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I went to the Ideal Home show yesterday and found a “Natuzzi” sofa that we loved. We paid a deposit (£1700). On getting home from the show I did some searches for reviews and discovered that the brand has two divisions and the “editions” version has many bad reviews about longevity etc. unlike the “Italia” side.

This has made me very worried that we were “sold to” and have bought an inferior product.

We are renovating our forever home and I don’t want something that won’t last. The order form T&Cs say the deposit isn’t refundable. Can someone provide some advice please?

2 Answers 2

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A consumer may be entitled to a full or substantial refund of a large "non-refundable" deposit on a purchase of goods when the order is promptly canceled.

Consumer Rights Act 2015

Under the UK Consumer Rights Act 2015 (CRA), an unfair contract term is not binding on the consumer. Schedule 2 of the act lists as possibly unfair terms (among others):

4 A term which has the object or effect of permitting the trader to retain sums paid by the consumer where the consumer decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the trader where the trader is the party cancelling the contract.

5 A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied.

6 A term which has the object or effect of requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation.

Any of items 4, 5, or 6 from schedule 2 might apply to a large non-refundable deposit on a purchase of goods when the order is promptly canceled.

In section 62 of the act

Subsection (1) provides that:

An unfair term of a consumer contract is not binding on the consumer.

Subsection (4) provides that:

A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

Under subsection 10 of section 20 (right to reject) of the act

To the extent that the consumer paid money under the contract, the consumer is entitled to receive back the same amount of money.

If the trader fails to provide a refund, the consumer may complain to the Competition and Markets Authority (CMA) which has powers to investigate and enforce the CRA.

Other Sources

The official page "Cancelling goods or services" from the CMA states:

The business may be asking for more money than it is entitled to. Just because it’s in the contract doesn’t mean it’s always legally binding. Businesses cannot rely on unfair terms. Check your consumer rights.

...

If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their actual losses that directly result from your cancellation (eg costs already incurred or loss of profit).

Businesses must take reasonable steps to reduce their losses (eg by re-selling the goods or services).

Non-refundable deposits should only be a small percentage of the total price.

Cancellation charges must be a genuine estimate of the business’ direct loss.

If you have concerns, firstly ask the business to explain how they calculated the amount they are keeping or charging you for cancelling the contract.

According to the page "Deposits" from Citizens Information:

If you pay a deposit but then change your mind about paying the balance, the trader may not have to refund it. However, the amount kept must be a genuine reflection of the trader’s actual losses that result directly from your cancellation and must not be excessive.

According to the page "Can I claim back a non-refundable deposit?" from the publication known as Which?

Just because something is written in a contract, it doesn’t mean it is always legally binding, as businesses ordinarily cannot rely on unfair terms.

Only in certain circumstances can businesses keep your deposit or advance payments, or ask you to pay a cancellation charge.

If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their actual losses that directly result from your cancellation.

This could include costs already incurred or loss of profit.

Typically, the business has no entitlement to keep any amount that can be saved by finding another customer, or cancelling any other suppliers they’ve employed. That would likely constitute an unfair contract term under the Consumer Rights Act.

The page "There's an unfair term in my contract, how can I complain and get my money back?", also from Which?, states:

Excessive cancellation fees Terms that allow the trader to take too much of your money if you back out of a contract can be unfair. If you want to end a contract, a trader can claim for administration and marketing costs and for any work they had started and loss of profit but no more.

This page also describes the complainant process.

Conclusion

A so-called "non-refundable deposit", in the circumstances described in the question, may not actually be fully non-refundable. It would be well to complain to the business asking how they calculated their actual costs for the cancelled sale.

If a different product or version would be acceptable, the company may be willing to transfer the deposit to a purchase of that product.

Failing that, a complaint to the CMA, or local consumer's rights organization may be useful.

For comparison, in most US jurisdictions, the consumer would have the right to cancel any such transaction within 3 business days, and receive a full refund.

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  • I'd add that they may claim the sofa is bespoke and therefore exempt from the right to a refund, but gov guidance is "a sofa where the consumer chooses a fabric and colour from a range on offer will not be bespoke for the purposes of these Regulations" - it needs more customization than that in order to meet the exemption.
    – Sellis
    Mar 17, 2022 at 11:46
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    But having seen the actual sofa on business premises (a trade show counts, just like a market stall would), the right may be limited for that reason - different rules for on-prem and off-prem sales including online sales. Still, "We'd like to buy a different and more expensive sofa from you instead" will probably work pragmatically.
    – Sellis
    Mar 17, 2022 at 11:50
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The order form T&Cs say the deposit isn’t refundable.

What advice would you like? You can kindly ask for your money back or for it to be placed against another product, but the seller has no obligation to help you legally.

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    The consumer may well have a right to a refund under the CRA. See my answer. Mar 17, 2022 at 1:59
  • 1
    This answer cites no source. Apr 16, 2022 at 15:11

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