Risk of Loss
Warranties IV--Implied Warranty of Merchantability
Article 2 also provides for implied warranties. Though the implied warranty of merchantability ("IWM") and the implied warranty of fitness for a particular purpose ("IWF") each have their own code subsection, 2-314 and 2-315, the Code also provides that "Unless excluded or modified...other implied warranties may arise from course of dealing or usage of trade (2-314(3))." The Gindy case (p. 313) is an example of how a court gives meaning to an implied warranty derived from course of dealing.
An IWM is included with every new good sold in the marketplace if the seller is a merchant with respect to goods of that kind. That is, in order for an IWM to attach, the seller must be a merchant in the "narrower" definition of merchant we discussed when we considered 2-104. So, a florist selling roses sells them with an IWM, though if the florist sold her refrigerator in which she kept the flowers, even if it was new, there would be no IWM with the refrigerator.
It is questionable whether there is an IWM for used goods. Comment 3 to 2-314 provides that "A contract for the sale of second-hand goods, however, involves only such obligation [fitness for general purposes] as is appropriate to such goods for that is their contract description." However, even if a person is not a merchant, and there is no IWM, there is a duty of good faith in the sale of goods, and it imposes an obligation that known material but hidden defects be fully disclosed. See Comment 3 to 2-314.
We saw that the IWM also reaches food sold in restaurants. The Webster case, involving the sale of fish chowder in a Boston restaurant and the last sentence of 2-314(1) illustrate this.
The statute provides six ways, not meant to be exhaustive, that new goods must be merchantable. 2-314(2). These six are not meant to be mutually exclusive; indeed the "labeling" requirement of (e) and (f) seem to be flip sides of the same requirement of truth in packaging. Likewise the requirement of "passing without objection" in (a) can be seen as synonymous with "run...of even kind" in (d). These six ways are meant to flesh out the concept of merchantability; the basic notion is that the consumer expects the gadget to work or the object to be the size as it was advertised. The IWM is meant to support that consumer expectation. In that connection, the answer to the quiz question regarding whether three gallons of paint that did not match when applied to the walls but appeared to be very similar to the color chart provided by the merchant would breach the IWM is that they breached (d), especially, as well as (f), because they colors didn't run of even kind. One also might conclude that the paints were therefore not "fit for the ordinary purposes for which such goods are used" (c).
Likewise, the quiz question of whether 19/20 Bosc pears, which measured 4-4 1/4 inches in diameter [with the 20th measuring 4 3/4 inches] would violate the IWM when the contract provided that all 20 would measure between 4-5 inches in diameter would also be answered affirmatively. Notice that the pears would not violate an express warranty but they do violate the IWM. Why? Because of (b). (b) requires that they be "of fair average quality." Comment 7 further defines that term to mean "goods centering around the middle belt of quality, not the least or the worst that can be understood in the particular trade..." The middle belt of quality would have required a substantial number to be 4 1/2 inches or more in diameter.