THE FEDERAL THREE-DAY COOLING OFF RULE – IT APPLIES TO MORE BUSINESSES THEN YOU MIGHT SUSPECT?

Many individuals have some awareness of the three-day rule and think of it generally as the right to cancel purchases from a door-to-door salesman.

The rule however is much more extensive and applies to many businesses, especially small construction contractors, that do not engage in traditional door-to-door sales.

The reason for the confusion is in how broadly the rule defines “consumer goods or services” and what constitutes a “door-to-door sale.”

A “Consumer Goods or Services” includes goods or services purchased, leased, or rented primarily for personal, family, or household purposes. This would include almost any home improvement or renovation.

Whereas a “door-to-door sale” is:

  1. The sale, lease, or rental of consumer goods or services;
  2. With a purchase price of $25 of more;
  3. In which the seller or his representative personally solicits the sale (note that this includes contact initiated by the buyer in response to an advertisement or mailer); and
  4. The buyer’s agreement or offer to purchase is made at a place other than the seller’s place of business.

The fourth item – the agreement is made at a place other than the seller’s place of business is the most problematic for construction contractors and other small businesses who often meet customers at coffee shops, restaurants, or at a booth at a trade show or fairground.

The rule’s coverage is extensive and will apply to most transactions where the seller solicits the buyer and the parties do not meet at the seller’s place of business.

There are several exemptions to the definition of “door-to-door sale,” two of which should be noted by contractors:

  1. Transactions made pursuant to prior negotiations in the course of a visit by the buyer to a retail business establishment having a fixed permanent location where the goods are exhibited or the services are offered for sale on a continuing basis; and
  2. Transaction where the buyer initiated the contact and the goods or services are needed to meet a bona fide immediate personal emergency of the buyer, and the buyer furnishes the seller with a separate dated and signed personal statement in the buyer’s handwriting describing the situation requiring immediate remedy and expressly acknowledging and waiving the right to cancel the sale within 3 business days.

The requirements of the Three-Day Rule will be covered in my next entry.

 

 

This blog post is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Although I intend to keep this information current, I do not promise or guarantee that the information is correct, complete, or up-todate. You should not act or reply upon the information in this post without seeking the advice of an attorney.

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