What Is a Cooling-Off Period
A cooling-off period is a window after signing a contract during which the consumer may cancel without reason and without penalty. It is a statutory exception to the general rule that contracts are binding when signed. Cooling-off periods exist only where a specific statute creates them.
In Ontario, the Consumer Protection Act, 2002 creates cooling-off periods for several types of consumer agreements, each with its own window and procedure.
Where Cooling-Off Periods Apply in Ontario
The main cooling-off periods under the Consumer Protection Act, 2002 include direct agreements (10 days), time share agreements (10 days), personal development services such as gym memberships and dating clubs (10 days), and certain loyalty program contracts. The Payday Loans Act, 2008 creates a separate two-business-day cooling-off period for payday loans.
- Direct agreement (door-to-door, off-site): 10 days under CPA s. 42
- Time share agreement: 10 days under CPA s. 27
- Personal development services: 10 days under CPA s. 30
- Payday loan: 2 business days under Payday Loans Act, 2008 s. 32
How Cooling-Off Periods Work
The cooling-off clock runs from the day the consumer receives a compliant written copy of the agreement. Where the contract fails to disclose required information, the cancellation window is typically extended, often to one year.
Cancellation is made by written notice to the supplier, referencing the relevant statutory provision. The supplier is required to refund any payments within a prescribed period (often 15 days) and to remove or retrieve any delivered goods or installed equipment.