Also known as: saleable · salability · saleability · marketable · merchantable
Written by attorneys — see sources below.
Goods or title that are fit for sale in the usual course of trade at the usual selling price. The standard requires that the item pass without objection in the trade and meet ordinary expectations of buyers regarding quality and freedom from defects or clouds.
Skylar Sullivan contracted to purchase land from Santiago Sanchez. A title search revealed an unreleased lien that Sanchez could not remove before closing. Sullivan refused to close because the title was not salable under the contract standard requiring marketable title free from reasonable doubt.
Starlight Media sold industrial cameras to Scott Summers for use in video production. The cameras repeatedly failed during normal operation and would not pass inspection in the trade. Summers sued because the merchant seller had impliedly warranted that the goods would be salable as merchantable.
Stella Shapiro agreed to buy a commercial lot from Sean Steele. The title commitment listed a recorded easement that the seller could not release. Shapiro declined to close because the outstanding interest rendered the title unsalable under the marketable-title requirement.
Steven Silva contracted to sell property to Sapphire Holdings. The contract required marketable title, but Silva tendered only a commitment for insurance at standard rates covering a known easement. Sapphire refused because insurable title did not satisfy the stricter salable-title obligation.
Sierra Solutions purchased coastal lots for development. A new state law barred all construction on the parcels. The owner claimed the regulation left the land without any salable use, triggering a takings claim under the Lucas framework.
In 1986, petitioner David H. Lucas purchased two residential lots on the Isle of Palms in Charleston County, South Carolina, for $975,000. He intended to construct single-family homes on the parcels, which at the time were zoned for such use and required no building permit for development. No portion of the lots qualified as a critical area under then-existing coastal zone legislation. Subsequently, in 1988, the South Carolina Legislature enacted the Beachfront Management Act. The legislation established a baseline and prohibited construction of occupable improvements seaward of a line drawn 20 feet landward of that baseline, directly affecting Lucas's parcels by barring any permanent habitable structures. Lucas filed an action in the Court of Common Pleas alleging that the Act's restrictions effected a taking of his property without just compensation. Following a bench trial, the court determined that the prohibition rendered the lots valueless and ordered the state to pay just compensation in the amount of $1,232,387.50. The Supreme Court of South Carolina reversed the trial court's judgment. It accepted the legislature's findings that new construction threatened public resources and concluded that a regulation designed to prevent serious public harm could not constitute a taking. The United States Supreme Court granted certiorari to review the South Carolina Supreme Court's decision.
View caseSkyline Construction bought a new truck from a dealer for job-site use. The vehicle had a steering defect that made it unsafe under ordinary driving conditions. The buyer recovered because the dealer, as a merchant, had warranted that the truck would be salable and fit for its ordinary purpose.
In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation. Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer. He alone signed a one-page printed purchase-order form. The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied. The front of the form contained two even smaller paragraphs directing attention to the back-side conditions. The form was a standardized document prepared by the manufacturer and used by all its dealers. No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them. The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide. On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall. The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident. An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off. Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection. The negligence counts against both defendants were dismissed at trial. The case was submitted to the jury solely on the implied-warranty claims. The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc. Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim. The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.
View caseTitle is salable when it is free from reasonable doubt and a prudent purchaser with full knowledge would accept it. Recorded encumbrances, unreleased liens, and outstanding interests such as easements typically render title unsalable unless cured before closing.
A merchant seller automatically warrants that goods are merchantable, meaning they must pass without objection in the trade and be fit for ordinary purposes. Goods that fail these standards are not salable and expose the seller to breach claims.
No. When the contract requires marketable title, the seller must deliver title free from reasonable doubt. Insurance coverage at standard rates is a lesser standard and does not discharge the obligation to convey salable title.
Yes. Under the perfect tender rule for a single shipment, any nonconformity allows rejection. Goods that would not pass without objection in the trade are not salable even if they retain some limited function.