Refunds and Exchanges

Since a sales transaction is regarded in law as contract in which title to property is transferred, it is, generally, final. Under the Business Practices Act (Ontario), where the contract has been entered into by a consumer as a result of a false, misleading, deceptive or unconscionable consumer representation made by the seller, the contract may be rescinded by the consumer in most circumstances. Where such a representation has been made, or where the goods supplied are not reasonably fit for the purpose for which they were intended, or are not merchantable, then the buyer may have a claim for damages against the seller.

The finality of a sales transaction protects both parties. The consumer can't insist that he be given his money back because he has found the same item for a better price. But neither can be seller demand to have the item returned if he finds someone who will pay more for it.

Of course, there is nothing in law to prevent the buyer and seller from returning the goods and giving refunds by agreement. That is where store policies come into the picture.

The merchant who offers his customers cash refunds, credit notes, or exchanges is offering something that he is not legally obliged to offer (in the absence of contractual terms creating such an obligation), and each merchant is free to set his own policy in this area. That is why you might be able to get your money back at one store, but not at another. A consumer's rights at one store are exactly the same as his rights at another. It is his privileges that differ.

It is worth remembering that a store may not even have a policy, but may deal individually with each consumer request. This, too, is within a store's legal rights. Nor, if a policy exists, is there any requirement that it be publicized. But most stores find it in the best interests of consumer relations both to have a consistent policy and to make sure its customers are aware of its terms, either through a prominently posted sign or through a notice on its sales slips.

(Incidentally, notices on sales slips may create contractual terms that are binding on the purchaser if the purchaser has notice of such terms either during the current transaction or by reason of an earlier, similar one).

The granting of customer privileges has a lot of market incentive behind it. The merchant who is no more liberal than the law forces him to be may find it hard to attract and keep customers. A number of stores stress a policy of granting cash refunds as part of their overall customer relations. Such a policy is often seen as part of a commitment to guaranteeing customer satisfaction.

More common than cash refunds are credit and exchange privileges. You buy your mother a teapot for $40, but it turns out that two of her friends bought her teapots too. So it makes sense to take your back and get her something else with the $40 the store allows you towards the purchase of another item. But there are some pitfalls to keep in mind about credits and exchanges.

• You are limited to the selection at that store. If you wish to exchange your teapot for a roasting pan, but the store sells only china, you are out of luck. That is why it is important to survey the kind of merchandise the store carries, for a credit no the is of no value to you if there isn't anything else in the store that you would wish to purchase.
• Be careful when you buy items marked as being on "sale". Sometimes credit privileges apply to regularly priced merchandise only.

These examples illustrate why it is important that you understand, before the sale is made, when, how, and under what conditions the merchandise may be returned. So, before buying an item, ask yourself, "Can I return it:..

• and get my money back?
• in exchange for another item like it in the store?
• and get a credit towards the purchase of something else in the store?
• at all, or is the sale final?"