The construction industry regards fitness for purpose with horror – but, as a recent Court of Appeal case demonstrates, there's really nothing to be afraid of
implied terms as to quality and fitness for purpose are an accepted part of the statutory framework for the sale of goods, but mention fitness for purpose to the construction industry and it reacts like a vampire to a crucifix. Clients have to have the term, and contractors have never accepted it – but has either side really analysed what it means?

A recent Court of Appeal decision – Medivance Instruments Limited vs Gaslane Pipework Services Limited and Vulcana Gas Appliances Limited – actually shed light on the issue, and might cause the industry to think rather than oppose.

The case concerned a fire in the packing area of a factory belonging to Medivance that resulted from the ignition of cardboard boxes close to the front grill of a heater designed and manufactured by Vulcana and sold and installed by Gaslane. The issue was whether the heater was of merchantable quality and/or fit for its purpose under section 14(2) and (3) of the Sale of Goods Act 1979. The heater included a thermostat that prevented the appliance overheating in the event of the failure of the fan. But if the outlet grill was obstructed, the rise in temperature was sufficient to set fire to cardboard.

Section 14(2) of the act provides for an implied condition of "merchantable quality" and section 14(3) states that: "Where … the buyer, expressly, makes known … to the seller … any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied …"

A maker of hair dye is not liable to a customer who contracts dermatitis if the dye is supplied with a warning

Medivance's central point was that the heater should have included a thermostat device in the event of overheating after blockage of the grill, or a guard to prevent that occurring. This was common practice, easy and cheap to achieve. It was particularly appropriate bearing in mind the heater was used in a packing area.

Gaslane and Vulcana argued as follows. The heater complied with the relevant standard - BS 5258, CORGI manuals and other guidance in what was accepted to be a "fairly heavily regulated" industry. Although acknowledging a court could conclude that an article would not be of merchantable quality even though it complied with British Standards, this fact strongly assisted Gaslane and Vulcana. It was of potentially less significance in relation to fitness for purpose as they knew the heater was to be used in the packing area with lots of combustible material, but the evidence suggested that there was nothing about the area, if well managed, that required the installation of a different sort of heater – in other words, it was not a sufficiently specific "purpose".

There was a warning in the instructions to the effect that the front of the heater should be unobstructed. It was communicated expressly, and Medivance had previously installed heaters of similar type and taken precautions to deal with the risk by cross-hatching the floor in front of the heater and managing the gangways to prevent the type of accident that occurred. The warning did not automatically negate any breach of the implied terms. If it did, then the seller would effectively be permitted to define the scope of its contractual duty, irrespective of the circumstances. The court looked at other cases - a maker of hair dye was not liable to a customer who contracted dermatitis if the dye was supplied with a clear warning of such a danger and a recommendation to test first. Here, not only was there a warning but Medivance knew of the risk; it had knowingly used such heaters before. The past experience and attitude of a buyer could not be ignored when considering whether goods were fairly to be said to have been fit for the purpose.