According to Halacha, every sale of merchandise is made on the implicit condition that it is not defective. If the buyer discovers a defect in the merchandise, he can demand a full refund even though he had not explicitly stipulated at the time of the sale that his payment is contingent upon the condition of the merchandise. Halacha considers it self-evident that a buyer renders payment on condition that the merchandise is in proper working order, and therefore upon the discovery of a defect the buyer can demand a full refund.
The Shulhan Aruch (Hoshen Mishpat 232:3) applies this rule even in a case where the defect is discovered only several years after the transaction. Assuming it can be proven that the item was defective at the time of the sale, the buyer can demand that the sale be voided and that his money be returned. The Shulhan Aruch adds, however, that if the buyer used the merchandise after discovering the defect, then he effectively forgoes on his right to cancel the transaction, and he can no longer demand a refund. By using the item, he essentially declares that he is prepared to accept it despite its defect, and thus the transaction cannot be voided thereafter.
Rabbi Yehoshua Falk (Poland, 1555-1614), in his commentary to the Hoshen Mishpat section of the Shulhan Aruch (the "Sema," 232:10), establishes an important qualification to the Shulhan Aruch's ruling. Namely, if people customarily inspect a certain item before purchasing it, then a buyer who purchased such an item without inspecting it cannot later demand a refund upon discovering a defect. Used cars, for example, are generally brought to a mechanic for inspection before being purchased. If a person purchases a used car without first inspecting it, he implicitly expresses his acceptance of the car regardless of its condition. Therefore, if he later discovers a significant defect in the car, the sale is nevertheless binding and he cannot demand a refund. Of course, it is unethical for a seller not to disclose to prospective buyers information about defects or possible defects in the car; a seller who withholds such information is deemed a sinner. Nevertheless, if he withheld this information and the buyer chose not to inspect the car, the sale is binding.
Summary: If a person buys merchandise and discovers that it is defective, he may annul the sale and demand a full refund from the buyer, even several years later, assuming that the defect was present at the time of the sale. The buyer is not entitled to a refund if he used the item after discovering the defect, or if this kind of merchandise is normally inspected before being purchased (such as used cars) and he chose not to inspect it.
See the book- "Pure Money" by Dayan Cohen, pages 147-148.
