Cancellation and the right to return goods and services

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A consumer may cancel an order for goods and services before they are delivered or performed. Once goods have been delivered, the consumer has no general right of return, except in the case of distance selling.

Cancellation

A consumer is entitled to cancel:

goods before they are delivered to the buyer,
services which they have requested and
further work even though the work has begun.

If the consumer cancels, the seller cannot demand payment, except for services already performed and for work that must necessarily be completed despite the cancellation.

The seller may claim compensation for losses incurred as a result of the cancellation. The seller must prove their loss, unless compensation in the event of cancellation has been agreed in advance, and is obliged to mitigate the loss.

Compensation shall be determined with regard to, among other things, the total price of the service. The consumer's liability to pay can never exceed the total price of the work agreed upon.

Right of return

The general rule is that a purchase is a binding contract between the seller and the buyer, unless a right of return has been agreed, for example if the item is bought on approval.

There is therefore no general right of return, except in the case of distance selling (online sales, doorstep sales, telephone sales, catalogues, etc.). However, many shops grant consumers the right to return goods under agreed conditions. More about the right of return.

Special rules apply if goods are faulty.

Guidelines on the right of return

Advisory guidelines have been issued on the right of return, gift vouchers and credit notes. Their main points are:

If an item bears a gift label, a till receipt is not required when returning it.
The consumer should receive either a refund or a credit note for returned goods.
Credit notes should be based on the price at which the item was sold. If an item is returned after a sale has begun, the refund is based on the sale price of the item.
Credit notes are valid for four years from the date of issue unless otherwise stated on the note, but never for less than one year. If a credit note is issued within 14 days before the start of a sale, it cannot be used during the sale without the seller's consent.
Credit notes remain valid with respect to anyone to whom the seller may transfer their retail operations.

Some shops go further than the guidelines require, for example by refunding goods instead of issuing credit notes or by allowing a longer return period.

Right of return in distance selling

In distance selling, the consumer has 14 days to withdraw from the purchase without giving a reason and receive a refund. For the purchase of services, the period is calculated from the conclusion of the contract, and for the purchase of goods from when the consumer received the goods. If the seller fails to inform the consumer of this right, the period is extended to 12 months. There are exceptions to this right for certain goods. More about the right of withdrawal from a contract.

Please note that the right of withdrawal does not apply if goods or services have been tailored to the consumer's specifications, or if seals have been broken and the consumer has been informed of this.

If the consumer has withdrawn from the purchase, the seller is obliged to refund all payments the consumer may already have made. The refund shall be made as soon as possible and no later than 14 days.

If a dispute arises concerning consumer transactions in other European countries, assistance can be sought from the European Consumer Centre, which is run by the Consumers' Association of Iceland.