Running a Legally Compliant Layby Business

1. Why legal compliance matters

The cash price penalty. If your layby agreement doesn't state the cash price, the customer is legally entitled to pay only 75% of the layby price. That means a K6,600 layby becomes K4,950 — a K1,650 loss, per agreement. Zedlayby enforces the cash price requirement on every plan. ^s.5

Criminal liability. Failing to provide the customer with a copy of the signed agreement is a criminal offence under Cap 399. Zedlayby sends the copy automatically after signing. ^s.6

2. Setting up your layby plans correctly

The law sets minimum deposits and maximum repayment periods by goods class (Section 25 Schedule). Zedlayby validates your plan against these before it goes live. If your deposit is too low or your period too long, we'll tell you exactly what to fix.

Zedlayby handles this automatically.

3. What must be in every agreement

Section 7 of Cap 399 requires every layby agreement to include:

• The cash price of the goods
• The total layby (hire-purchase) price
• The deposit amount
• The number and amount of each instalment
• The dates on which instalments are due
• A description of the goods sufficient to identify them
• The names and addresses of both parties

Zedlayby generates compliant agreements automatically from your plan data.

4. Terms you cannot include

Section 8 prohibits certain clauses. The most common mistake is a "forfeit all payments" cancellation clause. This is not enforceable. The customer's maximum liability on cancellation is half the total price minus what they've paid. Any clause that tries to override this is void. ^{ss.8, 18, 22}

Compliant alternative: "If you cancel, you may owe up to half the purchase price minus payments already made, as provided by Section 18 of the Hire-Purchase Act."

5. When a customer wants to cancel

The customer can terminate at any time before the last payment by giving written notice. Their maximum liability is: half the total price minus what they've paid. If they've paid more than half, they may owe you nothing extra. ^s.18

Zedlayby calculates this automatically and records the notice.

6. When a customer has paid over 50%

Once a customer has paid more than half the total price, you cannot repossess the goods without a court process. Specifically, you must obtain a court order, and the goods must be sold by a court-appointed person. Any surplus after your balance is paid goes to the customer. ^s.20

Zedlayby tracks the 50% threshold on every active agreement and notifies both you and the customer when it's crossed.

7. When a customer defaults

If a customer misses payments and you repossess the goods, they have 21 days from repossession to pay the arrears and reclaim the goods. You must allow this. ^s.15

If the customer has paid over 50%, follow the Section 20 court process instead of direct repossession.

8. Your obligations on request

If a customer requests a statement of their account, you must provide it within 30 days, free of charge. The statement must show amounts paid, amounts outstanding, and the payment schedule. Ignoring the request is an offence. ^s.9

Zedlayby gives customers real-time access to their payment status — reducing ad-hoc requests.

9. How Zedlayby protects you

• ✓Every plan validated against Section 25 (minimum deposits, maximum periods) before going live
• ✓Section 7 compliant agreements generated automatically — no template to maintain
• ✓Section 6 copy sent to customer automatically after both parties sign
• ✓Section 20 threshold tracked on every agreement — you're notified when it's crossed
• ✓Full audit trail of all payments and rights events

10. Common questions