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Having a "Fit for Purpose" Clause that is, Well....

To the outside world, lawyers are often accused of focussing on some of a contract's finer details and seemingly small points but the recent case of Williams Tarr v Anthony Roylance has demonstrated how a company's fortune can change on a simple turn of phrase or absence of a clear obligation.

Facts of the Case

The facts of the case are unspectacular; following construction of a retaining wall, it was discovered that water flows behind it required a drain. Under a separate contract [to that governing the construction of the wall] this drain was designed and put in, but was later found to be insufficient. The question for the court was whether the contract for the drain could be linked to the contract for the retaining wall.

The site owners claimed that the construction company had to ensure that both the drain and the wall were 'fit for purpose' whereas the construction company, claimed their obligation was only to provide 'reasonable care and skill' to design a drain for the wall. It mattered not that the wall when combined with the drain failed to be sufficient as when taken in isolation, 'reasonable care and skill' had been exercised in connection with the drain.

The Court's Decision

The 'contract' (not a legal deed but pieced together by email correspondence), was held to be so unclear that it was not even certain whether the site owners had contracted with the construction company itself or only the individual civil engineer. It is no surprise, then, that there were also questions as to the exact obligations of the parties.

As a result of the lack of clarity and in the absence of a clear consensus in the applicable contracts, the court agreed with the construction company that it was unjust to place the higher test of 'fit for purpose' on either party involved in the construction and design, the requirement instead being to exercise 'reasonable care and skill'.

Comment

This decision is crucial, as many professional indemnity insurance providers will only cover negligence to the extent that it means a lack of reasonable care and skill, and not the higher burden of making something 'fit for purpose'.

The lesson is that in the absence of specific wording, the default will only be that a civil engineer use 'reasonable care and skill'. Any site owner wishing to make sure that any designs and/or works are 'fit for purpose' will need to ensure this is made clear in the contract. Similarly, any construction company who sees the words 'fit for purpose' in a contract would do well to try and negotiate this obligation down, or at the very least be clear on the amount of cover their insurance would provide should something go wrong and extra work be required.

For any advice and assistance in implementing construction contracts in connection with a project, contact John Pickervance on 0333 207 1134 or via John Pickervance.

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