Cooling off periods in franchise contracts: from consumer protection mechanisms to paternalistic remedies for behavioral biases

Atwell Courtenay ()
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Atwell Courtenay: Taxation and Business Law, University of New South Wales, Level 2, Quadrangle Building, Kensington, New South Wales 2052, Australia

Business and Politics, 2015, vol. 17, issue 4, 697-721

Abstract: The “cooling-off period” has remained a fixture of domestic consumer-protection legislation. Yet, as I argue in this paper, the longevity of these provisions is neither the result of their effectiveness at solving the problems they were intended to solve nor the forces of path dependence. Rather, I suggest that the cooling-off period has endured because of a process of gradual ideational adaptation. Over the course of the 20th century, legal and economic intellectuals advising government agencies have abandoned traditional consumer-protection rationales that led to the creation of cooling-off periods in favor of a paternalistic policy orientation that integrates behavioral science insights. Though the organizational problems the cooling-off period were expected to resolve have been more effectively addressed through the concurrent institution of other protective measures, such as the disclosure document and compulsory advisory provisions, the cooling-off period has found new uses and advocates, which have made it far from obsolete.

Date: 2015
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DOI: 10.1515/bap-2014-0024

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