First off, the term 'mange' is a general one that basically just describes a skin condition evidencing hair loss and some degree of skin inflammation that is caused by one species of mite or other--so despite the fact that none of your dogs have ever shown any sign of the condition does NOT mean this puppy may not have broken with a case of it. The mites of the species Demodex
normally inhabit the hair follicles of all mammals, though each species of mammal has it's own specialized subspecies [we humans have our own as well], but these mites typically don't cause any adverse action to their host. When that host--in this case, a puppy--is under stress, however, such as occurs when adjusting to their new home, it is not unusual for them to become reactive to the presence of these mites, and experience an outbreak of demodectic mange
. That's not a big deal, and it usually resolves quickly; it only becomes an issue when the outbreak expands beyond a localized condition [affecting just a small area on the dog's face, for example] and instead becomes generalized and is causing hair loss, skin inflammation and dermatitis on the face and body of the animal. The mites are transferred from mother to puppy with after the puppy's birth, BTW, so many people mistakenly think the problem is 'inherited' from the dog's parents, or transmitted through contact with dogs other than the pup's mother. Regarding this type of mange, while the condition itself isn't passed from parent to pup genetically, a faulty immune system CAN be inherited from one or both parents, and a weak immune system can result in a dog that DOES have adverse response to the demodex mites. Basic rule of thumb is that localized demodex in an immature
animal under stress is not a big deal; generalized demodex in an immature animal, or any form of demodectic mange in an adult animal, suggests the dog has an abnormal immune system, [in which case it should likely not be used for breeding].
Regarding the question of whether to refund the buyer's money or not--as Hutchins asks, first you have to consider what your warranty provides for, if you have one. Not all breeders have warranties, and personally, I have no use for them as a buyer--once I've bought the dog, it's mine, for better or worse. From this point forward, with this buyer, even if you speak to them in person on via telephone, follow up that conversation with an email documenting EVERYTHING that was discussed. Take notes while you're talking to them so you can be specific. You always need to keep documentation...always!
I'd want to see the veterinary report that stated the puppy had a 'severe calcium deficiency', for starters, before I'd give any consideration to refunding any money without having the pup returned to me. If the vet did indeed make such a finding, it's worth something to you to have this information--if nothing else, it's worth the cost of the vet visit, x-ray and whatever treatment was prescribed. But I doubt this is even true.
If you have a warranty, you and the buyer need to follow that, or both agree IN WRITING to alter that warranty to whatever you both agree is fair. If you have no warranty or contract, personally, I think it's got to be an all-or-nothing deal: you refund the full purchase price and the buyer returns the puppy and transfers any registration paperwork, or the buyer can keep the puppy and you keep the money. If for some reason you decide it's worth it to you to refund part of the purchase price, you better make sure you have some kind of written disclaimer drawn up that both you and the buyer sign--if your country uses notaries to witness signatures, go that route, too--indicating that the refund is NOT being made due to any defect, flaw, fault, physical, mental or medical condition affecting said puppy, and is rather a 'good will' gesture on your part. Find out what is needed for a document such as this to hold up in court in your country, and make sure you follow those requirements to the letter.
Me, I think I'd want to get my puppy out of the buyer's hands if they are so dissatisfied as to want a partial refund...