Had I paid an interior designer to buy my armchair, this would have been her problem. Or would it? The contract between us would probably have said nothing about such matters, as the law simply implies an obligation on the interior designer to carry out her services with reasonable care and skill. To show that the designer had done anything wrong, I would have to prove that it was negligent to buy a chair that would not go through the door into my sitting room. Surely I should just be able to say that, as a matter of fact, it does not, and therefore the designer is at fault? Well, as the law stands, no.
What I am looking for is an absolute obligation of fitness-for-purpose. I believe I should be entitled to this whether I am a homeowner buying a design service or having an extension built, a developer building an office block or a pension fund buying the same property (using money entrusted to it by people like you and me). Generally speaking, common law and most standard form contracts embody an obligation to exercise reasonable skill and care in design. They do not, however, imply there is an absolute obligation to ensure that what is built will work, or be fit for its purpose. A possible exception is the JCT building contract for a home owner/occupier, which arguably does hold the contractor responsible for fitness for purpose.
I concede that in certain circumstances, the law will imply an obligation that the completed project will be fit for its purpose, but these cases are rare. For it to apply the client must be heavily reliant on the contractor responsible for design and construction. There must also be nothing in the contract that negates the implication of a fitness-for-purpose term. Both the JCT and ICE contracts state explicitly that the design obligation is limited to the exercise of reasonable skill and care and therefore rule out a fitness-for-purpose duty.
Express fitness-for-purpose obligations are seen, for example, in private finance initiative, or other major, projects. But, they are all too rare in private contracts for the design and construction of buildings, and will not apply if the published standard forms are used.
- Proving something does not work is easy
- Proving this was because someone was negligent is not
- Absolute fitness-for-purpose clauses would remove the uncertainty
So what is my problem with relying on the use of reasonable skill and care – in other words, on an obligation not to be negligent? Uncertainty, unnecessary disputes and (as a result) unnecessary expense. If something simply does not work, proving this is a question of fact. To prove that something does not work because somebody has been negligent requires a further test – has the professional involved failed to exercise the standard of care that could reasonably be expected in those circumstances?
This is a difficult test to satisfy. Designers and contractors (and their insurers) can hide behind it. Because negligence is not black and white, it is more likely that there will be a dispute about it. We live in an era where we are told that we are not supposed to have disputes in our construction projects. If we do, they are to be dealt with as quickly and simply as possible. But application of simple facts to the legal test of negligence may be far from straightforward. The doubt that the test of negligence creates surely only increases the scope for disputes. If we had absolute fitness-for-purpose obligations instead, there would be less scope for disputes and therefore, it follows, fewer of them.
As a developer, I would go further still. Not only should my contract entitle me to a building that works, but the same rights should be available to those who finance, purchase or occupy the building. This is now possible (even without collateral warranties) under the Contracts (Rights of Third Parties) Act 1999. We could take a lot of disputes out of the construction arena if those who own, occupy and finance buildings were given recourse against designers and contractors because their building did not work, rather than having to prove negligence.
This industry will not change overnight. Providing fitness-for-purpose obligations requires contractors and designers to assume a greater contractual risk. They should be rewarded for this. At present, their professional indemnity insurers may be reluctant to cover any obligation that goes beyond reasonable skill and care, but surely if demand changes, the insurance market can change too. Perhaps I am too innocent and naive. However, I appeal to the industry to think again about these issues. It is not a new problem, but there are new opportunities to deal with it.
Patrick Holmes is a solicitor at Macfarlanes.