Non refundable deposits

[Marie Edstein]

Is it lawful for a business to claim that deposits are non-refundable?

I know that when goods are sold under split / instalment payments, these are deemed as a lay-by. However, does the term "non-refundable deposit" mean that this would be ruled as an actual termination fee if the buyer pulls out of the sale? Can the seller claim the deposit is non-refundable lawfully, where there is no actual termination fee discussed or agreed upon otherwise?

Asking for cases where there is only an agreement where they allow people to buy goods in this manner, but where there is no actual written lay-by agreement as such. Thanks

 

[Rob Legat - SBPL]

It depends on the circumstances. Where the deposit only offsets the genuine loss of the business (for example in the cost of manufacturing a unique object, part work already performed, or where the materials used cannot be re-used) then it's likely the deposit can be considered non-refundable. However, if not or if there are laws with respect to the transaction or the terms of the contract don't allow it, then probably not allowed.

 

[Marie Edstein]

Hi Rob and thanks for that. I guess I should clarify further. This is in relation to animals being the goods sold. Seller required a 20% deposit stating that it was not refundable - which was therefore a split payment / instalment. The buyer informed them within 48hrs of paying the deposit that their circumstances had changed and that they could not proceed in buying the animal as planned, asking for a refund of the deposit. The seller had only changed their advertisement on Facebook to state the sale was pending and can easily amend that, and still has the animal, so no great loss regarding the 48hr pending sale falling through. There was no expressed statement of there being a "termination fee" for change of mind, but does the deposit = an actual termination fee when they claim the deposit is non-refundable?

Also, is there a limit on the amount of money a business can ask for as a deposit when selling goods?

 

[Tim W]

The point of contract law is certainty.
People don't get to just back out of a contract because they change their mind. *
One party can agree to release the other from a contract, sure.
But as a general thing, they don't have to.
A deal, as they say, is a deal.


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* K-Mart etc do change-of-mind refunds as a matter of their own choice of business practice.
This is more than is required by the Australian Consumer Law.
Mere change-of-mind is not otherwise available.