Legal Definitions - cooling-off rule

The Cooling-off Rule is a law that gives consumers the right to cancel a contract within a few days after signing it. This rule applies to sales, leases, or rentals of consumer goods and services that have a value of at least $25, made anywhere other than the seller's normal place of business.

For example, if you buy a vacuum cleaner from a door-to-door salesperson, you have three days to change your mind and cancel the contract. The seller must inform you of your right to cancel and provide you with a copy of the sales contract and two copies of the cancellation form. You have until midnight of the third business day after the sale to cancel.

The Cooling-off Rule applies to sales made at trade shows, conventions, and even when a salesperson makes a presentation in your home. However, it does not apply to sales made entirely online, via mail, or telephone. It also does not apply to insurance, securities, art/crafts sold at fairs, and automobiles sold directly at temporary locations such as auto shows.

Many states have laws regarding cooling-off rules, and the laws in most states resemble the federal rules. Some states have broader rules, such as Ohio, which allows cooling-off periods for sales of business opportunity plans and hearing aids in addition to the consumer goods and services covered under the federal cooling-off rule.