Legal How-To: Canceling a Contract Within 3 Days

Many of us have buyer's remorse after completing a purchase or closing a deal. But luckily, there are some situations in which you can cancel the deal within three days.

Caveat emptor (buyer beware) no more with these easy steps to cancel a recent contract:

1. Contact the Company.

Before you use your state and federal law options for canceling your contract, you may want to try simply contacting the business via mail or email to release you from the contract. Depending on the type of contract, you may be able to cancel for free or possibly a small fee.

2. Check State Laws.

Many states, like California, grant consumers a statutory "cooling off" period, typically three to five days, during which a consumer can cancel a contract for any reason by sending the seller a written cancellation notice.

Each state has its own methods and official forms for giving cancellation notice, but in most cases, the a contract can be cancelled within three days if notice is sent by certified mail before the third day.

3. Determine FTC Options.

The Federal Trade Commission (FTC) has put in place several safeguards to protect consumers from making hasty contract decisions. In particular situations, there is a three-day cooling-off period during which a consumer can cancel a contract.

This FTC cooling-off period only applies to purchases made in a buyer's home or a location outside the seller's permanent place of business (e.g., at a trade show).

Regardless of the location, a buyer cannot cancel a contract under the cooling-off period for a transaction that:

• Totals less than $25;
• Involves business or education goods (i.e., not personal or household goods);
• Involves cars (even if it's at a car show);
• Involves arts and crafts at a fair-type venue; or
• Involves real property, insurance, securities.

4. Send a Cancellation Notice.

If your contract is eligible for the three-day cooling-off period -- or even a longer period under state law -- you need to give cancellation notice to the seller.

Some businesses may offer their own cancellation forms, but you can always draft your own cancellation letter. Just make sure your notice includes:

• Your name, address, and contact information;
• Identifying information for the goods or services you're wishing to cancel (e.g., order number, account number, etc.); and
• An unequivocal statement that you are canceling the contract.

As long as you send the notice by mail -- or even better, hand delivery -- within three business days of the sale, the company may not sue you for breach of contract.

Need More Help?

While many laws are in place to protect consumers, remember that the three-day rule doesn't apply to all contracts. If you have questions about how to cancel a contract that you've agreed to, it may be best to consult an experienced contracts lawyer near you.

Are you facing a legal issue you'd like to handle on your own? Suggest a topic for our Legal How-To series by sending us a tweet @FindLawConsumer with the hashtag #HowTo.

Related Resources:

• Cancel a Purchase Under the 3-Day Cooling Off Rule (USA.gov)
• 5 Tips to Get Out of a Contract (FindLaw's Law and Daily Life)
• How to Get a Refund from Disneyland Disaster (FindLaw's Law and Daily Life)