If it was just a border and it was corrected, I still dont know if that justifies a refund or really considered damaged.
Oh I agree completely. If the damage was fixed, there's no issue. I repair all sorts of mistakes on my cakes before the customer sees them.
I have a clause as well about conditions that may affect the cake once I've delivered it, but to me, it's my problem to handle until I've delivered the cake. If it's 110 outside, I'm responsible for making sure that cake stays cool until it gets where it's going.
I don't think I'd get any customer to agree that if their cake melts in the heat before it's delivered, it's their problem.