Can you cancel a contract after signing?

The short answer

• No general right to cancel. The idea that every contract comes with three days to back out is a myth.
• Some sales do have a cooling-off period. The FTC's rule covers many sales made at your home or away from the seller's place of business, and states add their own.
• Read the contract. A termination clause may let either side end it, usually with notice and sometimes a fee.
• Both sides can agree to undo it. Put that agreement in a signed release.
• Some contracts can be undone because of how they were made: fraud, pressure, a party who lacked capacity, or a seller who skipped a required notice.

The FTC Cooling-Off Rule

The federal rule, 16 CFR Part 429, gives a buyer until midnight of the third business day after the sale to cancel for a full refund. It covers sales the seller personally solicits of $25 or more at the buyer's home, and of $130 or more at other places away from the seller's permanent business, such as the buyer's workplace or a seller's temporary location. Saturdays count as business days; Sundays and federal holidays don't. The buyer doesn't have to give a reason.

What it doesn't cover

• Sales made entirely online, by mail or by phone.
• Sales negotiated at the seller's permanent store or office.
• Goods or services not mainly for personal, family or household use.
• Real estate, insurance and securities.
• Repairs or maintenance you asked the seller to come and do, though anything extra they sell you on that visit is covered.
• A real emergency, when the buyer started the contact and gave the seller a separate, dated statement in their own handwriting describing it and waiving the right to cancel.
• Vehicles sold at temporary locations by a seller with a permanent place of business, and arts or crafts sold at fairs.

How a buyer cancels

1. Use the form. Sign and date one copy of the Notice of Cancellation the seller gave you. No form? A signed letter saying you're cancelling works.
2. Send it in time. The FTC says to mail it so it's postmarked before midnight of the third business day, and suggests certified mail with a return receipt as proof.
3. Keep a copy, and make any goods you received available in as good condition as when you got them.

The seller then has 10 business days to refund your payments, cancel and return any note or check you signed, return any trade-in, and tell you whether it will collect goods left with you. If it doesn't pick them up within 20 days of your notice, you may keep or dispose of them.

State cooling-off laws

The FTC rule doesn't annul state laws that protect buyers at least as well (16 CFR 429.2), and most states have their own home solicitation statute. Minnesota's is typical: for a home solicitation sale of goods, services or improvements to real property with a purchase price over $25, the buyer may cancel until midnight of the third business day after the sale, by written notice in any form showing they don't intend to be bound, and a mailed notice is effective when it's deposited in the mailbox (Minn. Stat. §§ 325G.06 and 325G.07).

Some states punish a missing notice by keeping the door open. In Ohio, until the seller gives the written agreement and cancellation notice the statute requires, the buyer may cancel, and the three-day period starts only once the seller complies (Ohio Rev. Code § 1345.23(C)). Home improvement rules often add their own notice wording; see the guides for California, New York and Ohio.

Loans secured by your home are separate. Truth in Lending rules give a right of rescission on certain credit secured by a principal dwelling; three-day right to cancel explains when that clock starts.

Other ways a signed contract can end

• A termination clause. Many service, subscription and construction contracts let a party end them for convenience with notice, or for cause after an uncured breach. Follow its steps exactly: who gets notice, how, and when. See termination clause.
• Mutual rescission. Both sides can agree to cancel. Write it as a short release saying the contract is over, who owes what, such as a deposit refund or payment for work done, and that neither side will claim more. Then both sign it.
• The other side's serious breach. If they fail to do something central to the deal, you may be excused from your side. Get this wrong and you become the one in breach, so get advice first.
• Contracts that can be voided. A contract signed by a minor, or obtained by fraud, misrepresentation or duress, can often be undone by the person it was unfair to. See can a minor sign a contract.

If you're the seller: what to give buyers

If you sell at the customer's home, the cooling-off paperwork is part of the sale. Under the FTC rule you must:

• Give the buyer a completed copy of the contract or a receipt at signing, in the same language as your sales presentation, stating in bold type of at least 10 points that they may cancel before midnight of the third business day.
• Hand over two copies of a form captioned NOTICE OF CANCELLATION, filled in with your name and address, the date of the sale and the cancellation deadline.
• Tell the buyer about the right to cancel out loud, too.
• Leave out any waiver of the right to cancel and any confession of judgment.
• Hold the buyer's note or contract until after midnight of the fifth business day before selling it to a finance company.

Starting work inside the three days is a risk you carry: if the buyer cancels, the deposit goes back. The notice of cancellation form template is a starting point for the forms.

Doing it electronically

Signing a home sale on a phone or tablet doesn't change these duties. The notice still belongs in the contract and the buyer still needs the cancellation forms. ESIGN's consumer-consent steps generally apply when a law requires information to be given to a consumer in writing (15 U.S.C. § 7001(c)), so if you deliver the notice electronically, get that consent first and offer paper too. In SignMaster, put the contract, notice and both forms in one envelope; when everyone has signed, the buyer gets the full set by email, and in the iPhone and iPad app you can also print it on the spot.