of a term of the agreement by the consumer;
the supplier is no longer engaged in trade or commerce; or
the goods are no longer available for supply.
If a lay-by agreement is terminated, the supplier must provide a full refund to the consumer of any amount paid up to the date of termination less any termination charge.
Legislative requirements for sale of goods generally
Transactions involving sale of goods in Australia are governed by legislation in each state or territory (eg Sale of Goods Act 1923 (NSW); Goods Act 1958 (Vic); Sale of Goods Act 1896 (Qld); Sale of Goods Act 1895 (WA); Sale of Goods Act 1895 (SA); Sale of Goods Act 1896 (Tas); Sale of Goods Act 1972 (NT); Sale of Goods Act 1954 (ACT)) all of which have similar requirements (Acts).
Where a contract is silent in relation to certain aspects of the sale of goods transactions, the requirements set out in the Acts will apply to the transaction. It is therefore important that anyone drafting a sale of goods contract is aware of the provisions set out in these Acts.
Where a supplier enters into an agreement to sell goods to a customer (defined as a consumer under section 3 of the ACL), the statutory requirements regarding consumer guarantees will likely govern the agreement between supplier and customer. It is therefore important when drafting sale of goods agreements involving consumers to be aware of the relevant provisions of the ACL, including sections 51 to 59 and section 64.
Other names for Lay-By Sales Agreement include:
- Instalment Agreement
- Instalment Payment Plan
The Legal Risk Score of a Lay-by Sales Agreement Template
Our legal team have marked this document as low risk considering:
- The risk of financial loss exists if the buyer decides to terminate the agreement, as they may forfeit any service fees paid, though other monies are refunded.
- The seller retains the risk for any damage or loss to the goods until they are delivered, potentially incurring additional costs if something happens to the goods before delivery.
- Ownership of the goods does not transfer to the buyer until the final instalment is paid, which could delay the buyer's ability to fully utilize or resell the goods.
Lay-by Sales Agreement Checklist
Complete your free Lay-by Sales Agreement with our checklist
Verify Payment Schedule Compliance
Ensure that all payments, including the initial deposit and subsequent instalments, are made on the dates specified in Schedule 1 of the agreement.
Confirm Delivery Arrangements
Check that the delivery details are clearly agreed upon and documented, as the risk remains with the supplier until the goods are delivered.
Track Transfer of Title
Keep records of all payments made to confirm when the final instalment is completed, as the title to the goods will only pass to the buyer at that point.
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