A layby agreement is a retail sale arrangement in which a customer agrees to purchase specified goods and pays for them in instalments over time, with delivery occurring only after the full purchase price has been paid. In Australia, layby sales are specifically regulated by Division 3 of Part 3-2 of the Australian Consumer Law (ACL), which forms Schedule 2 to the Competition and Consumer Act 2010 (Cth).

Layby sales have a long history in Australian retail — they were widely used before the advent of consumer credit cards and continue to be used by retailers of furniture, electronics, appliances, jewellery, and clothing as an alternative to credit-based finance. A key feature of a layby is that no interest or finance charge is imposed — the customer simply pays the purchase price in instalments. If interest or fees are charged on the deferred balance, the arrangement becomes a credit contract regulated by the National Consumer Credit Protection Act 2009 (Cth) rather than a layby under the ACL.

Section 94 of the ACL requires layby sale agreements to be in writing and to include mandatory terms: the price of the goods, the deposit and instalment amounts, the instalment due dates, the layby period, and the cancellation terms. Retailers who fail to comply with these requirements risk enforcement action by the Australian Competition and Consumer Commission (ACCC) or state and territory fair trading authorities.

The ACL also provides important statutory rights for customers in layby arrangements. A customer can cancel a layby at any time before delivery and receive a refund of all amounts paid, less a lawful cancellation fee (which must not exceed the seller's reasonable costs). Conversely, a seller can only cancel a layby in limited circumstances — if the customer breaches the agreement, the seller is closing its business, or the goods are no longer available — and must refund all amounts paid without deducting any cancellation fee.

This template is designed for Australian retailers of all sizes offering layby arrangements and is fully compliant with the ACL's layby sale requirements.

A formal written layby agreement is legally required under section 94 of the Australian Consumer Law whenever a retail business offers a layby sale in Australia. Beyond the legal requirement, a written layby agreement is commercially essential in the following circumstances.

Furniture and homewares retailers: Layby is particularly common for high-value furniture, bedding, and homewares, where customers want to secure a product at a sale price but cannot pay in full immediately. A written layby agreement protects both the retailer (by documenting the instalment schedule and cancellation fee) and the customer (by confirming the purchase price is locked in and the goods are reserved).

Jewellery and luxury goods: Jewellers have offered layby for generations. A formal written agreement is especially important for custom or special-order items that cannot easily be resold if the customer cancels.

Electronics and appliances: Retailers of televisions, whitegoods, and computer equipment use layby to give customers time to save for expensive purchases. Given that models can be discontinued, the agreement should address what happens if the specific model becomes unavailable.

Toys and children's goods: Layby is particularly popular for expensive children's gifts such as bicycles, gaming consoles, and learning devices, where parents put items on layby months before Christmas or birthdays.

Boutique clothing and footwear: Small fashion retailers use layby to secure sales of seasonal, limited-edition, or custom items that the customer cannot afford outright.

Any time a retailer reserves goods for a customer against instalment payments, a written layby agreement should be completed and provided to the customer before any money changes hands.

A compliant Australian layby sale agreement must contain the following key elements under the Australian Consumer Law and as a matter of good commercial practice.

Goods description: The goods must be identified with sufficient precision to make clear exactly what is being reserved. For standard retail items, include the product name, model number, colour or variant, and quantity. For custom or made-to-order items, include specification details. A vague description creates a risk that the customer and seller will disagree about what was agreed.

Total purchase price and GST: The full purchase price, inclusive of GST at 10%, must be stated. The GST component should be separately identified so the customer understands how much GST they are paying and the retailer can issue valid tax invoices for each instalment.

Deposit and balance: The agreement should state the deposit paid on the date of the layby and the outstanding balance. The deposit demonstrates the customer's commitment and partially compensates the seller for taking the goods off display.

Instalment schedule: The ACL requires the instalment amounts and due dates to be set out. The schedule should be realistic — instalments that are too high relative to the customer's means will lead to cancellation. A clear schedule also allows the retailer to follow up promptly if an instalment is missed.

Cancellation terms: The agreement must clearly state the customer's right to cancel at any time before delivery and the cancellation fee that applies. The fee must represent a genuine estimate of the seller's reasonable costs and must not exceed those costs. The seller's own cancellation rights — limited to breach, business closure, and goods unavailability — must also be clearly stated.

Refund obligation: Both the amount and the timeframe for refund on cancellation must be addressed. The ACL requires refunds to be made within 10 business days. Clearly stating the refund commitment demonstrates good faith and reduces the risk of disputes.