Penn State International Law Review

Article Title

Rethinking the Usefulness of Mandatory Rights of Withdrawal in Consumer Contract Law: The Right to Change Your Mind?


Jan Smits

First Paragraph

Both in Europe and the United States, withdrawal rights are increasingly part of mandatory legislation to protect consumers. Withdrawal rights allow the consumer to terminate the contract within a set 'cooling-off period.' This paper offers a threefold analysis of these rights. First, it makes a comparison between statutory withdrawal rights in Europe and in the United States. Second, it presents the results of a modest survey of the voluntary use of withdrawal rights in general conditions of retailers. Third, it evaluates the usefulness of mandatory withdrawal rights. The paper shows what can be the effect of introducing such mandatory rights on the behaviour of both retailers and consumers. The main reason why a retailer voluntarily grants withdrawal rights to a consumer is that it creates trust and thus enhances the willingness of the buyer to purchase products. This trust-building process can be undermined if the legislator imposes statutory withdrawal rights, leading to crowding-out effects. Finally, the consequences of this finding for the optimal design of withdrawal rights are discussed.