A lay-by agreement is one where goods are delivered to the consumer only when the total price of the goods has been paid, and the transaction involves payments spread over at least three instalments (including any deposit). This constitutes a lay-by agreement, unless both the consumer and supplier agree that an agreement involving two payments is a lay-by agreement.
The ACL sets out five rules about lay-bys:
1 A lay-by agreement must be in writing, a copy of which must be given to the consumer (s 96 ACL).
2 A consumer may cancel a lay-by agreement at any time, after paying any termination charge, which must not be more than the reasonable costs incurred by the supplier (s 97 ACL).
3 A supplier may cancel a lay-by agreement only if:
i the consumer has breached a term of the agreement;
ii the supplier is ceasing to engage in trade or commerce; or
iii the goods are no longer available (s 98 ACL).
4 In the event of cancellation by either party, the consumer is entitled to a full refund of amounts paid (s 99(1) ACL).
5 Where a consumer cancels a lay-by agreement, the supplier is entitled to recover a reasonable termination charge. This amount may be withheld from any money repaid to a consumer or recovered from the consumer if the total amount paid by the consumer under the lay-by agreement is not enough to cover it (s 99(2) ACL).
Lay-by arrangements are no longer widely promoted. Instead, retailers now commonly offer “buy now, pay later” arrangements. These arrangments allow customers to purchase and obtain goods and services immediately, but pay for the goods and services later.
There are no specific regulations dealing with“buy now, pay later” arrangements and the National Consumer Credit Protection Act 2009 (Cth) does not apply. However, these arrangement are considered to be “credit facilities” under the ASIC Act. This means that ASIC can take action where a “buy now, pay later” provider engages in conduct that is misleading or unconscionable.