When consumers make a purchase, sometimes, if the product or service is not immediately supplied, consumers are requested to pay a deposit before the full payment is made.
This can happen, for example, when buying household goods or when hiring someone to supply a particular service. In these situations, consumers should be aware of both their rights and their responsibilities to ensure they are well protected should problems arise.
In the first instance, it is important to understand the purpose of a deposit. By paying a deposit, buyers commit themselves to continue with the purchase and pay in full when the product or service is supplied. By accepting the deposit, sellers also confirm their commitment to provide the product or service ordered.
Regarding the amount of deposit, this may vary depending on the type of product or service being purchased, and on the agreement between the buyer and the seller. Usually, sellers suggest the amount of deposit to be paid. However, there is no law regarding this practice.
If the trader is unable to supply the product or service, consumers have the right to claim a refund of the deposit- Odette Vella
So if consumers think the amount of deposit requested is unreasonable, they can try and negotiate a lower amount. If the trader rejects the consumers’ proposed amount, the latter may wish to reconsider whether or not to proceed with the sale.
Once the amount of deposit is agreed upon, this should be clearly written in the contract of sale. The sales contract should also include information on how the rest of the payment is going to be made.
Consumers should be aware that once they accept to pay a deposit, the sale is confirmed, and it becomes legally binding. This means that if consumers change their mind, they risk losing the deposit. This applies unless the contract of sale includes a clause that allows consumers to cancel the sale and claim a refund of the deposit paid.
However, it is considered unfair for traders to require consumers who fail to fulfil their obligations, to pay a sum that is disproportionately high to the value of the goods or services purchased or hired. When consumers cancel a sales contract, the amount kept or charged must reflect the trader’s actual losses related to the cancellation of the sale, and hence must not be excessive.
Furthermore, the Unfair Contract Terms provisions of the Consumer Affairs Act stipulate that contract terms are considered unfair and hence not legally binding if they give the trader the right to retain sums paid by the consumer in cases where the trader is the partycancelling the contract or the trader decides not to conclude or perform the contract, without allowing the consumer to receive compensation of an equivalent amount from the trader.
After paying a deposit, consumers may also encounter situations where it is the trader who is unable to supply the product or service according to the sales contract. In this case, consumers have the right to claim a refund of the deposit paid and may also hold the trader liable for additional expenses incurred that are directly linked to the seller’s breach of contract.
Consumers may be required to prove breach of contract by submitting evidence of the original sales agreement. Thus, consumers should make sure the contract of sale is in writing, and that it includes all aspects of the sale agreed upon, such as a detailed description of the product or service ordered, the agreed delivery date, and the total price.
In conclusion, paying a deposit is a common practice when making a purchase or securing a service. However, it is essential for consumers to know their rights and responsibilities.
In case of a dispute over a deposit paid, if consumers are not sure about their legal rights, they may contact the Office for Consumer Affairs at the MCCAA for information and assistance.
Odette Vella is director, Information and Research Directorate, MCCAA.
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