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 New York, the Uniform Commercial Code (UCC) applies to lease transactions and includes provisions for implied warranties, such as the implied warranty of merchantability. This warranty implies that leased goods must meet certain criteria 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 each unit and among all units involved in the lease. Additionally, if the goods are fungible, they must be of fair average quality. The goods should also be properly packaged, labeled, and conform to any affirmations made on the container or label. Beyond the implied warranty of merchantability, other implied warranties may arise from the course of dealing between the lessor and lessee or from the usage of trade in the relevant industry. It's important to note that while these warranties are implied by law, parties to a lease agreement can modify or exclude them by specific language in the contract, subject to certain limitations under the UCC.