The following questions were submitted to John Roska, an attorney/writer whose weekly newspaper column, "The Law Q&A," ran in the Champaign News Gazette.
I signed a contract to buy furniture, and tried to cancel within 3 days. The store said I couldn’t. Can’t I cancel a contract within 3 days?
You can cancel some, but not very many, contracts within 3 days. Generally speaking, though, you can't cancel just any contract within 3 days.
This column has dealt with this issue before. But, the myth that you can cancel any contract within 3 days is so persistent it’s worth discussing again.
There are really only 2 situations when you can cancel a contract: a door-to-door sale, or when your house is collateral for a loan. If it’s not one of those 2 kinds of deals, you don’t have an automatic right to cancel. Otherwise, without fraud or something extreme, you’re stuck.
When it exists, the 3 day right to cancel permits people with “buyer’s remorse” to get out of deals they regret. By allowing second thoughts, the 3 day “cooling off period” protects people in particularly vulnerable situations.
Door-to-door sales can be cancelled within 3 days because they’re notoriously high pressure—people say yes just to make the salesman leave. While the 3 day right to cancel clearly applies to the classic door-to-door salesman, or to any contract signed in your home, it also applies to situations where a contract is signed away from a seller’s usual place of business.
The Federal Trade Commission rule about such “off premises” sales specifically says it applies to sales at “facilities rented on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants, or sales at the buyer’s workplace or in dormitory rooms.” It does not, however, apply to automobile auctions or “tent sales” (as long as the dealer has a fixed place of business somewhere), or to arts and crafts fairs. Those both have special exemptions from the rule.
Besides door-to-door sales, the second kind of deal you can cancel in 3 days is a sale or loan where your house is collateral for the loan.
It’s important to understand that this particular right to cancel does not apply to loans used buy your house ("purchase money loans"). It does apply to home equity loans, mortgage loan refinancings, and when you finance something besides your house using your house as collateral. An example of that last type of deal is a home repair loan.
When a 3 day cooling off period applies, you get 3 business days to cancel. And when you sign a contract that can be cancelled, you must get 2 sets of forms you can use to cancel. If you don’t get the forms, or if your right to cancel is otherwise interfered with such as being misled about your rights or given the run around, you have a “continuing right to cancel,” beyond 3 days.