“Merchantable” is equivalent to “marketable” or “sellable.” Goods are merchantable when they are of reasonable quality within expected variations and are fit for sale in usual course of trade, at usual selling price. Merchantable goods need not be outstanding or superior quality, they need only be fit for the ordinary purpose for which they are used.
There exists an implied warranty of merchantability for all items sold, unless there is some sort of disclaimer with language stipulating the item is being sold “as is” or “with all faults.” This is not to be confused with the similar but distinct implied warranty of fitness, which exists to ensure that an item requested for a particular purpose by a buyer and supplied by the seller is usable for that purpose.
Under UCC Section 2-314, for goods to be merchantable, they must be at least such as:
- (a) pass without objection in the trade under the contract description; and
- (b) in the case of fungible goods, are of fair average quality within the description; and
- (c) are fit for the ordinary purposes for which such goods are used; and
- (d) run, within the variations permitted by the agreement, of an even kind, quality within each unit and among all units involved; and
- (e) are adequately contained, packaged and labeled as the agreement may require; and
- (f) conform to the promise or affirmations of fact made on the container or label if any.
[Last updated in July of 2020 by the Wex Definitions Team]