Cooling off period? 30 April 2007 at 2:22PM in Savings & investments 2 replies 669 views

carnac2000

Help please!

My partner Sue needed to organise dollars and went to Barclays on Saturday. They took an order for $9000, but then said they could not deliver before Wednesday. In the meantime she has found a better rate that can be delivered later today, but Barclays are insisting that Sue continue with their contract. Sue did not realise that she was entering a binding contract on Saturday, and I feel there should be some kind of cooling off period.

Is there anything she/we can do?

Thanks for your help

John

dunstonh

Barclays have bought the dollars on her behalf. It's not as if they just have $9000 dollars lying around.

She can still buy them and sell them back immediately and just pay the difference in rate if that is still the case.

and I feel there should be some kind of cooling off period.

and how long would that cooling off period be? 1 week, 4 weeks? Remember Barclays wouldnt be able to get the dollars until after the cooling off period. You only gave them 2 working days to get them in.

jamesd

Say you have a cooling off period.

You buy $10,000 on Saturday one week for delivery on Wednesday. The Dollar falls by 5% between Saturday and Tuesday. Now your 10,000 would be worth only 10,000 less 5%. But you can cancel and buy them elsewhere at the lower price. Do you stick with the deal or cancel and get 5% more Dollars for your money by buying elsewhere on Tuesday?

What if the Dollar goes up by 5% and you make a profit by sticking with the deal?

You're after a free option contract. The bank is certain to lose money on the deal over time: people will cancel if the Dollar drops, continue if it rises. That loses the bank the value of the drop each time a drop happens.

You're after an option that is sure to lose the bank money. Banks don't do that. Nor would you.

Alternatively you'd have to order them without knowing how much they would cost, or alternatively how many you'd get. That's because the bank wouldn't buy them until the end of the cooling off period to protect itself from the options risk. But since you want physical delivery of banknotes this is impossible: it has to buy them in advance to give it time to ship them to you. So, no escape here.