Deposit and Fair Contractual Terms

The Claimant relied upon s62 of the Consumer Rights Act 2015 (CRA 2015) to argue his £3000 deposit should be returned in full when he changed his mind.

The judge disagreed. The Claimant had dealt with our member for several years and had some knowledge of high value vehicles. He test-drove a Porsche over 10 miles and advised our member he would “sleep on it.” Two days later, the Claimant called to confirm he wanted to purchase the car and pay the deposit. He was emailed the order form, which made clear it was a legally binding contract, to be signed only if the purchaser wished to be bound by its conditions. The Claimant signed and returned the form.

Over the course of the weekend, the Claimant left an answerphone message to say he did not wish to proceed. Later, he followed this up with a phone call to say he had changed his mind and did wish to proceed; this was followed by a further change of mind expressed in a later email. The judge concluded there was little in dispute that there was some vacillation. In the meantime, in accordance with their company policy, our member arranged for the vehicle to be prepared for the Claimant’s collection.

When it transpired the Claimant no longer wanted the car, our member agreed to return £1500 of the deposit. The Claimant issued proceedings for the other £1500, arguing that s62 of the CRA 2015 makes the retention of the deposit an unfair contractual term. He argued the term, “the deposit was non-refundable” makes a significant imbalance in the parties’ rights or obligations. The Claimant argued that as only a short period of time had passed, there was no loss to our member, and he was sceptical that the preparatory work was done. He argued there was no loss to our member, as the car was subsequently sold so the preparatory work done would have been actioned in any event.

The judge determined that whether a non-refundable deposit was an unfair term depends on the circumstances. If the Claimant had been required to place a £25,000 deposit, for example, that might be argued as disproportionate or if it were such a large sum he was obviously dependent on. The actual sum retained represented less than 3% of the value of the contract, and in relation to part 1(5) of Schedule 2 of the CRA2015, the sum in question was not disproportionately high, and thus the Claimant was not entitled to claim it is an unfair term.

The judge found the Claimant’s argument that the vehicle would have been prepared in any event must go by the way as a vehicle must be prepared, so the work would have to be repeated.

In summary, in consideration of Schedule 2 Part 1(5) of the CRA 2015 the sum in dispute, £1500 was not disproportionate as it represented less than 3% of the contract value. The term was not unfair, the term was fair. As the term was fair, the Claimant’s case was dismissed, and there was no order as to costs.