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Difference between revisions of "Deposits in Consumer Transactions"
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Deposits in Consumer Transactions (view source)
Revision as of 21:37, 16 September 2018
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This section provides a brief outline of the common law of deposits as it applies to consumer transactions. Deposits in other transactions, such as residential tenancies and purchases of land, are not included in this discussion. | This section provides a brief outline of the common law of deposits as it applies to consumer transactions. Deposits in other transactions, such as residential tenancies and purchases of land, are not included in this discussion. | ||
Basically, a deposit is a payment made by a purchaser, usually at the seller’s request, as confirmation of a contract. It is paid before the seller fulfills some or all of their part of the contract. Consumers are asked for deposits in a variety of situations where the seller must take some action, such as ordering or manufacturing a product, or providing a service requiring some preparation. | Basically, a deposit is a payment made by a purchaser, usually at the seller’s request, as confirmation of a [[Contracts Overview|contract]]. It is paid before the seller fulfills some or all of their part of the contract. Consumers are asked for deposits in a variety of situations where the seller must take some action, such as ordering or manufacturing a product, or providing a service requiring some preparation. | ||
In common law, deposits are forfeited to the seller if the consumer refuses to carry through with the transaction. For example, if the consumer agrees to buy a car and gives a deposit in exchange for the seller’s promise of delivery within two weeks, the consumer cannot get out of the agreement simply because they change their mind (see the section on Opting Out and Cooling-off Periods). The law says, in general, that the seller can keep the deposit as compensation for the consumer breaching the contract (that is, wanting out of the deal without a legal excuse). | In common law, deposits are forfeited to the seller if the consumer refuses to carry through with the transaction. For example, if the consumer agrees to buy a car and gives a deposit in exchange for the seller’s promise of delivery within two weeks, the consumer cannot get out of the agreement simply because they change their mind (see the section on [[Opting Out and Cooling-off Periods]]). The law says, in general, that the seller can keep the deposit as compensation for the consumer breaching the contract (that is, wanting out of the deal without a legal excuse). | ||
=== Exceptions to the rule allowing the seller to keep the deposit=== | === Exceptions to the rule allowing the seller to keep the deposit=== | ||
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=== Buyers’ liens under the Sale of Goods Act=== | === Buyers’ liens under the Sale of Goods Act=== | ||
Under [https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-410/latest/rsbc-1996-c-410.html#sec75_smooth section 75] of the | Under [https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-410/latest/rsbc-1996-c-410.html#sec75_smooth section 75] of the ''Sale of Goods Act'', consumers have certain '''lien rights''' (a lien allows a person’s property to be kept until a debt is paid) for deposits paid to sellers. This is an important protection in cases where businesses take a deposit for some or all of the purchase price for goods and then go out of business before delivering the goods. | ||
The lien rights arise in situations where the consumer enters a sales contract for a product that the seller usually sells in the course of its business. These rights give consumers a claim for the amount of the deposit against the assets of the business, including all the goods and the bank accounts of the business. Most importantly, consumer claims that comply with the terms of section 75 rank ahead of claims of creditors with security interests under the [http://canlii.ca/t/8495 ''Personal Property Security Act''] (see the sections on Types of Lenders and Creditors and Security Agreements). | The lien rights arise in situations where the consumer enters a sales contract for a product that the seller usually sells in the course of its business. These rights give consumers a claim for the amount of the deposit against the assets of the business, including all the goods and the bank accounts of the business. Most importantly, consumer claims that comply with the terms of section 75 rank ahead of claims of creditors with security interests under the [http://canlii.ca/t/8495 ''Personal Property Security Act''] (see the sections on [[Types of Lenders and Creditors]] and [[Security Agreements]]). | ||
== Information gathering== | == Information gathering== | ||
