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 South Dakota, as in many other 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 and are fit for the ordinary purposes for which such goods are used. Specifically, the goods must conform to the lease agreement's description, be of fair average quality if they are fungible, be suitable for their intended use, be consistent in quality and quantity within and across units, and be properly packaged and labeled as required by the lease. Additionally, they must match any claims made on their packaging or labeling. South Dakota may also recognize other implied warranties that arise from the customary practices within a particular industry or from the history of dealings between the lessor and lessee. These regulations are designed to protect lessees by ensuring that they receive goods that are of a certain quality and that function as expected.