Contracts are, by definition, legally binding, therefore it’s difficult to cancel without financial penalty unless you can prove breach of contract. In many situations however, such as buying goods from shops, you are able to cancel the contract and get your money back. But unless the goods are faulty, this is not an automatic right, and you must refer to the individual shop or supplier’s returns policy.

Under certain circumstances, you are given the right to cancel over a specific period of time. This is referred to as your cooling off period and the duration of this period depends on what you bought and the manner in which you bought it. The following are situations in which the cooling off period applies

Buying online from shops or suppliers

The purchase of goods and services over the internet, by phone or by mail order generally is subject to the Distance Selling Regulations. One of the most important implications of these regulations is a cooling off period of 7 days during which you have the right to cancel. You must provide notice of cancellation in writing and it must be posted to, left at, faxed or emailed to the business address of the supplier, and you must ensure this is done no later than 7 working days after receipt of goods. Contracts for financial products sold by distance means are subject to different rules, see below for more on this.

Something else worth mentioning is that the supplier must have sent you written confirmation of your order no later than the time of delivery of the product or performance of the service. If they did not, then your 7 day cooling off period will not begin until they do, and may be extended by a further 3 months.

If you have commissioned a service under a distance selling contract and the work begins before the end of the 7 days cancellation period, then you must give up your right to cancel, but this must be clearly communicated and with your express agreement.

Does the right to cancel apply for all goods bought by mail order?

There are obvious exceptions and you will not have the right to cancel with the purchase of the following goods:

• Goods made to a personalised specification
• Perishable goods, such as foodstuffs and flowers
• Audio/video recordings or software where the seal has been broken
• Newspapers, magazines or other reading material (not books)
• Gaming, betting, lotteries

Buying from a doorstep seller

If you have bought something costing more than £35.00 from a trader as a result of a visit to your home or place of work (whether or not the visit was requested by you), you will be protected by the Doorstep selling Regulations – or to give it its proper title: The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008. These regulations give you a cooling off period of 7 calendar days during which time you have the right to cancel and get a full refund. Just as with the Distance Selling Regulations, you must have been provided with a notice of your cancellation rights, otherwise the agreement may be legally unenforceable

Buying away from the trader’s normal place of business.

You may also invoke your 7 day cancellation rights for items over £35.00 where business is taking place away from the trader’s HQ or shop. This may include any of the following:

• Your place of work
• A trade fair
• A one-day fair (such as a wedding fair) or a marketing presentation (such as overseas property)

It is also the case even when contracts are concluded at a later date, back at the trader’s shop or office – the fact that you have made your offer away from here is the important thing.

Timeshare agreements

There have been numerous problems to do with consumers who have signed contracts while under pressure from sales reps in the UK or as a result of a ‘free’ holiday provided by the company. For this reason, the Timeshare Act 1992 gives you the benefit of a cooling off period of 14 days if contracts are signed in the UK. If you sign abroad you will be subject to local laws, although most European member states have a cooling off period of 10 days. Check before you sign, although the company must provide you with the same notification of your rights as doorstep sellers.

Credit Agreements

You will only benefit from a cooling off period if the credit agreement was made in one of the following ways:

1. For agreements signed away from the creditor’s normal business premises – i.e. at your home, place of work or at an exhibition stand
2. For agreements made at a distance (online, by phone or by post)

For agreements which fall under (1), you will have a cooling off period of 5 days, which begins from the time you receive the second copy of the agreement (containing the cancellation form). For contracts which fall under (2) and (3), you benefit from a 14 day cooling off period. Unlike the cooling off period for goods bought under the Distance Selling Regulations (DSRs), the creditor may make a reasonable charge for any service (such as insurance cover) which was operating during this time.

There are specific guidelines on how you should cancel the contract, which must be notified to you by the creditor before or immediately after the contract is made. If the creditor does not make this information available to you, then your cooling off period will not begin until this happens.

Financial products and services

Financial products including banking, credit, insurance, personal pensions and investments, sold by distance means are subject to a 14 day cooling off period (this is 30 days in the case of life insurance and personal pensions). This includes renewals for insurance where the agreement has been sent by post. This 14 day cooling off period also covers situations where you bought a financial product from an intermediary or a broker, even if it was discussed and signed face to face. You must be sure to follow correct procedure for cancellation (see below). The insurer or broker must refund any monies paid by you within 30 days, although they have the right to deduct a reasonable admin charge, and a sum proportionate to the number of days cover you have had. If you have any related credit agreements, these will also be cancelled.

Extended warranties

These are effectively insurance policies and have a 45 day cancellation period with the right to a full refund if you have not made a claim in this time. Any cancellation after this time will entitle you to a  pro-rata refund. See our guide to extended warranties for more in depth information.

The correct procedure

With any contract or sale which is concluded away from the trader’s normal business premise, you must be sure you have been presented with clear written notice of your right to cancel, at or before the time the contract is made. If you have not, the contract is legally unenforceable. This notice, which cannot be in the form of small print, or otherwise disguised, must also provide a cancellation form and advise you on how and to whom a notice of cancellation is to be made. You can use the cancellation form provided or a simple written notice, as long as it is clear of your intentions. And as long as you have posted your notice of cancellation before the end of the cancellation period, it doesn’t matter when it is actually received. For this reason, it is always advisable to send it recorded delivery.

Refunds

The supplier must reimburse you within 30 days of cancellation, without charge, unless you have been informed that you will be liable for the cost of returning the goods. If you have any related credit agreements, these will also be cancelled.