Educational Consumer Tips


Author: Better Business Bureau


Whenever you and a seller sign an agreement requiring him to perform a service or deliver a product and you to pay money, you are both entering into a contract. A contract is a legal document. Sometimes it is very formalized and "official looking," but it can also be handwritten on a plain sheet of paper. A contract describes the exact obligations of the signers to one another.

Once in force, a contract generally cannot be changed or broken unless both parties agree.

A Trade Regulation Rule from the FTC allows a consumer three business days in which to cancel a contract signed in a door-to-door sale of a product or service and through hotel-motel sales. The salesperson must give the customer a cancellation form that fully explains this right and how to exercise it. If the customer cancels, the seller must return any money or trade-in merchandise that was taken at the time of sale and , of course, the customer must return any merchandise that the seller left behind. This FTC Rule applies to most sales of $25 or more made off the seller's premises in interstate commerce. If you sign an agreement that is not covered by such a law, or if you let the three-day period elapse, you then are bound by your side of the agreement, and you may be subject to penalty if you cancel. So know ahead of time what you are signing.

Before you sign a contract for any product or service, the BBB recommends you review the following consumer tips:

--As with any business transaction, be sure to read all agreements, guarantees, and instructions before signing.

-- Do not be pressured into signing an agreement before you are ready and you understand all terms and conditions.

-- Make sure all oral promises are put in writing.

--Be wary of vaguely worded provisions, exclusions or limitations which could pose a problem later.

-- Never sign a contract with sections left blank.

-- You may also wish to have your legal counselor review the contract before signing.

To be sure you are satisfied with the seller's part of the agreement, you must verify that everything the seller is to do is covered by the contract. The price, type and model number of every item, the quality and condition of the materials to be used, service obligations and the time of delivery or completion should be stated precisely. On installment contracts, finance charges must be set forth and expressed as an annual percentage rate according to the federal Truth In Lending law.

You should also be aware that products sold "as is" are sold without any obligation as to their condition, service or return.

For more information on Sales Contracts the BBB's booklet entitled "Sales Contracts" is available upon request.