72 Hour Contract Laws

By John Toivonen
Many laws give people 72 hours to cancel a contract.

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A legal contact requires that a person fulfill written obligations. But federal and state laws can give consumers a cooling-off period during which they can cancel the contract. In many cases the cooling-off period is 72 hours, which gives you the right to cancel a contract by midnight after the third day following the signing of the contract.

Federal Trade Commission Cooling-Off Rule

The Federal Trade Commission Cooling-Off Rules permit cancellation in some cases.

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The Federal Trade Commission (FTC) Cooling-Off Rule allows you to cancel a contract when you purchase something at your home or at a location that is not the permanent place of business for the seller. But not all sales can be canceled under this rule. Exemptions include sales that are under $25, goods or services that are not designed for use in the home, sales made by mail or over the phone, a sale that is arranged from prior discussions at the seller's permanent place of business, goods or services needed for an emergency, and repairs to personal property that are solicited by the buyer.

The Cooling-Off Rule does not cover transactions that involve real estate, securities or insurance, automobiles sold at a temporary location (as long as the seller has a permanent place of business) and arts and crafts sold at fairs.

Home Equity Loans

The Truth in Lending Act allows you to cancel a home-equity loan.

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The Truth in Lending Act gives consumers the same 72-hour protection as the Cooling-Off Rule. This law gives you the right to cancel a home-improvement loan or a second mortgage. The law requires the lender to inform you of your right to cancel and to give you a cancellation form.

State Law

State law may give you the right to cancel a roofing contract.

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Most states give consumers 72 hours to cancel contracts for home repairs. The time is generally calculated in the same manner as the above laws.

Contract Rights

A contract may contain the right to cancel.

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Even when state law does not give you a 72-hour cancellation period, you may have this right because it is stated in the contract. If the right is not in your contract, negotiate with the seller for a provision giving you a right of cancellation.

About the Author

John Toivonen is an attorney in Lansing, Mich., and has been a professional writer since 1999. His work has appeared in "The Washington Times." He holds a Juris Doctor from Thomas M. Cooley Law School and a Bachelor of Arts in English from Guilford College.

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