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 states, the law provides for an implied warranty of merchantability in lease transactions for goods, which is applicable to various items such as office equipment, computers, and vehicles. Under this implied warranty, the leased goods must meet certain criteria: they must be acceptable in the trade per the lease description, be of fair average quality if they are fungible, be suitable for their ordinary use, be consistent in quality and quantity within and across units as allowed by the lease, be properly packaged and labeled as required by the lease, and match any claims made on their packaging or labeling. Additionally, other implied warranties may arise based on the lessor and lessee's previous interactions or the customary practices in the relevant industry. These statutory protections are designed to ensure that lessees receive goods that are of a certain standard and fit for their intended purpose.