The ease or difficulty you have when cancelling a contract depends on the item as well as its cost. Under certain circumstances and within a specific time frame, the Federal Trade Commission provides a way for you to cancel a contract by submitting a cancellation form or letter of intent. It is important to know when and how to submit letters of intent to cancel a contract in order to fully protect your rights.
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The law giving you the right to cancel a contract is the FTC's "Cooling Off Rule." The rule, however, applies only if the contract meets FTC specifications. First, the contract must be over £16 and the intent of your purchase must be for personal, family or household use. Second, the contract must result from a door-to-door sale, a trade-show sale, a loan application for home improvements or a second mortgage or any type of loan in which you use your house as collateral.
When you sign a contract, by law, the seller must provide you with information on how to cancel your contract. This information should include two copies of a cancellation form that can take the place of letters of intent to cancel. If you mail the letter, it must have a postmark no later than midnight on the third business day after you signed the contract. For the purposes of contract cancellations, the only days the FTC considers nonbusiness days are Sundays and federal holidays. If you choose to mail the letter, the FTC recommends sending it via certified mail with a return receipt so you have proof that you not only mailed the letter within the appropriate time, but also that the company received it.
If you decide to write a letter, whether by choice or because the seller did not provide the appropriate form, the letter should be in business letter format. Include your contact information and an account number, if you have one, as well as information for the company you are addressing. Begin your letter with a statement telling the company you want to cancel your contract. Next, tell the company it may not take further steps to fulfil the terms of the contract, such as ordering materials, sending out an order or cutting a check for your loan. In addition, let the company know you want confirmation, in writing, of the contract cancellation. Make sure to hand sign the letter in pen and make a copy before sending or hand delivering it.
The state in which you live may provide additional options for cancelling contracts federal laws do not cover. These may include contracts for goods or services such as health club memberships, dating services, weight-loss programs, dance or martial arts lessons, timeshare properties, and hearing aids. Contact the consumer protection agency in your area to find out if letters of intent to cancel a contract may apply.
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