What types of contracts does this apply to?
This rule, also known as the “Cooling Off Rule,” applies to sales contracts made at your home, work, or other location convenient to you and the seller. Sometimes, you may feel pressured into entering a sale and then realize you do not need or want the goods or services. These are sometimes done by door-to-door solicitations.
The rule applies to the following sale contracts:
- at least a $25 sale made at your home
- greater than a $130 sale made at temporary locations
- for goods or services mainly for your personal, family, or household use
- for any instruction or training courses, regardless of your reason for taking them
- not made to meet any emergency
- made entirely at your home
- sale was not made online, by mail or telephone
However, this rule does NOT apply if the sales contract was:
- made after completing negotiations at the seller’s permanent place of business, where the seller regularly sells the goods or services you bought
- made because you asked the seller to visit your home to repair or perform maintenance on your personal property. (Things you buy beyond that repair or maintenance request are covered.)
- involves any real estate, insurance, or securities
- for any cars, vans, trucks, or other motor vehicles sold at temporary locations, if the seller has at least one permanent place of business
- for any arts or crafts sold at fairs or places like shopping malls, civic centers, and schools
What information must the seller tell you?
At the time of the sale, the seller has to tell you about your right to cancel. The seller also must give you:
- Two copies of a cancellation form. One copy is for you to keep. The other copy is to send to the seller if you decide to cancel your purchase.
- 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.
- Note: The contract or receipt must be in the same language that’s used in the sales presentation.
When can I cancel the contract?
Your right to cancel for a full refund lasts until midnight of the third business day after the date you signed the contract or the sale was made. Saturday is considered a business day, but Sundays and federal holidays are not. So:
- If the sale happens on a Monday in a week without a federal holiday, you have until midnight on Thursday to cancel.
- If the sale happens on a Monday and Tuesday is a federal holiday, you have until midnight on Friday to cancel.
- If the sale happens on a Friday, you have until midnight on Tuesday to cancel, if there are no federal holidays on Monday or Tuesday.
- If the sale happens on a Friday and the following Monday is a federal holiday, you have until midnight on Wednesday to cancel.
Do I need a reason to cancel the sale?
You don’t have to give a reason for canceling. You have a right to change your mind.
How do I cancel the sale?
- To cancel a sale, sign and date one copy of the cancellation form. Mail it to the address given for cancellations in the contract or by the seller. Make sure the envelope is postmarked before midnight of the third business day after the contract date.
- If the seller didn’t give you cancellation forms, write a cancellation letter. It must be postmarked within three business days of the sale.
- Send the cancellation form or letter by certified mail and regular mail. With certified mail, you will get a return receipt so you have proof of when you mailed it and when it was delivered. This is the “green card”. Also, keep a copy of the letter or cancellation form for your records.
What happens next? What does the seller have to do after the cancelation?
The seller has 10 days to:
- cancel and return any check you signed
- refund all your money
- return any property you might have traded in
- tell you if any product you still have will be picked up or abandoned
Within 20 days, the seller must either pick up the items left with you, or reimburse you for mailing expenses if you agree to send back the items.
If the seller gave you any items, you must make them available to the seller in as good condition as when you got them. If you don’t make the items available to the seller — or if you agree to return them but don’t — you remain responsible for paying the seller as you agreed under the contract.
The information provided in this post does not, and is not intended to, represent legal advice. All information available on this site is for general informational purposes only. If you need legal help, you should contact a lawyer. You may be eligible for our free legal services and can apply by calling our Legal Hotline at 1-844-244-7871 or applying online here.