Business Halacha: Defective Product Bought On Final Sale


final-saleQuestion: A clothing store advertised an “inventory clearance” sale, stating in bold letters, “All sales final; no refunds, no exchanges.” I bought a packaged dress shirt that proved defective. Can I return it? 

Answer: The Shulchan Aruch writes that even if the seller stipulates that the customer will not be entitled to a claim of defective merchandise – he is still entitled to claim, unless the defect was specified or valuated. (Choshen Mishpat 232:7) This is either because a person has to be aware of what he is foregoing or because the customer can claim that he did not really expect a defect and was not sincere in foregoing his rights. (SM”A 232:16) Thus, you should be able to return the shirt.

Despite this, it seems that would not be able to return the shirt for two reasons. First, as mentioned last week, the common commercial practice supersedes the standard halacha here, and nowadays the common practice seems to be that such sales are final even if merchandise proves defective. Second, these sales are typically discounted significantly, and part of the low price is to compensate for the risk of defect.

Similarly, we mentioned in an earlier issue that defective merchandise can be returned even if discovered years later. However, Responsa Maharsham writes that if the sales terms stipulate that a defects claim can only be made within eight days – if the common practice is to follow the sales terms we also follow them. (III:128)

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Authored by Rabbi Meir Orlian

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  1. The author gives two reasons which are really one. 1) The standard practice is that the sale is final even if the merchandise is damaged. 2) The price is lowered for that reason.
    I don’t think anyone expects that items in a closed package are damaged, (so long as the package looks fine from the outside, i.e. not bent and out of shape etc.) even at a final sale. For the same reason I don’t believe that the standard practice is not to give a refund in such a case. Being that people don’t expect the damage in such a case, therfore that clearly is not the reason the price is lower. A little knowledge of the consumer world will show that any honest seller will specify that the merchandise may be damaged That is even for seller’s of merchandise that’s from overstock and closeouts.
    According to the following psak it would only be “midas chasidus” to specify that the products may be damaged. Personally I think that makes no sense.

  2. I’m sorry to differ with this halachic ruling.

    The sign stated (as a stipulation for the transaction – ‘tenai’) “All sales final; no refunds, no exchanges”.
    It did NOT say “AS IS” which would indicate that it may be damaged. It was an “inventory clearance” sale”, which means the store is getting rid of older inventory ( i.e. out of style or winter items before the summer items come in). But NOT that the items are damaged.
    If the sign indicated “AS IS” then you would assume that it maybe damaged or that is damaged for sure.

  3. I have to say that I disagree with the premise of the reasoning. Common practice is to accept a return for defective merchandise. Final sales are to get rid of older merchandise, not to avoid the risk of defective products. Unless the products are sold “as is” or some other indicator that the seller takes no responsibility, the return should be accepted as is common practice.

  4. What is the meaning of common commercial practice supercedes halacha? Where is the halachic source for this?

    I disagree with the author’s statement that sales are final even if the merchandise is defective, and that the discount compensates for the defect.

    Unless an item is clearly marked “DEFECT” in advance of the sale, no buyer assumes at any price that the product is defective. There are many reasons why a merchant puts products on sale, and not disclosing defects is gazeila.

  5. All of the comments as well as the author have a fundamental misunderstanding of how Choshen Mishpat (business halacha) operates. That’s why such articles are not very helpful to the public. In a case where someone purchased an article at a “final sale, no returns or refunds” and the article turned out defective, the buyer would have to take the seller to a Din Torah. There is no such thing as “the halacha” like there is in hilchos shabbos, or kashrus. We have here a dispute. The buyer is not automatically stuck with the item, nor can he demand from the seller his money back. The buyer, who is the Petitioner, would have to prove to a Bais Din he is entitled to a refund. The Bais Din may decide that the low price indeed indicates a risk of substandard merchandise, as mentioned. Or if the buyer can prove the seller knew this item was defective, and not merely a fluke, the Bais Din may decide the seller ripped off the buyer. The question of Onaah, market value of the item under the totality of the circumstances, may also come up. There are so many factors in most financial disputes, that it is wrong and impossible to “pasken” halacha without a Din Torah in which both sides present their case and bring evidence.

  6. From the “psak” in the article: “and nowadays the common practice seems to be

    “seems to be” is entirely insufficient and misleading to rely on as an answer.

  7. SG/#5:

    Having a Din Torah over a $25 sale would be entirely impractical every time a customer comes into the store for a refund and the store doesn’t agree to it.

    You would have 1,000’s of $25 Din Torah’s every week. Who will pay for three Dayanim for all these small monetary value cases?

  8. Binyomin #7

    You wouldn’t have 1000s of din torahs, for $25 most buyers would forget about it. I am merely stating the correct halacha. sometimes a $1000 item can be reduced to $500 on sale, then it may be worth while to seek redress, and din torah is the proper way to do it. the buyer has no grounds to stand on by going over to the seller, throwing the item back at him and demanding his money back by stating according to rabbi so and so in matzav, you have to give me back my money. that is my point.

  9. SG — But the question is, if at the end of the day the customer and merchant disagree over a $25 (or $100 or $200) transaction), what remedy does the buyer have? A Din Torah would cost more than the entire transaction.

  10. Rabbi Meir Orlian responds:

    In every realm of halacha, one has to consider the principle involved and the practical application of that principle. The principle here was established in a previous article about eggs: Even where a person has a rightful claim of defective merchandise, halacha recognizes a minhag hamedina (common commercial practice) not to honor such a claim. (C.M. 232:19) This article simply applied the principle to the case of “final” inventory clearance sales, under the assumption that there is a minhag hamedina not to allow return of defective merchandise in such sales. A number of readers disagreed with this assumption and claimed that this is not the common practice, unless the sale specified that the merchandise is sold “AS IS.” [This is also the U.S. law according to the UCC (Uniform Commercial Code).] The Pischei Teshuva (232:6) writes about this that Beis Din has to verify the local practice in each place. In the absence of a clear practice disallowing returns, we would revert to the basic law that a person usually has a claim of defective merchandise.

  11. Rabbi Orlian,

    If the two parties (merchant and buyer) don’t agree who halacha favors, what remedy does the customer have to enforce his rights to a refund (in a case where that right is present) if the dollar amount of the transaction in question is less than the cost of a Din Torah?

    Secondly, wouldn’t the “minhug hamedina” for transactions effectively be the law of the land (i.e. as codified in the UCC)?

  12. the UCC governs sales *among* merchants –
    that is merchant to merchant…

    sorry, simply not applicable in merchant to consumer transactions