Lay-by agreements

A lay-by can be an easy way of buying something without having to pay for it all at once. However, the goods need to be paid for in full before the consumer can take them home.

When agreeing to set up a lay-by the supplier must ensure that the agreement offered:

  • is in writing
  • specifies all terms and conditions, including dates when payments are due and termination fees
  • is in plain English and easy to understand.

Cancelling a lay-by

The consumer may cancel the agreement at any time before receiving the goods. On cancellation, the consumer must receive a refund of all money paid, less any termination fee specified in the agreement.

The termination fee must not be more than the supplier’s reasonable costs. This could include storage and administration costs. If the supplier cancels the lay-by the termination fee cannot be charged.

Suppliers must not terminate a lay-by agreement, except when:

  • the consumer has breached a term of the agreement (for example, they failed to make a scheduled payment on time)
  • the supplier is no longer engaged in trade or commerce, or
  • the goods are no longer available due to circumstances outside the supplier’s control (not because the supplier decided to withdraw the goods from sale).


It is an offence for a supplier to:

  • enter into a lay-by agreement without putting it in writing
  • not give the consumer a copy of the written agreement
  • refuse all of the consumer’s money (except for the termination charge)
  • charge a termination fee that is higher than the reasonable costs associated with the agreement or when the supplier has breached the lay-by agreement.

Each offence has maximum civil and criminal penalties of $30,000 for a body corporate and $6000 for an individual.