A deposit is a payment made to a supplier of a product or service upon placing a purchase order.
In business-to-consumer transactions, a paid deposit binds, on one hand, the supplier to provide the goods or service ordered, and on the other, binds consumers to pay for the goods or services provided.
The amount or percentage of deposit that should be paid upon order is not stipulated by law but is a matter of agreement between seller and buyer. Usually however, it is the seller who proposes the amount to be paid. But if we think the amount asked is too high, taking into consideration the total price, we should not be afraid to negotiate with the seller.
On certain occasions, we may be requested to pay a small amount as a deposit. This may be risky. It could be a marketing technique to encourage us to sign an order without reflecting too much on the kind of purchase we are making.
But once a deposit is paid, the sale contract becomes legally binding and we may be obliged to proceed with the sale. Hence, if we change our mind, there may be unpleasant legal consequences to face.
First and foremost, unless otherwise stipulated in the sales contract, the deposit paid will be lost.
Losing the deposit is not our only risk. When we change our mind, we may also be obliged to continue with the purchase. Should we agree otherwise with the seller, such an agreement is best written black on white in the sales contract.
To avoid such situations, it is advisable to shop around before paying any deposits. In cases of products we won’t be using for a while, there is no need to order them years before.
New models may be created which will provide us with a wider range of products to choose from.
There is also the possibility that circumstances may change, so our needs may change too. Furthermore, there is the legal guarantee, which is valid for two years from delivery. Therefore, it is advisable to use the product as soon as it is delivered to ensure it is not faulty.
If it is the supplier who does not adhere to the terms of the contract, such as failing to provide the goods as agreed, or failing to deliver the product ordered on the date agreed, we may have a right to ask for our deposit back and hence have the sale cancelled.
In case the goods are delivered faulty, the trader will be liable to either fix the problem or to refund the deposit paid. The trader may also be liable to any other reasonable costs we may have incurred as a direct result of the seller’s breach of contract.
Even though we may be convinced about the product or service we would like to purchase, we should always try and negotiate to pay the least possible amount of deposit. Various problems may crop up before we actually start to use the product or the service.
One of the worst scenarios is when the seller goes out of business. If this happens, we may have considerable difficulty in getting either the goods or our money back. In such circumstances, the seller owes money to a number of people, so our claim would be one of many.
There are rules about the priority to be given to the various debts when a business goes into liquidation, and the individual consumer is low on the list.
There may also be problems with the order, such as when a different product is delivered or arrives with missing parts. When faced with such problems, our worries diminish or increase depending on how much money we have already paid to the supplier.
Even if we need to complain, whether or not we get what we want and how effectively we get it, may depend on how much money we still owe the trader.
Thus it is advisable to negotiate a reasonably low deposit until the product or service ordered is provided to us.
customer@timesofmalta.com
odette.vella@gov.mt
Ms Vella is senior information officer, Consumer and Competition Department.