Steps to understanding merchant contract cancellation rules

Written By Steps To Faculty Published August 13th, 2010

With so many new rules and policies regarding contract cancellation, it can be mind-boggling on the legal time frame to cancel a contract without consequence. But these rules are important because they are your rights. Take a look at some of the important new regulations regarding contract cancellation.

Step 1 Remember the 3 day rule

Contracts that are formed between two parties and that occur outside of a formal business office or commercial property can be cancelled within 2 days as long as the value of the contract exceeds $25. Outside places of business include home sales, such as a tupperware party, trade shows, and conferences. You are not required by law to explain why you would like to cancel the contract within the 2 day time frame.

Step 2 Stop that loan in time

With the exception of first home mortgages, collateral loans not involving the house as collateral as well as second and third mortgages and even home improvement funding contracts has a 3 days cancellation period. During these three days you do not have to give an explanation why you are cancelling the loan. However, first mortgage contracts require an explanation and a special form in order to cancel in the same three day period.

Step 3 Abide by shipping rules

By law, you are entitled to cancel your contract anytime within a 3 day span. You can also rely on having your order shipped to you within a 30 day time span or the time frame outlined in the contract. Should the other party fail to do so, they must provide an alternative date or provide you with a full refund.

Step 4 Contract by phone

Any contract formed by telephone or mobile phone can be terminated within a 3 day span as long as you also provide a notice of cancellation and return items outlined in the contract.

Step 5 Make a pledge to good..but just in case

Contracts and promises of cash or other goods to any nonprofit organization can be cancelled within 1-2 days without reprimand.

Remember, you generally have 2 days to cancel a contract if you change your mind. Please visit stepsto.com for more great business advice.


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