A consumer's right to cancel certain contracts is referred to as the "right to rescind" that contract. Sometimes this is also referred to as the “cooling-off rule.”
When consumers are in their own home, or someone else's home, they cannot walk away from a salesperson like they would be able to in a retail store. Consumers are often persuaded or pressured by a skillful and convincing salesperson to make a purchase. For that reason, there are both state and federal laws which allow consumers to cancel contracts for credit sales entered into in such situations.
Under federal law, a "door-to-door sale" is a sale that takes place at a location that is not the seller's permanent place of business. Most "door-to-door sales" take place in the consumer's home. However, sales which take place in facilities rented by the seller on a temporary or short-term basis can also be classified as "door-to-door sales" and include the consumer's right to cancel the contract, or the “cooling-off rule.” Other examples include hotel/motel rooms, convention centers, restaurants, a party sale type transaction and similar situations, even if the consumer invites the salesperson to make a presentation in his or her home.
South Carolina law defines "door-to-door sales" (or home solicitation sales) as a consumer credit sale of goods or services sold in person by a salesperson at the consumer’s residence or home. The fact that a credit sale is made at a consumer’s home gives the consumer special rights, mainly the right to cancel the transaction without cost by midnight of the third business day after signing the agreement.
In order for the consumer to have the right to cancel the contract, the sale must be either a credit transaction in which the seller extends credit to the buyer, or else a sale, lease or rental of consumer goods or services with a purchase price of more than $25. Home solicitation sales, or door-to-door sales, do not include sales made pursuant to preexisting revolving charge accounts with the seller or transactions conducted entirely by mail or telephone.
To cancel a door-to-door sales contract, the consumer must mail or deliver a signed and dated written notice to the seller's address as it appears in the sales contract. The cancellation must be sent by the consumer no later than midnight of the third business day after the date the sales contract is signed, unless the contract allows more time. As long as the notice is sent before that deadline, the notice is effective in canceling the contract. There is no required form for this notice as long as the consumer expresses in writing his or her intention not to be bound by the home solicitation sale and the consumer does not have to give a reason for cancelling the contract.
The seller must give a copy of the contract to the consumer at the time the agreement is signed and it must include a written statement of the consumer’s right to cancel the agreement. If the seller doesn’t give this notice, the consumer can cancel by notifying the seller in any manner and by any means.
There is an exception to the right to cancel a door-to-door credit sale, or home solicitation contract. The consumer may not cancel a contract if he or she requests the seller to provide goods or services without delay in an emergency situation. An emergency situation is defined as one in which the goods or services are required to protect the health, safety, or welfare of persons or to prevent damage to the property of the consumer. The seller can require payment only if the consumer has provided a separate signed and dated statement to the seller describing the emergency and that the goods or services are required for emergency purpose. Without this statement, the seller cannot require payment if the consumer takes action to cancel the contract.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 799-7100 in Richland or Lexington Counties, and 1-800-868-2284 from other parts of the state.