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 Michigan, the implied warranty of merchantability for leased goods is a legal concept that ensures that leased goods meet certain minimum standards. Under this warranty, goods must be able to pass without objection in the trade under the lease agreement's description, be of fair average quality if they are fungible, be fit for the ordinary purposes for which such goods are used, maintain consistent quality and quantity as specified in the lease, be properly packaged and labeled as required by the lease, and conform to any affirmations made on the container or label. These requirements ensure that the goods are of a quality that is acceptable in the market and fit for the usual purposes for which such goods are used. Additionally, other implied warranties may arise from the specific course of dealing between the lessor and lessee or from the standard practices in the industry (usage of trade). It's important to note that while these warranties are generally implied by law, they can be modified or disclaimed under certain conditions as provided by the Uniform Commercial Code (UCC), which Michigan has adopted.