Which statement about the implied warranty of merchantability in the sale of goods is true?

• A. A merchant seller is required to disclose all latent defects.
• B. If the seller is not a merchant, the implied warranty of merchantability may still apply in some cases.
• C. The implied warranty of merchantability generally applies only to merchants in the sale of goods.
• D. Non-merchant sellers are always exempt from warranties.

Answer: (C)

The key idea is that the implied warranty of merchantability attaches in the sale of goods primarily when the seller is a merchant who deals in goods of the kind sold. When a merchant sells such goods, the law implies that the goods are fit for the ordinary purpose for which they are used and meet reasonable expectations for quality and labeling. This warranty is created automatically in those merchant sales unless it is disclaimed.

That’s why the statement identifying the warranty as generally applying only to merchants in the sale of goods is the best answer. It captures the core rule: merchant status matters, and the warranty isn’t typically extended to casual nonmerchant sellers in the same automatic way. Of course, nonmerchants can still have other types of warranties in play (such as express promises or the implied warranty of fitness for a particular purpose) if the circumstances support them, but the implied warranty of merchantability itself is not the standard rule for nonmerchants.

In contrast, requiring a merchant to disclose all latent defects isn’t correct—the warranty focuses on fitness for ordinary use and conformity to the goods’ expected quality, not a broad duty to disclose every hidden flaw. And the idea that non-merchant sellers are always exempt ignores that other warranties can apply and that, in some contexts, a nonmerchant who acts in a business of selling goods can still implicate merchantability.