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 other states, the implied warranty of merchantability is a legal concept that applies to lease transactions for goods such as office equipment, computers, and vehicles. This warranty implies that the leased goods must meet certain standards to be considered merchantable. They must be fit for the ordinary purposes for which such goods are used, match the quality and description specified in the lease agreement, and be consistent in quality and quantity within each unit and among all units involved in the lease. Additionally, the goods must be properly packaged and labeled as required by the lease agreement, and they must conform to any claims made on the packaging or labeling. The implied warranty of merchantability can also be affected by the course of dealing between the lessor and lessee or by the usage of trade, which refers to the standard practices in the industry. It's important to note that while these warranties are typically implied by law, they can be modified or disclaimed under certain conditions as long as such disclaimers comply with the Uniform Commercial Code (UCC) as adopted by Tennessee.