## Facts

- Noah Bass operated a service station and sought to add a coin-operated car-wash system to his business.
- Bass selected the particular car-wash equipment from the manufacturer’s offerings.
- All-States Leasing Co. purchased the selected equipment and leased it to Bass under a finance-lease arrangement.
- Bass took delivery, installed the equipment, and made two lease payments.
- Bass stopped paying, asserting the equipment was defective and unsuitable for operating a commercial car wash.
- All-States sued for unpaid lease installments.
- Bass defended and sought relief based on breach of implied warranties, including merchantability and fitness for a particular purpose under UCC Article 2.
- Bass introduced evidence that All-States had financed more than forty leases of the same type of car-wash machine.

## Issues

1. Whether UCC Article 2 implied warranties, including fitness for a particular purpose, may apply to an equipment finance lease.
2. Whether a finance lessor that repeatedly arranges leases of a particular type of equipment may be treated as a “merchant” with respect to goods of that kind for implied-warranty purposes.
3. Whether the evidence supported a finding that an implied warranty was breached, justifying Bass’s defense and rescission-type relief.

## Decision

- The Idaho Supreme Court affirmed the judgment for Bass.
- The court held that implied warranties under UCC Article 2 may extend to lease transactions when the statutory conditions for the warranty are satisfied.
- The court concluded All-States qualified as a merchant with respect to the car-wash equipment based on its volume of similar transactions.
- The court upheld the trial court’s determination that an implied warranty was breached and that Bass was entitled to relief defeating All-States’ claim for remaining payments.

## Legal Principles

- UCC Article 2 implied warranties, including the implied warranty of fitness for a particular purpose, can apply to lease transactions in appropriate circumstances.
- A finance lessor may be treated as a “merchant with respect to goods of that kind” when it regularly deals in, or repeatedly arranges transactions involving, the same type of equipment.
- For fitness for a particular purpose, liability may arise when the lessor has reason to know the lessee’s particular purpose and the lessee’s reliance on the lessor to furnish suitable goods, and the goods prove unsuitable.

## Conclusion

The court treated the finance lease as sufficiently analogous to a sale to apply UCC implied warranties, held that a repeat equipment lessor could be a merchant for warranty purposes, and affirmed judgment relieving the lessee from further payment due to breach of implied warranty.


All-States Leasing Co. v. Bass, 538 P.2d 1177 (Idaho 1975)