Few expressions are more likely to get construction practitioners hot under the collar than “fitness for purpose”. But is the hype justified? And what does it really mean? I was pondering these questions when recently reviewing a client’s in-house (bespoke) form of design and build contract.
What’s the problem?
The client, an intelligent and experienced construction professional, was adamant that he did not want to impose a fitness for purpose design obligation on his contractor. He had heard that they were onerous, uninsurable and generally a Bad Thing.
However, when I asked him if he expected the contractor to produce a building that met his requirements as set out in his brief, his tune changed. Surely that was the least he was entitled to expect? Wasn’t that exactly what he was paying for? Quite, I said. But we are entering dangerous territory here, since (at least on one view) this comes very close to a fitness for purpose obligation.
So how should we square this circle?
Professional men and contractors
Let’s take a step back. As every lawyer (and insurer) knows, the common law imposes on a professional person a standard of reasonable skill and care (the Bolam test). Specifically, he is not required to guarantee results.
There is nothing to stop the parties agreeing to set a higher standard in their contract. Many clients take the view that at least some obligations of their consultants (such as the timely delivery of information) should be expressed as absolutes, rather than measured against the Bolam standard. However, consultants will frequently object to this, not least because their professional indemnity (PI) insurance cover will generally respond to common law liabilities only.
On the other hand, design and build contractors are required at common law to produce a building that achieves the contracted result (IBA v EMI Electronics and BICC Construction Ltd 14 BLR 9). They are treated in the same way as any other manufacturer of a complex product, such as a car or a computer.
Again it is possible to alter this obligation by contract. The JCT seeks to do this by watering down the contractor’s design liability to that of an architect or other professional designer (that is, to reasonable skill and care only). But many clients fail to see the logic in this. Why should some of the contractor’s obligations (like workmanship and materials) be subject to an absolute test and others (like design) be measured by a lower standard? After all, they are both steps towards the same end, namely delivery of a working finished product. In short, what the client wants and expects is a package deal: “design and build”, not “design” and “build”.
Contractors often plead that absolute design obligations fall outside the scope of their PI cover. That may or may not be true, but (in my humble opinion) it is a red-herring. Many of the contractor’s obligations are not insurable, for example, to build in a good and workmanlike manner and to use suitable materials. But no reputable contractor would object to them for that reason alone. In other words, professionals and contractors are in a different position as far as design liabilities are concerned.
I am not for a moment suggesting that design and build contractors should not be seen as professionals with specialist skills in their own right. That would be very much against the zeitgeist. But the overall service they offer is different, and it is right that the law should reflect this.
So where does “fitness for purpose” come in?
I think the problem is that “guaranteeing a result” and “fitness for purpose” have become confused. There is nothing at all wrong with asking a contractor to produce a building that meets specified performance requirements. Indeed (as my client pointed out) that is exactly what he is being paid to do.
What is objectionable is being asked to provide a facility that is suitable for any unspecified purpose that the client may choose to put it in future. It is unreasonable to expect an office building to serve as a process plant, any more than a family car is designed to negotiate the Cresta Run. This is an extreme example, but it nicely illustrates where fitness for purpose becomes a real problem.
I suggest that we should say what we mean in our contracts, and not allow the glib term “fit for purpose” to muddy the waters. Contractors should deliver what they have bargained for, and clients should not expect contractors to guess what their future intentions might be. Then we can all stop worrying about fitness for purpose and get on with our day jobs.