Chapter 24 Over what period does the fitness for purpose term apply?
An express fitness for purpose term included in a contract will ideally address the issue of expiry of the contractor’s liability for the warranty. It may be possible to create indefinite or even perpetual liability through the use of expressions like ‘will at all times be reasonably fit for the intended purpose’. Such drafting may vest the contractor with liability for a breach of a fitness for purpose warranty during the life of the completed works or the materials or goods supplied; a period of time which may be much longer than those set out in the various Limitations Acts. However, while there is a view that it is possible for parties to draft design life warranties to circumvent the Limitation Acts, the position is not entirely settled in Australian law.
In the context of a contract for the delivery of goods, a fitness for purpose term implied by common law will generally apply at the time of delivery to the site and acceptance by the head contractor, principal or owner. Failure to fulfil the requirements of the warranty within a reasonable time after delivery may lead to an inference that they were unfit at delivery and that the supplier was in breach of the contract at that point.
Leaving aside the question of whether it is possible to ‘contract out’ of limitation periods, remedies under statute are limited by the applicable limitation period specified in the relevant Act. Consequently, unlike the position in contract or at common law, there may be greater certainty as to the period of potential liability where the terms are implied by statute. Under the Australian Consumer Law, there are a number of remedies available against manufactures and suppliers if the goods and services do not meet the requirements of the consumer guarantees. The limitation period for a claim under the Australian Consumer Law will depend on the cause of action pursued under the Act. For example, under sections 236(2) and 237(3) of the Australian Consumer Law, an action for damages for misleading and deceptive conduct may be commenced at any time within 6 years after the day on which the cause of action accrued (ie when the damage is suffered).