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Consumer rights & money

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Layby sales


Fair Trading Act 1986, ss 36B-36J

If you buy on layby, you get some special protections under the Fair Trading Act, including the right to cancel the sale at any time before you take the goods home.

What is a layby sale?

Fair Trading Act 1986, s 36B

In a layby sale, you pay a deposit on an item and the shop puts it aside while you pay off what you owe within a certain time. The shop keeps the goods and still owns them until you pay off the full price (or an agreed part of it). You don’t pay any interest while you’re paying off the item, but you don’t get to take possession of it until you’ve paid it off.

The special protections for layby sales only apply if:

  • the sale agreement states or implies that you don’t get to take the goods away (“take possession”) until you’ve paid the full price or the agreed part of it, and
  • the agreement states or implies that you’ll pay the price in at least three instalments or, if the agreement explicitly says it’s a layby sale, in at least two instalments (a deposit paid at the outset counts as an “instalment”), and
  • the price of the goods is not more than $15,000.

If the agreement has all three of those features, it is a “layby sale”, whether or not it describes itself as one.

If you are buying goods, and are paying by instalments, and fees (other than a cancellation fee) or interest are included, then this may also be a credit contract. See “Credit Contracts” in Credit and Debt chapter.

Requirements for the content and form of layby sale agreements

Fair Trading Act 1986, s 36C, Fair Trading (Infringement Offences) Regulations 2014

The seller must make sure that the layby sale agreement is in writing and that it’s clear, able to be read, and in plain language. You must be given a copy of the agreement when you enter into it.

The agreement must state the total price you’ll have to pay, and the agreement must be dated. The following information must be on the front page:

  • a clear description of the item you’re buying
  • a summary of your right to cancel the sale (see below, “Your right to cancel a layby sale”)
  • whether you’ll have to pay a cancellation charge if you do cancel, and how much this will be or how it will be calculated
  • the shop’s name, street address, phone number and email address.

If a seller breaches these requirements, the Commerce Commission can issue them with an infringement notice requiring them to pay an infringement fee of $1000 as an alternative to bringing criminal charges.

If the contract is a credit contract, you may have to provide additional information. See “The information you must be given” in the Credit and Debt chapter.

Fair Trading Act 1986, s 36D

In a layby sale, you have the right to ask the seller at any time for a written statement that clearly sets out:

  • the total purchase price
  • the amount you’ve paid, as at the date of the statement
  • the amount you have left to pay, and when and how you must pay it
  • the amount of any cancellation charge you must pay.

The seller must provide the statement within five working days. They can’t charge you for providing it.

You can ask the seller for these details at any time – at the time you enter into the agreement, or while you’re paying off the item, or after you’ve cancelled the agreement. For example, you might want to see the statement if you’re considering cancelling the layby and want to know how much you’ve paid, how much you owe, and how much the seller would want to charge you for cancelling, see “Your right to cancel a layby sale” below.

If the seller doesn’t provide you with the statement as it’s required to, the Commerce Commission can issue them with an infringement notice.

Your right to cancel a layby sale

Fair Trading Act 1986, ss 36F, 36H

You can cancel a layby at any time before you take possession of the goods. You don’t have to give a reason for cancelling.

To cancel, you don’t have to follow a particular process or use a particular form or a particular set of words. You can do it in any way that shows you intend to cancel or withdraw from the agreement. This could be in writing or by telling the seller verbally.

You must communicate with the seller using their contact details given on the agreement, or in any other agreed way.

If you cancel, the seller must immediately repay you all the money you’ve paid under the layby, less any cancellation charge. You may have to pay a cancellation charge if the agreement says that one is payable, see below, “How much can I be charged for cancelling?”.

How much can I be charged for cancelling?

Fair Trading Act 1986, s 36F(4), (5)

The amount of a cancellation charge can’t be more than the seller’s reasonable costs arising directly from the layby arrangement. Their reasonable costs will include, for example:

  • the loss in value of the goods since the date of the agreement (for example, if you put summer clothes on layby and it’s now winter and so the clothes will be harder to sell)
  • the reasonable costs of storing and insuring the goods, and
  • their reasonable administration costs, such as offices expenses, salaries and wages.

Will I get a refund if I cancel the layby?

Fair Trading Act 1986, s 36H

Whether you’re entitled to a refund, and how much you get, will depend on how much you’ve paid and the amount of any cancellation charge. If the amount you’ve already paid isn’t enough to cover the cancellation charge (if there is one), you’ll owe the seller the amount of the difference. However, the seller can’t then claim any further damages, compensation or other remedy from you.

If you’re entitled to a refund, the seller must give it to you in cash, not a store credit.

If you have a problem you can’t resolve with the shop, you can take it to the Disputes Tribunal, see the chapter “The Disputes Tribunal”.

