Kevin Hunt: The Remorseful Buyer: Contracts You Can Cancel Within 3 Days


Once you sign a contract, there's no clean way out — unless that contract is covered by a state or federal "cooling off" rule that allows consumers to cancel within three days.

What's covered by the cooling-off rule follows no apparent logic or pattern so don't waste time on buyer's remorse.

What's covered (or not) in Connecticut:

>> Any home-improvement contract is covered. An agreement to buy a home or condo is not.

>> A dating-service contract is covered. A home heating-fuel contract is not.

>> A diet or weight-loss program contract is covered. A contract for a new or used car, purchased or leased, is not.

"Generally speaking," says John Neumon, an attorney and director of the Frauds Division at the state Department of Consumer Protection, "the right of rescission exists where there may be high-pressure sales (door-to-door), or where significant sums of money may be involved, as in home improvement. Why certain services or goods may be covered as opposed to others may be found in their relevant legislative histories."

Home Improvement

A contract with a home-improvement contractor must include a notice of the buyer's right to cancel within three days. (Note that, in Connecticut, Saturday is considered a legal business day.)

The contract also must include the contractor's business information, including a registration number on record with the state and the date along with the project's start and finish dates.

Health Club

A health-club contract also must include all pricing and a provision to cancel membership and receive a pro-rated refund if the club moves more than 25 miles or the club member becomes disabled.

Other protections: A club cannot sell memberships lasting more than two years. (Lifetime memberships are illegal.)

A licensed health club pays fees directed to the state's Guaranty Fund that offers refunds when a club closes unexpectedly. To get a refund, consumers must fill out a DCP form or call 860-713-6300 (or 800-842-2649).

Dating Service

A dating-service contract must include specific cancellation procedures. If you cancel within three days, any money deposited must be refunded within 10 business days after the service receives the cancellation notice.

Diet Program

A diet-program contract must include an estimate of all costs, how long it will take to reach a desired weight and, beyond the three-day right to cancel, an out clause that allows cancellation at any time with a letter from your doctor or if you move more than 25 miles from the diet program's local facility.

How To Cancel

When signing a contract that's covered by the cooling-off rule, make sure you receive a duplicate notice-of-cancellation form. If none is available, draft your own. Include your contact information, a description of the contract and a definitive statement indicating you are canceling.

"If the consumer has canceled their contract properly during the cooling-off period," says Neumon, "then there is no existing contract and the business must refund. The failure to refund is its own violation and if the business does not, the business may also be committing an unfair trade practice. The consumer could then sue the business."

Federal Help

In-Home Purchases: Under the Federal Trade Commission's cooling-off rule, consumers can cancel a sale of $25 or more if the item was purchased someplace other than the seller's permanent place of business. That would include temporary spaces rented by the seller and visits to a workplace.

Among the many exemptions are deals made entirely by mail or phone, vehicles sold at temporary locations and arts or crafts sold at fairs or shopping malls.

Second mortgage or home-improvement loan: The Truth in Lending Act gives you until midnight of the third business day to cancel a contract. The lender must notify you of your right to cancel and provide a cancellation form at the contract signing.

Mail or Telephone Order Rule: If you order by mail or phone (or computer), the seller must ship within a promised time. If no shipping date is specified, the order must ship within 30 days.

When a seller cannot meet a shipping date, it must supply a new shipping date with an option of canceling the order. If you request a refund, the seller must issue it within seven days on purchases made by check or money order and within one billing cycle on orders made with a credit card.

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