CHAPTER 601. CANCELLATION OF CERTAIN CONSUMER TRANSACTIONS
BUSINESS AND COMMERCE CODE
TITLE 12. RIGHTS AND DUTIES OF CONSUMERS AND MERCHANTS
CHAPTER 601. CANCELLATION OF CERTAIN CONSUMER TRANSACTIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 601.001. DEFINITIONS. In this chapter:
(1) "Consumer" means an individual who seeks or acquires real
property, money or other personal property, services, or credit
for personal, family, or household purposes.
(2) "Consumer transaction" means a transaction between a
merchant and one or more consumers.
(3) "Merchant" means a party to a consumer transaction other
than a consumer.
(4) "Merchant's place of business" means a merchant's main or
permanent branch office or local address. For a state or
national bank or savings and loan association, the term includes
an approved branch office and a registered loan production
office.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.002. APPLICABILITY OF CHAPTER; EXCEPTION. (a) This
chapter applies only to a consumer transaction in which:
(1) the merchant or the merchant's agent engages in a personal
solicitation of a sale to the consumer at a place other than the
merchant's place of business;
(2) the consumer's agreement or offer to purchase is given to
the merchant or the merchant's agent at a place other than the
merchant's place of business; and
(3) the agreement or offer is for:
(A) the purchase of goods or services for consideration that
exceeds $25, payable in installments or in cash; or
(B) the purchase of real property for consideration that exceeds
$100, payable in installments or in cash.
(b) Notwithstanding Subsection (a), this chapter does not apply
to:
(1) a purchase of farm equipment;
(2) an insurance sale regulated by the Texas Department of
Insurance;
(3) a sale of goods or services made:
(A) under a preexisting revolving charge account or retail
charge agreement; or
(B) after negotiations between the parties at a business
establishment in a fixed location where goods or services are
offered or exhibited for sale; or
(4) a sale of real property if:
(A) the purchaser is represented by a licensed attorney;
(B) the transaction is negotiated by a licensed real estate
broker; or
(C) the transaction is negotiated at a place other than the
consumer's residence by the person who owns the property.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
SUBCHAPTER B. CONSUMER'S RIGHT TO CANCEL TRANSACTION
Sec. 601.051. CONSUMER'S RIGHT TO CANCEL. In addition to any
other rights or remedies available, a consumer may cancel a
consumer transaction not later than midnight of the third
business day after the date the consumer signs an agreement or
offer to purchase.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.052. NOTICE OF CONSUMER'S RIGHT TO CANCEL REQUIRED.
(a) A merchant must provide a consumer with a complete receipt
or copy of a contract pertaining to the consumer transaction at
the time of its execution.
(b) The document provided under Subsection (a) must:
(1) be in the same language as that principally used in the oral
sales presentation;
(2) contain the date of the transaction;
(3) contain the name and address of the merchant; and
(4) contain a statement:
(A) in immediate proximity to the space reserved in the contract
for the signature of the consumer or on the front page of the
receipt if a contract is not used; and
(B) in boldfaced type of a minimum size of 10 points in
substantially the following form:
"YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO
MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS
TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN
EXPLANATION OF THIS RIGHT."
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.053. COMPLETED CANCELLATION FORM REQUIRED. (a) A
merchant that provides a document under Section 601.052 must
attach to the document a completed notice of cancellation form in
duplicate. The form must:
(1) be easily detachable;
(2) be in the same language as the document provided under
Section 601.052; and
(3) contain the following information and statements in 10-point
boldfaced type:
"NOTICE OF CANCELLATION
(enter date of transaction)
"YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR
OBLIGATION, WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE.
"IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU
UNDER THE CONTRACT OR SALE, AND ANY NEGOTIABLE INSTRUMENT
EXECUTED BY YOU WILL BE RETURNED WITHIN 10 BUSINESS DAYS
FOLLOWING RECEIPT BY THE MERCHANT OF YOUR CANCELLATION NOTICE,
AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE
CANCELLED.
"IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE MERCHANT AT YOUR
RESIDENCE, IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED,
ANY GOODS DELIVERED TO YOU UNDER THIS CONTRACT OR SALE; OR YOU
MAY IF YOU WISH, COMPLY WITH THE INSTRUCTIONS OF THE MERCHANT
REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE MERCHANT'S
EXPENSE AND RISK.
"IF YOU DO NOT AGREE TO RETURN THE GOODS TO THE MERCHANT OR IF
THE MERCHANT DOES NOT PICK THEM UP WITHIN 20 DAYS OF THE DATE OF
YOUR NOTICE OF CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE
GOODS WITHOUT ANY FURTHER OBLIGATION.
"TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED
COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR
SEND A TELEGRAM, TO (name of merchant), AT (address of merchant's
place of business) NOT LATER THAN MIDNIGHT OF (date).
I HEREBY CANCEL THIS TRANSACTION.
