International Construction Law Review
FITNESS FOR PURPOSE OBLIGATIONS UNDER INTERNATIONAL STANDARD FORM CONTRACTS
Chris Duncan1 and Sarah Hudson2
White & Case LLP
INTRODUCTION
A fitness for purpose warranty is a species of absolute obligation. It requires a contractor to achieve a specified result for the Employer (for example, the delivery of a process plant with a design life3 of 20 years), and the Contractor will be liable for any failure to achieve the specified purpose, regardless of whether it was negligent or not. Express fitness for purpose obligations are commonplace in heavy engineering projects where the Contractor bears responsibility for preparation of the design.
This article explores the approach to fitness for purpose obligations under a range of standard form construction and engineering contracts used internationally. It considers the implications of such obligations for users of these standard form contracts as well as issues for those preparing fitness for purpose obligations under bespoke contracts.
BACKGROUND
In some jurisdictions, fitness for purpose requirements are implied into construction contracts by law.4 However, employers will often seek to ensure that fitness for purpose obligations are expressly set out in the Contract. Conversely, if the parties do not intend a fitness for purpose obligation to apply, contractors will wish to ensure that fitness for purpose obligations are expressly excluded.
1 Counsel, White & Case LLP, London.
2 Associate, White & Case LLP, London.
3 For an analysis of the terms “design life” and “service life”, see Dr Donald Charrett, “Design life or service life: what is the difference?” [2017] ICLR 16 (hereafter, “Charrett”).
4 See: Julian Bailey, Construction Law 2nd Edition (Oxford, 2016) (hereafter “Bailey”), chapter 3;
Stephen Furst and Vivian Ramsey, Keating on Construction Contracts 10th Edition (London, 2016) (hereafter, “Keating”) chapter 3 and Hazel Fleming, “Fitness for Purpose: The Implied Design Obligation in Construction Contracts” (1997) 13 Const LJ 4 for discussion of implied fitness for purpose obligations under English law. For discussion of implied terms under the Civil Codes of France, Belgium, Germany, Italy and the Netherlands, see Professor Sarah Lupton, “Design Liability: An EU comparison” [2013] ICLR 395. For discussion of implied terms under Australian law see Pamela Jack, “Getting Back into Shape – Toning up Fitness for Purpose” (2011) 27 Const LJ 5.
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