Chapter 24 Express fitness for purpose terms

An express fitness for purpose warranty or condition requires interpretation of the contract and the surrounding circumstances to determine its extent and application. The intended purpose of the work or the goods should be properly identified. The purpose of the relevant work should be clearly stated in an objectively measurable way. This may be with reference to drawings, specifications and/or project requirements.

Where an express fitness for purpose warranty or condition is drafted broadly, effectively ‘covering the field’, a court may limit its scope and implication. A fitness for purpose warranty is not an insurance policy.

CASE STUDY

Barton v Stiff [2006] VSC 307

Facts
  • Barton entered into a contract with the Stiffs to build a house on their property.
  • The contract required Barton to give a fitness for purpose warranty and stated that the house was required for the purpose of a residence.
  • Barton used general purpose clay bricks which over time had been damaged by the salty groundwater on the land.
  • The Stiffs claimed that the bricks used by the builders below the damp proof course were not suitable for the purpose for which they were used.
Result
  • The court held that the fitness for purpose warranty required Barton to complete the house to be proof against any groundwater conditions likely to be encountered at the land. The court accepted that the presence of salty groundwater at the land had been ‘highly unusual’ and as such the failure of the bricks had not breached the fitness for purpose warranty.
  • The court concluded that to interpret the fitness for purpose warranty as covering the highly unusual groundwater conditions ‘would be tantamount to finding that the contract provided for the builders to be insurers of the house’ (Barton v Stiff [2006] VSC 307 at 39) and that the parties could not have intended this.
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