When we pay a deposit, we enter into a legally binding contract that gives us certain rights and obligations. A deposit is a commitment to buy a specific product or service. Once a deposit seals a sales agreement we are committed to finalise the purchase by fully paying for the goods or service when they are delivered to us.

If we change our mind, legally, we are seen as breaking the sales contract and may have to forfeit our deposit. For instance, if we pay a deposit to a shop to hold an item for us and then change our mind, the seller is not legally obliged to refund the deposit paid unless we had made a specific agreement before leaving the deposit.

The law gives us the right to claim a refund of the deposit paid when it is the seller who does not adhere to the terms of the contract, such as when the seller is unable to provide us with the product or service we agreed on.

We also have the right to cancel a sale when the agreed delivery date is not honoured and the new delivery date is not acceptable to us. When faced with these kind of problems and the supplier refuses to refund the deposit, we may then file a complaint with the Office for Consumer Affairs.

Before paying a deposit, we should negotiate with the seller the least possible amount

To prove breach of contract, it is important that we have evidence of the original agreement. All the details of the sales agreement should be written down so both parties are fully aware of their rights and obligations. A verbal agreement is legally binding but with no written details we may find it difficult to prove that we have not received the what we paid for.

When we change our mind, we do not only risk losing the deposit paid but we may also be obliged to continue with the sale and hence pay the full amount due.

Another risk associated with deposits is that a seller may go out of business. When a company goes into liquidation, customers are generally among the last of creditors to be paid back. Hence, to minimise risks, before paying a deposit we should negotiate with the seller the least possible amount. Besides bankruptcy, there could also be problems with the order and if this happens, our strength will often depend on how much money we still owe the trader.

We should also make sure that we know who we are dealing with. This is especially so if we are paying deposits on goods seen only on the internet or other distance forms of communication. Hence we are not personally meeting the seller.

If this is the case, we should make sure that we have the contact details of the seller, such as his geographical address and telephone number. An e-mail address or a mobile number may not be enough. Paying a deposit with an unknown company may make us vulnerable and open to theft, and thus victims to traders who neither have the intention of giving us what we ordered nor paying back the deposit.

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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