(date)
(buyer's signature)"
(b) A merchant may not fail to include on both copies of the
form described by Subsection (a):
(1) the name of the merchant;
(2) the address of the merchant's place of business;
(3) the date of the transaction; and
(4) a date not earlier than the third business day after the
date of the transaction by which the consumer must give notice of
cancellation.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.054. USE OF FORMS AND NOTICES PRESCRIBED BY THE FEDERAL
TRADE COMMISSION AUTHORIZED. The use of the forms and notices of
the right to cancel prescribed by the Federal Trade Commission's
trade-regulation rule providing a cooling-off period for
door-to-door sales constitutes compliance with Sections 601.052
and 601.053.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.055. ALTERNATIVE NOTICE AUTHORIZED FOR CERTAIN CONSUMER
TRANSACTIONS. A consumer transaction in which the contract price
does not exceed $200 complies with the notice requirements of
Sections 601.052 and 601.053 if:
(1) the consumer may at any time cancel the order, refuse to
accept delivery of the goods without incurring any obligation to
pay for the goods, or return the goods to the merchant and
receive a full refund of the amount the consumer has paid; and
(2) the consumer's right to cancel the order, refuse delivery,
or return the goods without obligation or charge at any time is
clearly and conspicuously stated on the face or reverse side of
the sales ticket.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
SUBCHAPTER C. RIGHTS AND DUTIES OF CONSUMER AND MERCHANT
Sec. 601.101. MERCHANT'S COMPENSATION. A merchant is not
entitled to compensation for services performed under a consumer
transaction canceled under this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.102. CONSUMER'S RETENTION OF GOODS OR TITLE TO REAL
PROPERTY AUTHORIZED. Until a merchant has complied with this
chapter, a consumer with possession of goods or the right or
title to real property delivered by the merchant:
(1) may retain possession of the goods or the right or title to
the real property; and
(2) has a lien on the goods or real property to the extent of
any recovery to which the consumer is entitled.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.103. CONSUMER'S DUTIES WITH RESPECT TO DELIVERED GOODS
OR REAL PROPERTY. (a) Within a reasonable time after a
cancellation under this chapter, the consumer must, on demand,
tender to the merchant any goods or any right or title to real
property delivered by the merchant under the consumer
transaction.
(b) The consumer is not obligated to tender goods at a place
other than the consumer's residence.
(c) If the merchant fails to demand possession of the goods or
the right or title to real property within a reasonable time
after cancellation, the goods or real property become the
property of the consumer without obligation to pay.
(d) Goods or real property in possession of the consumer are at
the risk of the merchant, except that the consumer shall take
reasonable care of the goods or the real property both before and
for a reasonable time after cancellation.
(e) For purposes of this section, 20 days is presumed to be a
reasonable time.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
SUBCHAPTER D. PROHIBITED ACTS AND CONDUCT BY MERCHANT
Sec. 601.151. CONFESSION OF JUDGMENT OR WAIVER OF RIGHTS. A
merchant may not include in a contract or receipt pertaining to a
consumer transaction a confession of judgment or a waiver of any
of the rights to which the consumer is entitled under this
chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.152. FAILURE TO INFORM OR MISREPRESENTATION OF RIGHT TO
CANCEL. A merchant may not:
(1) at the time the consumer signs the contract pertaining to a
consumer transaction or purchases the goods, services, or real
property, fail to inform the consumer orally of the right to
cancel the transaction; or
(2) misrepresent in any manner the consumer's right to cancel.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.153. TRANSFER OF INDEBTEDNESS DURING CERTAIN PERIOD. A
merchant may not negotiate, transfer, sell, or assign a note or
other evidence of indebtedness to a finance company or other
third party before midnight of the fifth business day after the
date the contract pertaining to a consumer transaction was signed
or the goods or services were purchased.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.154. FAILURE TO TAKE CERTAIN ACTIONS FOLLOWING RECEIPT
OF NOTICE OF CANCELLATION. A merchant may not:
(1) fail to notify the consumer before the end of the 10th
business day after the date the merchant receives the notice of
cancellation whether the merchant intends to repossess or abandon
any shipped or delivered goods;
(2) fail or refuse to honor a valid cancellation under this
chapter by a consumer; or
(3) fail before the end of the 10th business day after the date
the merchant receives a valid notice of cancellation to:
(A) refund all payments made under the contract or sale;
(B) return any goods or property traded in to the merchant in
substantially the same condition as when received by the
merchant;
(C) cancel and return a negotiable instrument executed by the
consumer in connection with the contract of sale;
(D) take any action appropriate to terminate promptly any
security interest created in the transaction; or
(E) restore improvements on real property to the same condition
as when the merchant took title to or possession of the real
property unless the consumer requests otherwise.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
SUBCHAPTER E. ENFORCEMENT
Sec. 601.201. CERTAIN SALES OR CONTRACTS VOID. A sale or
contract entered into under a consumer transaction in violation
of Section 601.053(b) or Subchapter D is void.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.202. LIABILITY FOR DAMAGES. A merchant who violates
this chapter is liable to the consumer for:
(1) actual damages suffered by the consumer as a result of the
violation;
(2) reasonable attorney's fees; and
(3) court costs.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.203. ALTERNATIVE RECOVERY UNDER CERTAIN CIRCUMSTANCES.
If the merchant fails to tender goods or property traded to the
merchant in substantially the same condition as when received by
the merchant, the consumer may elect to recover an amount equal
to the trade-in allowance stated in the agreement.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.204. DECEPTIVE TRADE PRACTICE. A violation of this
chapter is a false, misleading, or deceptive act or practice as
defined by Section 17.46(b). In addition to any remedy under
this chapter, a remedy under Subchapter E, Chapter 17, is also
available for a violation of this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.
Sec. 601.205. INJUNCTION. If the attorney general believes that
a person is violating or about to violate this chapter, the
attorney general may bring an action in the name of the state to
restrain or enjoin the person from violating this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 2.01, eff. April 1, 2009.