Accounting Fundamentals Certification (AFC) Practice Test

Which warranty is mandated by state law?

1. Implied warranty

2. Express warranty

3. Full warranty

4. Limited warranty

The correct answer is: Implied warranty

An implied warranty is a type of warranty that is automatically created by law in certain transactions, regardless of any explicit promises made by the seller. This type of warranty ensures that the goods sold meet certain minimum standards of quality and performance. For instance, when you purchase a product, there is an implicit assurance that the item will function as expected for the general use intended. This legal expectation is grounded in consumer protection laws and does not require any verbal or written affirmation from the seller. The significance of implied warranties lies in their ability to protect consumers when they have little or no ability to negotiate the terms of the sale. By contrast, express warranties are explicitly stated by sellers, often in the form of a statement or guarantee, and they depend upon the seller's declarations. The other types of warranties, such as full and limited warranties, pertain more to the extent of the guarantees and the conditions under which they apply, often having specific terms defined by the seller. These specific warranties are not mandated by law in the same way that implied warranties are, making implied warranties the correct choice in relation to state law requirements.