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What Does "Right to Cancel" Mean?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 10 September 2014
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"Right to cancel" is a term that is used to describe the option provided in a number of different contractual agreements that allows participants in the contract to cancel the pending agreement within a specified period of time. In many nations around the world, one or both parties may be able to exercise this right to cancel within three business days after the contract is signed. The procedures for managing the cancellation and notifying all relevant parties will vary based on local laws and the process outlined within the terms of the contract.

The right to cancel a contract is an important provision or clause within different types of legal agreements. Sometimes known as a right to rescind, this provision can be exercised for a number of reasons. One of the most common is that one or more parties uncover information that changes their willingness to participate in the activity governed by the contract, preferring to move in a different direction. It is important to note that the right to cancel does not necessarily require that parties have not engaged in full disclosure prior to signing the contract, or that anything is illegal or underhanded. Often, one or more parties simply identify another avenue that is likely to yield greater levels of satisfaction and wish to cancel the contract in order to pursue that alternative.

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A consumer right to cancel is found in a number of different transactions, even those involving the purchase of products like vehicles, household appliances, and even telecommunication services. Within the terms of the purchase agreement, a time frame is identified during which the recipient can choose to terminate the contract, return the goods or refuse the services, and owe nothing. The duration of this time period will vary, although three business days is often considered the standard. This means that if a consumer purchases a new vehicle on Monday and by Wednesday that the car is not as comfortable or does not perform as well as he or she anticipated, the car can be returned to the dealer and the agreement can be terminated.

In most cases, specific conditions must be met in order to claim the right to cancel. In the case of goods purchased, the seller has the right to inspect the item in question and determine if the good was damaged in some manner by the buyer, or if the good was subjected to use that is considered outside the norm. This helps to protect sellers from incidences in which buyers purchase goods with the intention of using them only for a day or two, returning them for full credit. Provisions of this type would prevent a buyer from purchasing a vehicle for a quick weekend trip out of state, then returning it to the dealer before the three-day right to cancel had expired.

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