Laws vary from state to state but state statutes often provide for the creation of an implied warranty of merchantability by a lessor of goods in a lease transaction—such as for office equipment, computers, telephone systems, heavy machinery, home furniture, motor vehicles, or electronics.

For goods to be merchantable and comply with the implied warranty of merchantability they generally must:

• pass without objection in the trade under the description in the lease agreement;

• in the case of fungible goods, are of fair average quality within the description;

• be fit for the ordinary purposes for which goods of that type are used;

• run, within the variation permitted by the lease agreement, of even kind, quality, and quantity within each unit and among all units involved;

• be adequately contained, packaged, and labeled as the lease agreement may require; and

• conform to any promises or affirmations of fact made on the container or label.

Other implied warranties may be provided by statute or arise from the lessor and lessee’s course of dealing or usage of trade (standard practices and methods in the industry).

In Kentucky, as in many states, the law provides for an implied warranty of merchantability in lease transactions for goods such as office equipment, computers, and vehicles. This warranty means that the leased goods must meet certain criteria to be considered merchantable. They must be fit for the ordinary purposes for which such goods are used, match the quality and description specified in the lease agreement, and be consistent in quality and quantity within and across units. The goods should also meet the packaging and labeling requirements as per the lease agreement and conform to any claims made on their labels or containers. Additionally, other implied warranties may arise from the course of dealing between the lessor and lessee or the customary practices of the trade. It's important to note that while these warranties are typically implied by law, they can be modified or disclaimed under certain conditions as provided by the Uniform Commercial Code (UCC), which Kentucky has adopted.