When you pay a deposit you are paying in part for a product (or service). Paying a deposit shows that you intend to buy the item and it means you are entering into a contract with the business. There may or may not be a contract in writing, but doing it verbally still means a contract is in place, meaning there are obligations on both you and the business.

When you pay a deposit, you and the business agree:

  • the exact product or service that you are buying
  • the amount of deposit you pay
  • when the balance has to be paid
  • when the product or service will be provided

It is important to make sure that you and the business are clear about all the details. Ask for written confirmation that includes all of the information above.

Obligations on businesses

Be very clear about what the business’s obligations are – in particular, be clear on what exactly the product is, and when it will be delivered or available. This can be very important when you are buying something expensive which might have to be made for you, such as a piece of furniture like a sofa. Make sure you are clear about any options, like the colour and style, and ask the business to confirm this in writing on your receipt.

If the business tells you that your delivery will be delayed, you should try to agree a new, reasonable date for delivery. If the product is delivered and is not what you ordered, you should contact the business immediately to arrange for it to be changed. This is why it is important for you to have written confirmation of what exactly you ordered.

You have a right to ask for your deposit back if:

  • you cannot agree a new delivery date
  • the new delivery date suggested  is way off what you originally agreed
  • the business fails to meet the new agreed delivery date
  • the business cannot provide you with the item you agreed to buy

If the business refuses to return your deposit, you may have to take legal action to try to get your deposit back.

Remember, deposits are usually non-refundable. If you pay a deposit and then change your mind, the business may not have to return your deposit.

If the shop goes out of business

If you pay a deposit and the shop goes out of business, it may be very difficult to get either the item or your money back. It’s likely your deposit will not be a priority for the business if it goes into liquidation or receivership.

You should always try to pay a large deposit using a debit or credit card. If you pay for items using a credit or debit card, and the shop goes out of business, your card provider can reverse the transaction. This is called a chargeback. Contact your bank immediately and give them details of your transaction.

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