Entitlement of a deposit?

We are often asked advice when it comes to keeping a deposit, so what is the entitlement?

You have a customer arrive and place a deposit on a vehicle and sign an order form. You would then hope they conclude the agreement, unfortunately sometimes the customer wishes to cancel and requests their deposit be returned.

Essentially they are in breach of contract, you therefore are entitled to retain X amount for the breach but this X amount should be for your losses!

Therefore, if the customer places a £100 deposit and you have carried out a service and a MOT test for the date of the collection of the vehicle, then it may be that you are entitled to retain the full amount as you will be able to show the company’s loss.

But if you take £1,000 deposit and do the same as above, MOT and service then your customer will be entitled to a proportion of it back.

The scenario will be different if the customer has placed a deposit but they feel the company are in breach of contract (not completed any requirements which was agreed when placing a deposit) then it is likely they are entitled to the full deposit being returned.

As always, the wording on your order form pad will also play a role.

Lawgistics members can get further advice on this matter by calling the legal helpline 01480 455500.


Authors: Roxanne Bradley

Published: 02 Mar 2016


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