Also known as: passes without objection in the trade · passing without objection in the trade · merchantable · merchantability · implied warranty of merchantability
Written by attorneys · grounded in primary & secondary sources — see below
A criterion for merchantability under the implied warranty of merchantability. Goods meet the criterion when they conform to the standards and expectations prevailing among merchants in the relevant trade for items matching the contract description.
Apex Brakes delivered brake pads to AutoStop that repeatedly failed under normal highway conditions. Trade buyers in the auto-parts market routinely rejected similar pads because they did not meet prevailing durability benchmarks for the contract description. AutoStop therefore prevailed on its merchantability claim.
Horizon Fund sold currency counters to Dawn Financial that jammed during routine high-volume use and missed counterfeit notes. Banks in the financial-equipment trade consistently objected to counters exhibiting those defects when sold under the same description. Dawn therefore established a breach of the merchantability warranty.
Select any source to read its text and confirm it supports the definition.
Apex delivered brake pads to Metro Auto Parts after including a conspicuous written disclaimer of merchantability in its acknowledgment. The disclaimer satisfied the statutory requirements for excluding the warranty. Metro could not recover even though the pads later failed in ordinary use.
Zeidenberg purchased software from ProCD, opened the package, read the license terms inside, and continued using the product. Because the license terms were accepted by conduct after inspection, the court enforced them against later objections to the product's performance.
Ford sold a Bronco to Denny that performed adequately for ordinary driving but proved unstable when used off-road. The vehicle satisfied the merchantability standard because it passed without objection among dealers and buyers in the light-truck trade under the contract description.
Shell Oil supplied asphalt to Nanakuli under a long-term contract that incorporated local trade usage allowing price escalations. Nanakuli accepted the shipments without objection under the prevailing trade practice. The court therefore upheld the price adjustments as consistent with the contract description.
The pass-without-objection criterion focuses on whether a significant segment of buyers in the trade would object to the goods under the contract description. The fit-for-ordinary-purposes test instead asks whether the goods can perform their everyday functions. Courts treat the two as related but analytically distinct inquiries.
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A sweeping disclaimer of the implied warranty of merchantability materially alters the bargain and therefore does not become part of the contract unless the buyer expressly agrees. The disclaimer remains ineffective when it appears only in the seller's form and the buyer never assents.
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The buyer must demonstrate that merchants in the relevant trade would object to the goods when sold under the contract description. Evidence of repeated rejections by other buyers or deviation from prevailing trade quality norms satisfies the showing.
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…negligence counts were dismissed by the court and the cause was submitted to the jury for determination solely on the issues of implied warranty of merchantability. Verdicts were returned against both defendants and in favor of the plaintiffs. Defendants appealed and plaintiffs cross-appealed from the dismissal of their negligence claim. The matter…