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 Nebraska, the Uniform Commercial Code (UCC) applies to lease transactions and includes provisions for implied warranties, such as the implied warranty of merchantability. This warranty means that 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 description in the lease agreement, be of consistent quality and quantity within each unit and among all units, be properly packaged and labeled as per the agreement, and conform to any claims made on the packaging or labeling. Additionally, goods must pass without objection in the trade and, if they are fungible goods, they must be of fair average quality. Nebraska's statutes may also recognize other implied warranties based on the course of dealing or usage of trade between the lessor and lessee. It's important for both parties in a lease transaction to understand these warranties to ensure compliance with state law.