Can the seller cancel the layby sale?

Fair Trading Act 1986, ss 36F(3)(a)(ii), 36G

The seller can cancel the layby only if:

  • you don’t keep to the terms of the contract – for example, if you miss payments, or
  • for reasons outside the seller’s control, the goods are no longer available and a satisfactory substitute can’t reasonably be obtained, or
  • the seller has stopped trading – but not if they’ve gone into bankruptcy, liquidation or receivership (see below, “What if the seller goes out of business?”).

If the seller cancels, your right to a refund, and the seller’s right to any further payments, will be the same as if it had been you who cancelled (see above, “Will I get a refund if I cancel the layby?”), except that the seller can only charge a cancellation charge if they cancel because that you didn’t keep to the terms of the contract, not if they cancel for one of the other reasons.

Who owns the goods while I’m paying them off?

While you’re paying off the goods, the seller still owns them and they remain at the seller’s risk. This means that if the goods are destroyed, for example, in a fire, the seller has to bear the loss, not you. In that case, they’d be required to provide you with a matching item or to refund you all the money you’ve paid.

What if the seller goes out of business?

Fair Trading Act 1986, ss 36I, 36J

If the seller is declared bankrupt or is put into liquidation or receivership, and they still have the goods, you have the right to complete the sale by paying what you owe under the agreement within a reasonable time. However, you don’t have the right to complete the sale if you’ve breached the agreement by not making any payments in the last three months.

Fair Trading Act 1986, ss 36K-36S

If there aren’t enough goods to satisfy all layby buyers, the buyers who contracted with the seller first will get the goods. Buyers who miss out will have a chance of getting a refund of what they have paid.

Did this answer your question?

Consumer protection

Where to go for more support

Community Law


Your local Community Law Centre can provide free initial legal advice and information.

Consumer Protection


Consumer Protection helpline: 0508 426 678 (0508 4 CONSUMER)

Email: cpinfo@mbie.govt.nz

The Consumer Protection website has useful information on a range of consumer topics. Consumer Protection is part of the Ministry of Business, Innovation, and Employment (MBIE).



Phone: 0800 345 123

FinCap can help you with budgeting information online or on the phone. They may also suggest a local budgeting service to help you with debt and other budgeting issues.

Consumer NZ


The Consumer NZ website provides a wide range of information on consumer issues and template letters you can use to write to traders to enforce your rights. You can also order “Do Not Knock” stickers to deter uninvited door to door knockers on their website.

Citizens Advice Bureau


Phone: 0800 FOR CAB (0800 367 222)

Citizens Advice Bureaux have volunteers trained in consumer law who can provide you with information and advice about consumer problems.

Commerce Commission


Phone: 0800 943 600

Email: contact@comcom.govt.nz

The Commerce Commission enforces the laws against misleading and deceptive conduct by traders (the Fair Trading Act) and the consumer credit legislation (the Credit Contracts and Consumer Finance Act). The Commission provides information on these areas on its website.

Consumer rights in another language


This site by the Commerce Commission has information about typical situations consumers find themselves in, in five different languages.

Product Recalls


This site lets you know which products have been “recalled” due to safety issues or product defects. You can generally return a recalled product to the place where you bought it to be repaired or replaced.

Motor Vehicle Traders Register


Phone: 0508 MOTOR TRADERS (0508 668 678)

Check to see if a motor vehicle trader is registered.

Motor Vehicle Disputes Tribunal


Phone: 0800 268 787

The Motor Vehicle Disputes Tribunal deals with disputes of amounts up to $100,000. It can be more if both parties agree in writing.

Personal Properties Securities Register (PPSR)


Search the PPSR register to see if there is any security interest registered against a vehicle. This can be done for a small fee by registering to check online

Proceedings in the District Courts

The Ministry of Justice website has information about making or responding to a claim in the District Courts. See: www.justice.govt.nz and search “claims to civil court”.

Buying a car privately

YouthLaw has produced a video on buying a car privately.
See: www.youtube.com/watch?v=aK8irFAn1as

New Zealand Police


Check to make sure a car that you’re considering buying hasn’t been listed with the police as stolen.

Dispute resolution schemes

There are four dispute resolution schemes for consumers dealing with lenders and other credit providers.

Financial Services Complaints Limited – www.fscl.org.nz

Phone: 0800 347 257

Email: info@fscl.org.nz

Insurance & Financial Services Ombudsman
Phone: 0800 888 202

Email: info@ifso.nz

Banking Ombudsman – www.bankomb.org.nz
0800 805 950

Email: help@bankomb.org.nz

Financial Dispute Resolution – www.fdrs.org.nz
0508 337 337

Email: enquiries@fdrs.org.nz

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