Is Your Commercial Building Fit for Purpose?

In construction law, ‘fitness for purpose’ is a phrase most of us are familiar with; it means that a building must be fit for its intended use and perform at a required standard.

The definition of ‘fit for purpose’ (of an institution, building, facility etc) states that it should be well equipped or well suited for its designated role or purpose. So why should an employer require a ‘fitness for purpose’ obligation at all? In essence, it means that, when finished, the works must be fit for their intended use.

A building contractor is obliged to carry out works with ‘reasonable skill and care’, and is obliged to attain the purpose regardless of whether the design or construction was prepared negligently or not.

The mere mention of the phrase ‘fitness for purpose’ may be enough to set building contractors’ teeth on edge. Why? Surely all this means is that they have a responsibility to build something that works properly? The problem is that the phrase promises that what’s being built or designed will work even if the contractor could not have known that what was being built was incapable of working.

When a contractor in southern England was hired to convert an old brewery building into offices, the first thing he did was appoint a firm of commercial surveyors in Sussex to ensure that, when complete, the project was ‘fit for purpose’ in all respects.

High Court case

In a rather tricky and unusual court case between a building contractor and an offshore wind turbine company, ‘fitness for purpose’ was put to the test. The specialist building contractor was hired to make and install the foundations for 60 offshore wind turbines. The contract contained an obligation that the turbines would be ‘fit for purpose’. In this case, that meant that the foundations would have a minimum life of 20 years. It turned out that the international design standard and specifications for such foundations were incorrect, and this meant they would not last that long.

The High Court judge ruled that the contractor was in breach of the contract because the foundations were not ‘fit for purpose’, despite the contractor having exercised reasonable skill and care. As a result, it cost the contractor millions to correct the fault. In light of this case, contractors should exercise even more caution when requested to comply with a ‘fitness for purpose’ stipulation. Unwittingly, building something that’s ‘un-fit for purpose’ can be a very costly experience.

Reasons why contractors dislike ‘fitness for purpose’ obligations

Many contractors dislike ‘fitness for purpose’ obligations and find them onerous and unattractive. The reasons for this are that:

• These obligations may not be covered by the contractor’s insurance policy
• Where the design work is completed by an architect appointed by the employer, it may not be possible for the contractor to pass on his ‘fitness for purpose’ obligation to the architect.

The Supply of Goods and Services Act 1982

Where there is no written requirement for ‘fitness for purpose’, statute or common law may imply one. Unless displaced, the Supply of Goods and Services Act 1982 requires the contractor to exercise all reasonable skill and care in the provision of building works and the design thereof, and present his client with a completed building that’s ‘fit for purpose’.

Additionally, the Act requires that ‘goods’ must be reasonably fit for their intended purpose, where the particular purpose has been clearly spelt out, or implied in the contract, except where the employer did not rely on, or it was unreasonable for him to rely on, the contractor.

Common Law obligations may also exist in respect of the design and construction of the building. In this case, whether such terms are implied or not depends on the facts of each specific case.
It takes two to tango

So what does this all mean to employers and contractors? Well, both parties should be aware of the importance of this issue and ensure that any contracts they enter into adequately deals with this question and is clear and precise in its wording.

Contractors will need to:

• Ensure they fully understand the extent of any ‘fitness for purpose’ obligations they enter into
• Understand the extent of their insurance cover with regard to ‘fitness for purpose’

Employers need to:

• Ensure that the employer’s requirements, technical schedules and contracts accurately and fully set out what the contractor is expected and obliged to do and the purposes of the building works
• Take note of and understand the concerns of the contractor