Canceling a Sale: The Cooling-Off Period
There are a few types of contracts that you can cancel within a few days of making the contract, mainly transactions that take place at a location that is not the seller's permanent place (such as a trade show at a hotel), but most others you are stuck with for the duration.
There are some federal laws that allow parties to a contract to cancel or call off the contract within a few days of entering into them. These laws are often called "cooling off rules" and give the contracting parties the option of canceling a contract with a certain time period.
The contracts that fall under these rules include trade show sales contracts, contracts for home equity loans, internet purchase contracts and even door to door sales contracts. In addition, certain states have passed laws for canceling contracts that allow parties to get out of contracts for things like dating services, gym memberships and even weight loss programs.
Trade Show and Door-to-Door Sales Contracts
The Federal Trade Commission, in an attempt to protect consumers, has issued rules stating that you have until midnight of the third business day after entering into a contract to cancel certain contracts. Door-to-door sales contracts for more than $25 can be cancelled in this manner, as well as sale contracts for more than $25 made at any place other than a seller's usual place of business (like a trade show).
As an example, if signed a contract to buy $200 worth of pure chocolate milk from a door-to-door salesman, you could cancel this contract the next day. Additionally, if you contracted to purchase a rare comic book for $2000 at a trade show, you may be able to cancel the contract within 3 days provided the trade show was not the seller's normal place of business. This rule does not apply at public car auctions or at craft fairs, however, so if you contract to buy a wooden sculpture at a craft fair, you may not be able to cancel the contract.
You do not need a legally justifiable reason for canceling a trade show or door-to-door sales contract. If you change your mind, you can validly cancel the contact for your original purchase.
Canceling a Contract for Catalog or Internet Sales Orders
There are also rules that apply to canceling a contract for a purchase made via mail, internet, phone or fax. The Federal Trade Commission provides a "mail or telephone order rule" which gives the standards by which most companies must handle such orders. This rule requires that a seller ship to you in the promised amount of time. The rule goes on further to state that if the seller does not give an estimated shipping time, it must ship within 30-days. Certain services and companies are excluded from this rule, however, such as photo development and processing, orders for plant seeds, and magazine subscriptions.
If the seller fails to ship the purchased goods on time or within 30-days if the seller did not give a shipment time, the seller must send you a notice with a new shipment time and offer you the option of canceling the order. If you choose not to cancel the order, the seller again must ship by the stated time. If the seller again fails to make the shipment, he must again notify you and request that you agree to a third date. If you do not want a new shipment date or do not respond to this last notice, the seller must cancel your order and refund your entire purchase price within 7 days by check or money order, or within one billing cycle if your used a credit card to make the purchase.
Canceling a Contract under State Laws
A number of states have their own laws that allow consumers to cancel contracts within a certain number of days after entering into them. These laws often allow contracting parties to cancel contracts for the sale of certain goods or for services like diet programs or gym memberships. If you are curious about the laws of your state, you should call your state's consumer protection agency to find out what kinds of contracts can be canceled without penalty.