When do consumers have a 3-day right to
cancel a contract or purchase?
There has been
much confusion
about contracts
and the three-day
right of rescis-
sion law, com-
monly referred
to as the “cooling
off period.”
Many consumers
are under the impression that these
laws apply to any and all consumer
purchases. However, this is not true.
The right of rescission law applies only
to very specific situations. The three
day right of rescission law applies to
sales made at facilities other than the
seller’s place of business. Such locations
may be the consumers residence and
areas rented on a temporary or short-term
basis, such as hotel rooms or convention
centers.
There are several exceptions to
the law . There is no three-day right
of recision for goods or services
purchased for less than $25, or for the
purchase of insurance and farm
equipment. Other exceptions are real
estate purchases of less than $100 made
at a place other than the merchant's
place of business, a sale involving an
attorney or broker, and sales made
pursuant to prior negotiations at the
merchant's business establishment,
where the sale is the result of those
negotiations. Finally, the law does not
apply to sales conducted entirely by
mail or telephone, with no other contact
between the buyer and seller.
Under the law, the salesperson
must tell you about your cancellation
rights at the time of sale. The salesperson
also must give you two copies of a
cancellation form, one to keep and one
to send, and a copy of your contract
or receipt. The contract or receipt should
be dated, show the name and address
of the seller, and explain your right
to cancel.
If the salesperson provided you
with the right forms, to cancel the sale
you may simply sign the one titled "notice
of cancellation," date it, and mail it back
to the seller. To obtain a full refund,
you must do this before midnight of
the third business day after the sale.
Keep a copy of the form.
If the salesperson did not provide
a cancellation form, you may still cancel
your contract. Because the seller violated
the law by not providing the form, you
have extra time. But remember, you
must cancel in writing. Be sure to keep
a copy of the contract and your letter
notifying the seller of the cancellation.
It is a good idea to get this done as
soon as possible.
We have also received inquiries
from consumers who speak languages
other than English. The law provides
protection for these consumers as well.
The receipt or contract and notice of
the right to cancel must be written
in the same language principally used
in the sales presentation. For example,
if buyer and seller spoke Spanish during
the sale, the receipt or the contract must
also be in Spanish.
If you decide to cancel, the seller
has ten business days to refund your
money, return any note you may have
signed concerning the sale, and return
any trade-in items. The seller of the
goods must notify you within ten days
whether he or she intends to retrieve
the goods or abandon them. He or
she may not require you to mail or ship
the goods back.
If the seller fails to notify you of
his or her intention to repossess the
goods within 20 days of cancellation,
you may not be forced to return the
goods at a later date. You are not
obligated to return goods to the seller
until you have recovered either your
money or your note.
If you are unsure or concerned
about signing a contract, you should
consult with a private attorney before
you sign it