Deposit payments play a crucial role in various consumer transactions, ranging from buying a new car, ordering a new piece of furniture, to booking a wedding service. Before making these payments, it is essential for consumers to understand their legal rights and responsibilities to ensure they are adequately safeguarded in case issues arise.

Deposit payments are often requested by sellers as a commitment by consumers to honour the agreed sales contract. Likewise, the sellers’ acceptance of the deposits denotes their commitment to supply the ordered product or service as stipulated in the sales contract.

The amount of the deposit the consumer may be requested to pay, usually depends on the nature of the product or service being purchased, and also the agreement reached between buyer and seller. Typically, sellers recommend the deposit amount. However, if consumers believe that the amount requested is unreasonable, they are free to negotiate a different amount.

It is always in consumers’ best interest to pay the least amount of deposit possible. The reason for this is that should a problem arise with the product or service purchased, the consumers’ chances of obtaining a swift and hassle-free remedy may depend on how much money they still owe the trader.

Another potential issue is that the trader to whom the deposit is paid may go out of business

Another potential issue is that the trader to whom the deposit is paid may go out of business. In such a scenario, it will be challenging for consumers to retrieve either the item purchased or their deposit. When a company undergoes liquidation, consumers are considered as creditors. However, other creditors, such as employees, banks and suppliers are typically given priority in terms of payments.

If no agreement is reached with the trader concerning the amount of deposit to be paid, consumers may need to reconsider whether they want to proceed with the sale. Once both parties agree on the deposit amount, it should be clearly stipulated in the sales contract, along with details regarding the remaining payment.

The sales agreement should also include terms and conditions outlining the actions regarding the deposit if either party fails to honour the sales contract. It is crucial that these conditions are fair for both parties and do not disadvantage consumers.

Concerning deposit payments, consumer legislation stipulates that it is unfair to include terms in consumer contracts that allow traders to retain sums paid by the consumer if the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the trader if the latter is the party cancelling the contract.

Furthermore, in situations where the consumer is unable to continue with the sales contract, this may result in the loss of the deposit paid. Consumers may also face penalties to compensate the trader for incurred expenses or loss of business. It is, however, crucial to note that requiring consumers who fail to meet their obligations to pay an excessively high amount compared to the value of the goods or services purchased is legally unfair and in breach of consumer law. The amount retained or charged by the trader should genuinely reflect the trader’s actual losses resulting directly from the sales cancellation and must not be excessive.

Following the payment of a deposit, consumers may also encounter situations where the trader fails to deliver the product or service as per the sales contract. In such instances, consumers have the right to request a refund of the deposit paid and may additionally hold the trader liable for any incurred supplementary expenses directly associated with the seller’s breach of contract.

To prove breach of contract, consumers may be required to submit evidence of the original sales agreement. While verbal agreements are legally binding, in the event of disputes, proving that consumers have not received the goods or services they ordered might be difficult. Thus, consumers should ensure that the contract of sale is first and foremost established in writing, encompassing all aspects of the agreed-upon sale. This should include a comprehensive description of the product or service ordered, the agreed-upon delivery date, the price and method of payment.

In the event of a dispute regarding a deposit payment, consumers may seek information and assistance from the MCCAA’s Office for Consumer Affairs.

 

Odette Vella is director, Information and Research Directorate, MCCAA.

 

www.mccaa.org.mt

odette.vella@mccaa.org.mt

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