A right to “cool-off” is a contractual or statutory right which gives a party to an otherwise binding contract the right to change their mind during a certain period of time. Provided that the cooling off notice is given strictly in accordance with the relevant procedure, the contract will come to an end. Generally speaking, if a party has validly cooled off then neither party will have any further rights and any deposit paid will have to be refunded.
Whilst some contracts may be conditional upon the satisfaction of a pre-condition it is unusual for a contract to contain a cooling-off right by agreement. An example of an agreed cooling-off right is where one party has a right to terminate the contract before a certain date if they are not satisfied with the outcome of their due diligence enquiries.
In South Australia the statutory rights to “cool-off” include the following:
A person who is a purchaser of a second hand motor vehicle can send a cooling off notice (in writing) by serving it on the dealer during the cooling off period. The cooling off period starts when the contract to purchase the car is signed and ends at the end of the second clear business day after the day on which the contract is made.
Houses, Land and Businesses
A person buying may have certain cooling off rights under the Land and Business (Sale and Conveyancing) Act 1994. These rights do not apply across the board but if a statement of particulars has to be given by the seller, in general there is a right to cool off.
In relation to the sale of land:
- where the vendor’s statement is served on the purchaser before the making of the contract—the end of the second clear business day after the day on which the contract was made; or
- where the vendor’s statement is served on the purchaser after the making of the contract—the end of the second clear business day from the day on which the statement was served, or the time settlement takes place (whichever is the earlier).
In relation to the sale of a small business:
- the end of the fifth clear business day after the day on which the vendor’s statement is served on the purchaser, or the time settlement takes place (whichever is the earlier).
Domestic Building Contracts
In relation to a contract for domestic building work (other than minor work), a person engaging the builder can cool off at the end of five clear business days after the making of the domestic building work contract.
These are general statements of cooling off rights. Naturally, there are all sorts of exceptions and rules applying to cooling off. A wrongful cooling off can expose you to claims for debt, damages or specific performance so it is very important to get legal advice before taking this step.
For further information please contact Peter on 8362 6400 or email Peter Jakobsen. Join our mailing list to receive updates and advice on current issues.