Masinapurchased a lounge suite from a company that sold goods on layby. The lounge suite cost $2,000, which Masina was to pay off at $40 a week. Masina had paid $1,300 by the time the lounge suite was delivered.
Shortly after delivery, Masinatold the layby company the lounge suite had been delivered damaged. The company refunded Masinaand asked for photos of the damage.
Masinadid not send any photos. This meant the freight company that had delivered the lounge suite would not accept the layby company’s claim for the damage.
The layby company then asked Masina to pay them $950 for the lounge suite. The company had meant to request the purchase price of the lounge suite, $2,000, but their employee made a mistake with the purchase price. The company decided not to correct the mistake, and to only seek payment of $950.
Masinarefused to pay the company, so they referred the debt to a collection agency. Masina then complained about the debt. FSCL started an investigation when both parties agreed a stalemate had been reached.
The company believed Masinadid not send them photos of the lounge suite because it was never damaged, and that she never intended to return it. However, to resolve the complaint, the company offered to accept a discounted payment, $900, for the lounge suite. Alternatively, Masinacould return the lounge suite to them at her expense.
Masinadid not want the lounge suite, and she did not want to pay for it. She wanted the company to collect the lounge suite at their expense. Masinaalso wanted the company to compensate her because she had been storing the lounge suite at her home.
There was no evidence the lounge suite was delivered damaged, but we accepted in good faith that it was. The damage was reported shortly after delivery.
There did not seem to be any good reason for why Masina did not give the company photos of the damage. This was detrimental to their claim with the freight company. However, at law, the layby company were responsible for the damaged lounge suite.
The Fair Trading Act 1986 provides that goods, which relate to a layby sale agreement, remain at the supplier’s risk until property in the goods is transferred to the consumer, and the consumer takes possession of the goods. In this case, Masinahad taken possession of the lounge suite, but property in it remained with the company. Masinahad not paid for the lounge suite in full.
It seemed unreasonable for the company to expect Masinato pay for the lounge suite, which she did not want. It was reasonable for the company to expect the lounge suite back, but freight should be at their cost.
We suggested that the company should collect the lounge suite at their expense, write off the debt they had been trying to collect, and remove any default listing. Both parties accepted this.
Insights for consumers
Rules applying to layby sale agreements are set out in the Fair Trading Act 1986. The rules include disclosure requirements and cancellation rights.
Some layby sale agreements are also credit contracts, for example, when interest is payable under the agreement. Where the agreement is a consumer credit contract, the consumer protections in the Credit Contracts and Consumer Finance Act 2003 also apply to the agreement.