Legal Question in Business Law in California

Re: legality of charging restocking fee

You should disregard the label "restocking fee" and think of the proposed charge as an attempt to collect liquidated damages for breach of contract.

Your granddaughter entered into a contract to purchase the swing set. Arguably, title to the goods passed when payment was made. You are now in the legal position of asking the seller to repurchase the goods.

Even if title to the swing set was not to pass until delivery, you would be asking the seller to relieve you (or your granddaughter) of obligation under the contract. The question could then arise whether the 20% fee was a fair measure of the seller's damages for loss of the sale, or whether it was excessive, i.e. a penalty. Very likely, a court would find the seller's damages to be around 20% and the charge would be deemed fair in the circumstances.

There is a defense to the contract; the Commercial Code requires contracts for goods in excess of $500 to be in writing, or evidenced by a writing, signed by the party to be sued, in order to be enforceable. Using this "statute of frauds" defense would probably not work, however, even if there is no signed copy of the contract, because the signed check could be sufficient evidence of a contract.

All in all, I think the seller's attitude toward making a full refund is a bit hard-nosed and ungracious, but the law of sales and contracts supports the validity and enforcability of purchase agreements.