Once an agreement, verbal or written, is reached on the purchase of a product or service, the seller may request us to pay a deposit. This payment is often required to confirm the sales agreement and as a commitment that we, consumers, won’t change our mind about the purchase.
The seller is also bound to provide us with the product or service promised at the agreed price within the stipulated time frame. It is in the best interest of both consumers and sellers to ensure that there is a written confirmation of all the details of the sale agreed upon. This will safeguard both parties from any misunderstanding should there be a problem with the product or service ordered.
How much deposit should we pay?
The law does not stipulate a specific amount or percentage that must be paid. It is a matter of agreement between the consumer and the supplier. Often it is the trader who suggests the amount of deposit to be paid. If, however, we think that the amount requested is too high compared with the total price of the product or service, then we should bear in mind that we can speak to the seller and try to negotiate the amount requested.
Since the product or service has not yet been provided or delivered to us, we should pay the least amount possible as deposit. Outstanding payments give us power to solve any problems that may crop up. The product ordered may be delivered to us defective and we will need the seller to provide us with a quick and hassle-free remedy. Not having paid most of the amount due usually helps to quickly resolve such disputes.
When opting to cancel a sales agreement, losing the deposit is not our only risk
There is also the risk that the seller goes out of business. If this happens, we may face difficulties in getting either the goods or services ordered or our money back. When a business is liquidated, there are rules as to who of the debtors gets paid first and the individual customer is low in the order of priority.
Are deposits refundable?
In situations where consumers change their mind, deposits are not refundable. This is the case, unless there is a clause or condition in the contract of sale that the purchase agreement can be reversed and that any payments made can be recuperated. It does not matter how valid our reasons are; in cases, such as losing our job and hence our financial situation no longer allows us to afford to buy the product or service, the law does not give us the right to cancel the sale and request a refund of the money paid.
When opting to cancel a sales agreement, losing the deposit is not our only risk. The seller may also oblige us to continue with the purchase and pay in full the price agreed.
However, there are also traders who, after taking into consideration the circumstances their customers are going through, decide to refund deposits out of goodwill.
It is our responsibility to make sure we are convinced of the product or service we are about to purchase. We should shop around, compare offers and conditions of sale. In other words, we must ensure that our buying decision is well informed.
What if it is the seller who does not honour the sales agreement?
When the seller is unable to provide us with the product or service ordered, or if the agreed delivery date cannot be honoured, we can opt to cancel the sales agreement and ask for a full refund.
We may also opt for a refund when the goods ordered are delivered damaged and cannot be replaced without causing us significant inconvenience.
This reiterates the importance of having the details of the sales agreement clearly written down. Such a document may be used as proof that the original agreement has not been honoured and hence supports our claim for refund.
Dispute with trader
In case of disputes with traders about deposits paid, consumers may seek the assistance of the Office for Consumer Affairs to verify what rights they have at law and to be provided with assistance in dealing with traders when their legal rights are breached.
Odette Vella is director, Information and Research Directorate, Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.