After my bragging of N900 before I even got it during October my friend finally bought one in November and got it on the 21st november, while I bought in September and got it on the 5th December. But this is not the story,
He had problems with his touch screen after just one weeks of having the device and he called the Nokia and send it off for repair and ended up getting another N900 as a replacement. Yesterday his phone just did not have any signals no matter what you did, I was at the same spot and I had signals we reflashed the firmware and emmc.
With nothing of help he decided to send it back to Nokia for a repair, and when he talks with the rep. he tells him that device he has on his hands is a refurbished and has already passed the initial warranty of a refurb. phone so they cannot fix it under warranty but he is welcome to send it to Nokia and fix it on his own expenses. Which I said was BS, and asked to him to get transferred to his supervisor after telling him multiple times that he got this replace just after two weeks of buying a brand new with a year warranty. So he gets hold of the supervisor and the same story it is not in warranty being a refurb. phone so they cannot fix it under warranty but he can send and get it fixed on his own expenses.
He being a hard headed right after he got off the phone took his N900 out his pockets and threw on the ground and stepped and smashed it some was still left so he threw it in the dumpster.
But the main question can Nokia really do this?? Send a customer just after a week of being released a refurb phone (where did they even get a refurbished when the phone was being shipped to just hand full of people?) as a replacement and with in 7 months when the refurb also breaks they say they cannot do anything.
How ethical or legal is this?

Well it doesn't matter now does it?

I know it does not but how can they get away with this.
I have also recieved a refurb. phone when I had to sent my N95 but was only left with less that a month left on my initial warranty. I always thought because of being almost a year old phone they sent me a refurb and which looked brand new and I was really happy.

Well I would have argued harder before smashing the phone - especially because it can still be used as an internet tablet/media player even webserver if the celluar modem is broken.

However, as far as I know, the warranties are applied at the discretion of Nokia and are simply a customer service/build reputation thing - so I highly doubt it would be illegal for them not to honor a warranty under these circumstances.

In most countries (probably even your friend's), the warranty period is defined by the original purchase. A "replacement" could extend, but not contract, the initial warranty period.

IF he hadn't destroyed it he likely would have gotten a more informed employee to repair it.

I know that he should have acted as his age rather than a girl on her PMS. But what it really bugs me is after talking to two different reps and one is the supervisor, it was the same story. Like RWFarley said the phone as an official replacement by the company should carry on the initial warranty that came when he bought the brand new phone. How could they even have a refurb. phone on the first week of a launch?

It probably depends on how the agreements are interpreted by courts. If your account is accurate, your friend talked to a total of two people at Nokia and then smashed his phone. I know from many years of customer service experience that a customer service rep claiming to be a supervisor is not necessarily a supervisor, so all you know is that he talked to two people and they agreed with each other.

So your friend deserved to be ripped off to a certain extent.

so on the legal grounds if some one is played this way they can sue the company?

you havent even told us which country you are from...

In most countries, anyone can sue anyone for anything. So yes, someone can sue. There is a question of who would win, however.