Implied Warranty

AAA

DEFINITION of 'Implied Warranty'

Under a sales contract, whether written or oral, there is a guarantee that the item sold is merchantable and fit for the purpose intended. This guarantee arises by operation of law and is in addition to any expressed warranties that are provided at the time of sale. These implied warranties exist to protect consumers who might otherwise pay for products that are not as represented by the merchant.

INVESTOPEDIA EXPLAINS 'Implied Warranty'

Most products you buy do not come with a written warranty. For example, when you go to the supermarket, you assume that the stocked items are fresh and edible. This is especially important when the food is prepackaged and you can't visibly inspect it. In such cases, you are relying on the market's implied warranties when you check out and pay your bill. If you get home and the milk is sour, you can expect to return it for a full refund.




RELATED TERMS
  1. Bilateral Contract

    A bilateral contract is a reciprocal arrangement between two ...
  2. Oral Contract

    A type of business agreement that is spoken, not memorialized ...
  3. Uniform Commercial Code

    A standard set of business laws that regulate financial contracts. ...
  4. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  5. Warranty

    A type of guarantee that a manufacturer or similar party makes ...
  6. Occupational Safety And Health ...

    Law passed in 1970 to encourage safer workplace conditions in ...
Related Articles
  1. Economics

    Understanding The Consumer Confidence Index

    We look at this closely watched economic indicator to see what it means and how it's calculated.
  2. Retirement

    Consumer Confidence: A Killer Statistic

    The consumer confidence is key to any market economy, so investors need to learn the measures and how to analyze them.
  3. Credit & Loans

    What's On A Consumer Credit Report?

    A look at the various components and considerations that go into one's credit report and credit score.
  4. Options & Futures

    The Consumer Price Index: A Friend To Investors

    As a measure of inflation, this index can help you make key financial decisions.
  5. Budgeting

    Extended Warranties: Should You Take The Bait?

    Avoid shelling out for these policies and you could save hundreds of dollars.
  6. Options & Futures

    Top 7 Most Common Financial Mistakes

    Choose fortune over disaster by avoiding these money traps.
  7. Mergers are not the same as acquisitions.
    Investing

    What's a Merger?

    Mergers are not the same as acquisitions. In an acquisition, one company buys and subsumes another company, leaving only the buyer in place. In most mergers, both companies merge to form an entirely ...
  8. Investing

    Who's The Better Financial New Source: The Motley Fool or Seeking Alpha

    This is a comparison of two of the most popular investment research sites: The Motley Fool and Seeking Alpha.
  9. As the number of new employees increases, the marginal product of an additional employee will at some point be less.
    Investing

    More is Less: Diminishing Marginal Returns

    In formal economic terms, the law of diminishing marginal returns states that as the number of new employees increases, the marginal product of an additional employee will at some point be less ...
  10. Typically, SPEs are subsidiaries of a larger corporation.
    Investing

    How Special Purpose Entities Help Fight Risk

    A special purpose entity, sometimes called a special purpose vehicle, is a legal entity created for one very limited, particular task. Typically, SPEs are subsidiaries of a larger corporation.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center