A contract is a legally binding agreement and is presumed controlled by the terms spelled out in the contract document. Therefore, if the contract does not contain a clause allowing for cancellation, it usually can't be cancelled. However, the Federal government and the state of Florida do give consumers the right to cancel a contract under specific circumstances and rules.
Home Mortgage Rules
The Federal government legally gives homeowners the right to cancel a contract for refinancing the mortgage on their home. This right to cancel only applies if the home is the primary residence of the consumer borrower, the refinanced mortgage is not with the original mortgage lender and the loan is for personal use and not for business purposes. The time limit to exercise this right to cancel is three business days after the borrower has signed the contract and received copies of all the required disclosures.
The state of Florida gives consumers the right to cancel a contract that was entered into through an in-home solicitation. This right is available for all contracts over $25 in value and that occurred in any location that is not the seller's place of business. While this usually involves door-to-door sales, it also includes contracts entered into at special events, fairs, conventions and similar venues. This right does not include contracts that were initiated by the buyer or that were started at the seller's place of business. The buyer has three business days to exercise this right and can do so by regular mail.
Specific Contract Types
Florida also gives the right to cancel a contract for specific kinds of transactions. Note that these are not limited to occurring at home but can even take place at the seller's place of business. Contracts for home improvement services are included, which is where actual home improvement work is contracted for, not just the buying of materials. The other two transactions types included are contracts for gym or health club memberships and for dance lessons. All three of these contract types allow the buyer three business days to cancel, and that right must be told to the buyer in writing.
Car Purchase Contracts
Contrary to popular belief, the law does not give an automatic right to cancel an automobile purchase. What Florida does provide is what is commonly called the state Lemon Law. While this law does not give the buyer the right to cancel the contract, it does provide a legal means to get some or all of his purchase money refunded, which is provided to the buyer through a state run arbitration procedure. The details and forms used for this buyer remedy is included in the Lemon Law Handbook that is required to be given to all purchasers of eligible vehicles in Florida.
- Truthful Lending: The 3 Day Right of Rescission
- LawServer: Consumer Protection: Florida Statutes 501.025 - Home solicitation sale; buyer's right to cancel
- WFLX Fox 29: The myth that all contracts may be cancelled within three days of signing
- Florida Division of Consumer Services: Florida's Lemon Law Program
Kerry Zias has been a strategic business consultant and college instructor of business administration courses since 1990. He has taught courses and performed professional consulting work in the areas of marketing, management, business start-ups, entrepreneurship, real estate, sales psychology and performance, business communications, business law and political/governmental relations. Zias holds a Master of Business Administration in marketing from National University.