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 Illinois, the Uniform Commercial Code (UCC) is adopted, which includes provisions for the implied warranty of merchantability in lease transactions. This warranty applies to leased goods such as office equipment, computers, and vehicles, ensuring that they are fit for the ordinary purposes for which such goods are used, are of consistent quality and quantity, and meet the terms of the lease agreement. The goods must also be adequately packaged and labeled, and conform to any affirmations made on the container or label. Illinois law may also recognize other implied warranties that arise from the course of dealing between the lessor and lessee or the usage of trade in the relevant industry. An attorney can provide specific guidance on how these warranties apply to a particular lease transaction in Illinois.