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What is the Implied Warranty of Merchantability?

The implied warranty of merchantability is a warranty that arises by operation of the law, and which is not dependent on the terms of any written warranty given by the seller. In essence, the warranty of “merchantability” is the seller’s promise that the goods being sold have the basic characteristics and qualities you would expect from goods of that kind. For example, when someone purchases a chair there is an implied warranty that it can support the weight of an average-sized human being. Alternatively, when someone purchases a coffee maker there is an implied warranty that it can brew coffee. In the latter example, the implied warranty does not guarantee that it will brew coffee that you think is good tasting – just that it can produce a hot liquid that would appropriately be called coffee.

Under California’s lemon law statute, the implied warranty of merchantability is a legally enforceable promise from a seller that his/her goods have the following characteristics:

  1. they would pass, without objection, in the trade under the contract description;
  2. they are fit for the ordinary purposes for which such goods are used;
  3. they are adequately contained, packaged, and labeled; and
  4. they conform to the promises or affirmations of fact made on the container or label.

Why is the Implied Warranty Merchantability Important?

Under California’s lemon law, the implied warranty of merchantability attaches to every sale (unless disclaimed by the seller) of:

  1. new automobiles;
  2. new goods that are purchased for personal (i.e., non-business) purposes;
  3. goods (whether new or used) that are purchased from a person or entity that is in the business of selling that type of goods; and
  4. used goods that are bought for personal purposes and come with the seller’s express warranty.

In these types of transactions the warranty of merchantability helps to protect consumers in many ways. For example, with regard to the purchase of new consumer goods, the warranty of merchantability provides basic warranty protection – even if the seller gave no express warranty at all. When the seller provides an express warranty, the implied warranty of merchantability can fill in gaps in warranty coverage. That is, if a used car dealership gives buyers a 30-day express warranty that covers engines only, then there is no express warranty coverage for the axels, the steering column, the air bags, etc. But the implied warranty of merchantability covers such vehicles in their entirety. If a vehicle dies right after being driven off the dealer’s lot, then there has been a breach of the implied warranty of merchantability – the buyer has warranty coverage even if the breakdown was caused by a component other than the engine.

The Implied Warranty of Merchantability Does Not Apply to “As Is” Sales

The implied warranty of merchantability’s biggest limitation is that sellers can disclaim the warranty by selling goods “as is.” However, California’s lemon law statute partially addresses this problem in several ways. First, the lemon law statute prohibits sellers from disclaiming the implied warranty of merchantability on goods that are sold with an express warranty. Additionally, with regard to automobiles, dealers cannot disclaim the implied warranty of merchantability for vehicles that are sold with a service contract (often referred to as an “extended warranty”). And finally, even when sellers are permitted to disclaim the implied warranty of merchantability, the lemon law statute imposes strict requirements for doing so, to ensure that consumers are notified that no warranties will accompany the goods.