Consider the following scenario:

Lets say you have a balance of $300 in your Paypal account. You want to partly refund $225 out of a $400 payment that you received some time back.

When you go to refund this money, you will not be allowed to do so even when you only want to refund $225 which is less than your available balance of $300. This happens because Paypal checks the available balance against the total transaction value (in consideration for refund) and forgets that they have a “part-refund” option.

I hope they fix it soon!