Cooling-Off Rule

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Cooling-Off Rule

1. A rule of the SEC mandating that several days transpire between the filing of a new issue's prospectus and the actual offering of the issue. This allows potential buyers and the seller to have a final chance to investigate the new issue and attempt to determine if there are any previously unforeseen problems. The cooling-off period is usually 20 days, but the SEC may change that for individual offerings at its discretion.

2. A clause in many contracts allowing the buyer of a good to return it to the seller in exchange for the amount paid for it for up to three days, without committing breach of contract. The cooling-off rule allows a buyer to restore the status quo before the contract was entered for any reason for a limited period of time. It is also known as buyer's remorse.
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If you do sign a contract and then have second thoughts, remember that the Federal Trade Commission's "Cooling Off Rule" may apply if the contract was signed somewhere other than the contractor's place of business (in your home, for example).
If you made a purchase from a door-to-door salesperson, you are protected under the FTC's Cooling Off Rule. This gives you three days to cancel your order and get a full refund.