To be of merchantable quality, at the time of sale goods must be commercially saleable to buyers under the description by which they are sold in the original contract at a price not too far removed from the contract price.[1] This assumes that the buyer is fully acquainted with the facts and knows what hidden defects exist.[2] This means that merchantable quality is about the value received by the buyer for the price they paid, rather than setting any minimum level of durability of all goods to which a warranty of merchantable quality applies irrespective of price.
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[1] Russo v Belcar Pty Ltd & Anor [2011] SASCFC 151, per Peek J at [157], referring with approval to Thomson Reuters Laws of Australia, (at 31 October 2011) 8.4 Sale of Goods, ‘Merchantable Quality’, [8.4.63].
[2] Australian Knitting Mills Ltd v Grant [1933] HCA 35; (1933) 50 CLR 387 at 418.