When consumers accept to leave a deposit, they are committing to a sales transaction with the supplier of the product or service.

This commitment is legally binding. Ideally, the contract of sale is made in writing and should include the details of the sale, such as:

• the name and contact details of the trader;

• a detailed description of the product/service ordered;

• the total cost of the product/service;

• the amount of deposit paid and how the rest of the payment will be made;

• date when the product/service will be provided by the seller.

Once the sale is agreed upon, both parties are legally obliged to honour the agreement. This means that consumers cannot simply change their mind and ask for a refund of their deposit.

If the consumer decides not to proceed with the sale, they risk losing the deposit and even more. Out of good will, traders often decide to give back deposits, especially after taking into consideration the circumstances why consumers have opted to cancel the order.

However, most traders decide to keep deposits as compensation for the time wasted and for the broken deal. In certain situations, consumers are obliged to continue with the sale and therefore pay for the goods or services ordered in full.

If consumers feel that the deposit is unreasonable, they can negotiate a different amount

Before committing to a sales agreement, consumers should ask the seller whether it is possible to cancel the order and recuperate the deposit paid. If this is possible, consumers must make sure that an opt-out clause is included in the contract of sale.

Another precaution consumers should take concerns the amount of the deposit paid.

Usually, it is the seller who suggests the amount, but there is no law that makes such practice a rule. If consumers think that the deposit asked for is unreasonable, they can negotiate a different amount.

It is in their interest to pay the least possible amount. There could be problems with the goods or services ordered and if this happens, the consumers’ strength very often depends on how much money they still owe the trader.

Consumers also risk losing the deposit if the shop or seller goes out of business. If this happens, consumers may find it difficult to get their goods or money back.

There are rules for priority to be given to the various debts in the case of a business going into liquidation, and generally the individual consumer is low on the list.

Consumers are legally entitled to claim back the deposit paid if the seller does not honour the sales agreement, such as the agreed delivery date or is unable to provide the consumer with the product or service ordered.

If, in such situations, the seller refuses to return the deposit, consumers may file a complaint with the Office for Consumer Affairs.

odette.vella@mccaa.org.mt

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

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