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 Tennessee, as in many other states, the implied warranty of merchantability is a legal concept that applies to lease transactions for goods such as office equipment, computers, and vehicles. This warranty implies that the leased goods must meet certain standards 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, and be of consistent quality and quantity within and among units. Additionally, they must be properly packaged and labeled as required by the lease, and conform to any claims made on the packaging or labeling. Tennessee's Uniform Commercial Code (UCC) generally governs these transactions and the implied warranties. The UCC may also recognize other implied warranties based on the lessor and lessee's course of dealing or the customary practices in the industry. It's important to note that while these warranties are implied by law, they can be modified or disclaimed under certain conditions as outlined in the UCC.