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Three Day Right To Cancel

I recently had the pleasure of meeting Karen Ensley, a Dallas lawyer who is extremely involved in the contractor and subcontractor trades in the North Texas area. Karen works with a named partner at Ensley Benetiz Law, PC in North Dallas. Her firm specializes in Construction Law, Civil Litigation, Storm Restoration, as well as Business and Employment Law.

Karen wrote and published a brief article on her website that caught me by surprise, and I felt compelled to share the information. (Please keep in mind that this issue exists in other states as well, and we have included a link to examples and resources at the bottom of this article.) Any contract for the sale of products and services established in a consumer’s home must include a three-day right of cancellation. However, in Texas, failure to provide such notification can render the contract void as if it never existed. There may be other ways to seek payment for the services you have provided, but any specified protections in your contract are lost.

Furthermore, failure to give a Texas consumer the statutory three-day right to cancel may subject you, the merchant/contractor, to payment of the consumer’s attorney fees and costs if a dispute develops. Did you know that a violation, if determined to be intentional or knowing, might subject you to triple damages under the Texas Deceptive Trade Practices Act?

This notice requirement is being taken seriously by the Texas Legislature, and you should too. The statute that contains the precise warning language, as well as the cancellation notice language, is the Business and Commerce Code’s 601.052(b)(4)(B) and 601.053(3).

Not only must the wording be specific, but it must also be set in boldface type with a minimum font size of 10 points, next to the space reserved in the contract for the consumer’s signature, or on the front page of the receipt if no contract is used. (Examples may be found here.)

While this may seem small, and you haven’t been sued for any of your home consumer contracts, as this becomes a more popular topic on social media, the correct statement is that they haven’t sued you yet. Be sure to review your residential work contracts and make any necessary changes.

Bottom line: dealing with in-home sales has its drawbacks, but it is a vital aspect of working with homeowners. Always ensure that your contracts are compliant, contain language that complies with current legislation, and are designed fairly and if you are called upon to defend them in a court of law. This is an issue in other states as well. Click here to learn about the three-day right to cancel laws in your state.

About the Author

Ed Holomon
Ed Holomon
Sr. Claims Consultant

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