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Kevin O'Flaherty

In this article, we’ll discuss canceling a contract after it’s been signed, the FTC’s “three-day rule,” and how the ability to cancel depends on the industry or item being sold.

Buyer’s remorse, we’ve all felt it at one point or another in our lives. You move into a new area and decide to check out the facilities at the local gym with no intention of buying a membership. Thirty minutes later you’re walking out the door with a year-long agreement and a stomach ache because they had a twenty percent discount on memberships that day. Or, your fiance signs you both up for a free gourmet dinner that includes a free three-night stay at a beachside resort just for attending. By the end of the dinner, you’ve bought three-thousand dollars worth of surgical grade pots and pans and you don’t understand why it’s so hard for you to say no. In Iowa, can you cancel these transactions within a certain period of time? Is the FTC’s three-day cooling-off period a real thing? In some instances, yes. In general, Iowa does not provide consumers with the right to cancel all types of consumer contracts within a given period of time, but there are some exceptions depending on the industry.

Door to Door Sales Contracts

For purchases above $25 made in the home or at your place of work, you have the right to cancel the contract within three business days as long as the transactions are purchased, leased or rented primarily for personal, family or household reasons. The salesperson should provide you with an oral and written explanation of the cancellation policy. If they do not you still have the right to cancel within three days. A reason for canceling is not necessary and in Iowa, the three-day period also covers purchases made at convention facilities, fairgrounds, salespeople who approach you in public areas, a rented hotel or conference room, and the seller’s normal place of business. The right to cancel is not guaranteed for purchases made entirely over the phone or through the mail, some in-home repair contracts, and most “emergency” goods or services.

Buying Club Contracts

“Buying clubs” are membership groups that allow you to buy certain goods and services at a discount. The three-day policy should apply to all types of buying clubs.

Business Opportunities and Franchises

Suffice to say, be cautious and read the contract thoroughly with any business opportunity. In Iowa, the three-day cancellation period also covers the sale of a business opportunity regardless of the location where the sale took place. The business opportunity must include an initial investment of $500 or more and the seller must agree to provide the materials, goods, education, etc that the buyer needs to start the business, as well as follow Iowa law with regard to business opportunities and franchises.

Funeral Service Contracts

The three-day period also covers funeral services and any goods bought for the funeral service even if done at the seller’s place of business.

Campground Membership Contracts

Membership campground contracts give the buyer the right to use a portion or all of the available campground under a membership campground operator for a period of 30 days or more as stipulated under the contract. You have three business days to cancel after entering into an agreement, regardless of the place of sale.

Timeshare Contracts

Timeshares often tout their own cancellation policies as part of the high-pressure sales pitch, but generally, you have 5 business days to cancel a timeshare contract after the seller delivers all the information concerning the assets and liabilities of the timeshare estate.

Gym Contracts

The three-day cancellation period applies to all types of gyms, exercise clubs, fitness centers, etc, including tennis and racquetball clubs, golf clubs, gymnasiums, weight control studios, and martial arts studios. The one caveat to canceling gym memberships is that you will often get your full refund back, minus twenty dollars.

Dating Service Contracts

Any and all services for the purpose of matchmaking, matrimony, or general social connecting, within the legal boundaries of the law, are subject to the three-day cancellation period In Iowa.

Home Remodeling Contracts

Contracts for work to be done on the home also fall into the three-day grace period as long as the work has not already begun. Once work has started it is usually advantageous for both parties to see the agreement to the end, lest the contractor is left with no work and the homeowner is left with a demoed, unusable space.

What About Purchases Outside These Industries?

As a general rule, contracts are legally effective once signed. Some contracts contact a specific recission clause that allows the buyer to cancel within a certain period of time, however, those recission clauses may have their own stipulations such as only being able to cancel due to illness, relocation, death, etc. The buyer can always ask the seller if they can cancel the contract and the seller may agree it is in their best interest not to have a contract with an unwilling party. This is termed “mutual recission” and the original contract would be terminated and sometimes a new contract created.

Lastly, if you feel the circumstances surrounding your signing of a contract provide legal grounds for cancellation, such as you were ill, distraught, felt in danger or threatened, etc, speak with a qualified attorney. Bringing legal action against a seller is often enough to have the contract terminated.

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.


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