In the United States, the term “merchant” commonly refers to a person or firm buying goods at a wholesale price level for sale at retail. Under the Uniform Commercial Code (UCC), the definition also includes some businesses not engaged in retail trade, such as car dealers, mobile home manufacturers and even landlords. Under any definition, merchants are considered knowledgeable about the goods in which they trade.
Because of a robust common law heritage, and the importance of the UCC in business today, merchants are likely to be held to a higher standard in commercial activities than others who do not engage in trading goods as a profession. Merchants are presumed to offer implied warranties of “merchantability,” which are, in fact, unwritten guarantees that products are “fit to be sold.” This holds true regardless of any manufacturer warranty, and is the responsibility of the merchant, even if there is no written declaration. Because of this, the UCC specifies a “merchant’s confirmation” exception to the Statute of Frauds (SOF).
Types of Merchants
Merchants are professionals dealing in commodities that they do not normally produce themselves, in order to earn a profit, and fall into two major categories:
1. Wholesale merchants are positioned in the “retail channel” between the producer, on the one hand, and the retailer, on the other. Wholesalers can either arrange shipments or move the goods themselves.
2. Retail merchants sell commodities, both to consumers and other businesses. Every shop owner, by definition, is a “retail merchant.”
The “merchant class” has existed in all types of societies, through all ages of history. The status of merchants can be quite high as well as somewhat low, such as in Chinese culture. For philosophical reasons, “mere trade” was not considered as intrinsically valuable as the agricultural produce, crafts and fine art for which labor and creativity have been expended.
However, the rise of populist, consumerist societies in the 20th century made the merchant class both more visible and more economically vital. Today, the relatively free trade enjoyed in the West for several centuries has paralleled the greatest expansion of wealth and liberty the world has ever seen.
Although the term applies to Sears and General Motors, too, the term “merchant” still conjures up the image of a sole proprietor – butcher, baker, candlestick maker and so on – providing quality goods and services to a neighborhood or town. Many merchants discover that keeping this attitude of personal service helps them grow from local into regional, national and international businesses.
The technology of buying and selling will continue to evolve, and the merchant will always occupy a very important role in any modern society. Adopting new and better methods of operation (computers, wireless communications, etc.) while retaining the “service philosophy” of good merchants everywhere, in every era, is an excellent way to combine progress and tradition. The fact is, it is also good business, which is something all merchants are interested in.