A deposit is usually paid as a part payment to secure the purchase of a product or service.

When consumers agree to pay a deposit, it means they are committing themselves with the seller to purchasing a specific product or service. Such commitment is binding and usually there isn’t the possibility of changing one’s mind. If there is a mutual agreement that an order can be cancelled and the deposit paid refunded, such agreement should be clearly put down in writing.

In fact, even though verbal agreements are binding and enforceable, it is best to have the contract of sale in writing. Such a contract should clearly indicate the kind of product or service being purchased, the total cost, the deposit paid and the date when the product or service will be provided.

The contract of sale is important because if breached, consumers have the legal right to ask for their deposit back. In fact, if, for instance, the agreed delivery date is not honoured by the supplier, consumers may opt to cancel the contract of sale and be refunded.

The same right applies if the product or service is not in conformity with the contract of sale. If the seller is unable to provide the product or service agreed on when the sale was concluded, consumers may request that the sale is cancelled and may also ask for a refund of the deposit paid.

Even though verbal agreements are binding and enforceable, it is best to have the contract of sale in writing

Consumers do not have the right to ask for their deposit back if they simply change their mind. If they do, the deposit paid will be lost. Losing the deposit is not the only risk. When consumers change their mind, they may be legally obliged to continue with the purchase.

To avoid change-of-mind situations, it is advisable that consumers do some shopping around before paying a deposit. In cases of products consumers will not be using for a while, there is no need to order them years before. New models may be created, which will provide consumers with a wider range of products to choose from.

If, however, the product is ordered through a distant means of communication, such as by telephone, through mail order or via the internet, the law is different. In such cases, consumers are entitled to a 15-day cancellation period starting from the day after they receive the goods. During this time, consumers can change their mind, cancel the sale, and request back any money paid.

Even when consumers are convinced about the product or service they would like to purchase, they should always try to negotiate to pay the least possible amount of deposit. They should remember that they are paying money for something that is still not in their possession, so various problems may crop up.

One of the worst scenarios is when the seller goes out of business. If this happens, consumers may have considerable difficulty in getting either the goods or their money back. There could also be problems with the actual order; for example, a different product may be delivered or it may arrive with missing components.

Consumers should bear in mind that in such situations, their strength often depends on how much money they still owe the trader. Therefore, they should hold on to their money until what they have ordered is delivered and carefully checked.

odette.vella@mccaa.org.mt

Odette Vella is senior information officer, Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.