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 Wisconsin, the concept of an implied warranty of merchantability in lease transactions is recognized and is similar to the standards set forth for sales. Under Wisconsin Statutes section 402.314, which is part of the Wisconsin Uniform Commercial Code, goods must meet certain criteria to be considered merchantable. These criteria include being fit for the ordinary purposes for which such goods are used, conforming to the description in the lease agreement, and being of even kind, quality, and quantity within each unit and among all units involved. The goods must also be adequately contained, packaged, and labeled as per the lease agreement, and conform to any affirmations of fact made on the container or label. Additionally, in the case of fungible goods, they must be of fair average quality within the description. Wisconsin law also recognizes that other implied warranties may arise from the course of dealing or usage of trade between the lessor and lessee. It's important for lessors and lessees in Wisconsin to understand these requirements to ensure compliance with the implied warranty of merchantability in lease transactions.