Fitness For Purpose

As Karen Gidwani explains fitness for purpose is a phrase often used in everyday language in relation to a service or a product that is not working as expected or desired. In construction contracts, however, the concept of fitness for purpose has its own body of case law and analysis, and the effect of including a fitness for purpose clause in a construction contract can be draconian. As some standard forms of contract (in particular FIDIC) include such clauses it is important for contracting parties to be aware of the existence of such a clause and its potential effect.

Fitness for purpose – the starting point

Meaning It is commonly understood that the effect of a fitness for purpose obligation is to impose a duty of result. Accordingly, if a warranty is given that particular works or design will be fit for its intended purpose then the contractor or designer (or design and build contractor) will be held to that obligation, regardless of the reason why the works or design does not meet its intended purpose. In other words, matters beyond the control of the contractor or the designer will not (in the absence of contract terms to the contrary) exculpate the contractor or designer from that obligation. In real terms, this takes the contractor or designer beyond the duty to exercise reasonable skill and care in the carrying out of the works and instead imposes an absolute obligation to produce a result. This is an onerous obligation and one that is uninsurable.

Implied term

The common law implies a term of fitness for purpose in the following circumstances:

Goods and materials Unless expressly excluded by the parties, a warranty will be implied into a contract that goods and materials supplied by a contractor will be reasonably fit for the purpose for which they will be used.1 Similarly, under s. 14 of the Sale of Goods Act 1979 a term will be implied into a contract for the sale of goods that the goods will be fit for purpose.2

Construction and engineering works Unless expressly excluded, where the purpose for which the works are to be carried out are made clear, the work is of a kind that the contractor holds itself out to perform and the employer relies on the contractor's skill and judgment in that matter then a warranty will be implied that works when completed will be reasonably fit for their intended purpose.3 This implied term will also apply to a design and build contractor in respect of the design element of its work.

Express term

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