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 North Dakota, as in many states, the concept of an implied warranty of merchantability applies to lease transactions for goods such as office equipment, computers, and vehicles. This implied warranty ensures that the leased goods meet certain standards, such as being fit for the ordinary purposes for which such goods are used, matching the quality and description specified in the lease agreement, and being properly labeled and packaged. The goods must also be consistent in quality and quantity within each unit and across all units involved in the lease. Additionally, any affirmations of fact or promises made about the goods on their container or label must be accurate. Beyond the implied warranty of merchantability, other implied warranties may arise from the specific course of dealing between the lessor and lessee or from the standard practices in the relevant industry. These regulations are designed to protect lessees by ensuring that the goods they lease are of a certain quality and are as represented by the lessor.