Cooling Off Period

Business, Legal & Accounting Glossary

Definition: Cooling Off Period


Cooling Off Period

Quick Summary of Cooling Off Period


The period after a company’s prospectus has been filed with the SEC and before the IPO, during which the company’s relations with investors are greatly restricted. Usually lasts 20 days. also called waiting period.




What is the dictionary definition of Cooling Off Period?

Dictionary Definition


An interval of time during which no action of a specific type can be taken by either side in a dispute. An automatic delay in certain jurisdictions, apart from ordinary court delays, between the time when divorce papers are filed and the divorce hearing takes place. An amount of time within which a buyer is permitted to cancel a contract for the purchase of consumer goods—designed to effect Consumer Protection. A number of states require that a three-day cancellation period must be allowed purchasers following door-to-door sales.

A cooling-off period is frequently used in labor disputes. There might, for example, be a period of one month following the filing of a grievance by a union or company against the other, during which neither the union nor the company is allowed to take retaliatory actions against each other.


Full Definition of Cooling Off Period


A cooling-off period is defined as the period of time you’re allowed, after signing an agreement, to cancel it without incurring a financial penalty.

Legislation regarding cooling-off periods is complex. Indeed, there are five main pieces of legislation consumers can call upon if they wish to back out of contracts they’ve entered into. It should be noted that cooling-off periods may vary from 5 days to 30 days, depending on the type of product agreement reached and how the agreement was reached.

The best-known protection for consumers is the Consumer Credit Act 1974. Here, regulated credit agreements may allow you to cancel the agreement should you change your mind. Worth pointing out is that there is a cooling-off period in which you can change your mind. Assuming you signed the agreement anywhere other than on the premises of the trader or creditor, and you discussed the credit face-to-face with the trader or creditor before you signed the agreement, then you may cancel the agreement.

If you are entitled to cancel the agreement, you must be sent a cancellation notice within seven days of signing the agreement explaining that you have the right to cancel the agreement. A cancellation form will be enclosed with the notice and you can use this (or write a letter) to cancel the agreement. Should you decide to cancel, the cancellation must be sent to the lender within five days of receiving the notice, preferably by recorded delivery.

Under the Consumer Protection (Distance Selling) Regulations 2000, on the other hand, you have the right to change your mind and cancel an order within seven working days, although some services and goods aren’t covered by these regulations.

Distance Selling Regulations apply where there has been no face to face contact.

If you do decide to cancel, you should put your cancellation in writing. This can be done either by letter, such as via recorded delivery, or you can fax or e-mail. A telephone call will not normally be sufficient.

If you do order goods the cooling-off period of 7 working days kicks-in after the day on which the goods are received.

If you have ordered services the cooling-off period commences after the day on which you agreed to go ahead with the agreement. Again, it is 7 working days.

Worth noting is that if the trader has failed to provide you with the required information about your right to cancel, then the cooling-off period will be longer. You may require legal advice on this issue.

Assuming you have taken good care of your goods and have satisfied the above conditions you are entitled to expect your money to be refunded within 30 days. Also, if the seller had arranged a credit or hire purchase agreement for you, this should be cancelled automatically, and any deposits paid should be returned to you.

Distance Selling Regulations do not apply to financial services, the sale of land or buildings, auctions – including internet auctions – and rental agreements that have to be in writing (i.e. a lease for three years or more).

There are also some partial exceptions. The information and cancellation provisions do not apply to contracts for accommodation, transport, catering, and leisure services, including outdoor sporting events, but only where the supplier agrees to provide these on a specific date or within a specific period.

In addition, the provisions do not apply to package travel, timeshare, and contracts for the supply of food, drinks or other goods for everyday consumption supplied by ‘regular roundsmen’.

Always check the terms and conditions of the contract, as you may have to pay for the return of the goods to the trader. You will not be liable for the original postage and packing charges.


Examples of Cooling Off Period in a sentence


The cooling-off period was appreciated, although the investors may not have valued the silence as much as the start-up founders.

You should always try to make sure that you get a good rest and recoup during any cooling-off period of time.

Our start-up was in a cooling-off period, which greatly frustrated Gary, because he wanted to be in touch with Justin, his longtime friend and investor of this new venture.


Synonyms For Cooling Off Period


waiting period


Related Phrases


twenty-day period


Cite Term


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March 29, 2024 https://payrollheaven.com/define/cooling-off-period/.
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American Psychological Association (APA):
Cooling Off Period. PayrollHeaven.com. Retrieved March 29, 2024
, from PayrollHeaven.com website: https://payrollheaven.com/define/cooling-off-period/

Definition Sources


Definitions for Cooling Off Period are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.