How the right to rescind affects business contracts

On Behalf of | Aug 17, 2021 | Business Law |

In the state of Pennsylvania, a law exists to allow consumers to cancel a contract for goods and services. For a business providing goods and services to customers, it is important to know the situations where customers may terminate a contract with impunity.

The Unfair Trade Practices and Consumer Protection Law is used primarily in transactions or contracts that are made outside a place of business. This commonly includes transactions made over the phone or in a person’s home.

What is considered an unfair act?

Under this law, many things may be considered unfair or deceptive acts or practices. In a broad sense, any deliberate attempt to trick a customer into forming a contract for a product or service would fall under this law. This includes instances where:

  • Goods or services are passed off as those of another
  • Representing goods as original or new if they are damaged, altered or second hand
  • Disparaging other companies’ goods or services with false or misleading representation of fact
  • Advertising goods or services without intending to sell them as advertised
  • A company not complying with written guarantee or warranty given to the customer

When can a customer cancel their contract?

As to when a customer can cancel a contract is not consistent. Factors such as the nature of the contract, how it occurred, what goods or services were involved, etc., are considered when cancellation is disputed.

For instance, for door-to-door sales or phone sales, a customer may cancel their contract with a full refund within three business days following the first date of the contract. But when a customer is purchasing goods at a store, exchanges and refunds depend on the store’s policies.

This law provides customers with some protections but situations are largely circumstantial. Not all contracts are subject to this law, so reparations may exist for companies believing they were wronged by a breach of contract with a customer.

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