Fitness for purpose under IChemE contracts

Fitness for purpose clauses impose a duty on a contractor to achieve a specific result.

They have come under scrutiny as a result of a series of cases in the English courts which imposed significant damages onto a contractor, in complex factual scenarios [read more].

This post considers the IChemE (Red Book) contract.

IChemE Red Book (2013)

This contract, used in process plant projects, provides:

The plant as completed by the contractor shall comply with the contract and shall be in ever respect fit for the purpose for which it is intended as defined in the specification or in any other provision of the contract [3.4]

Interestingly, FIDIC 2017 has moved away from the more general statement that purposes could be found anywhere within the contract and has restricted it to the purchaser’s requirements only [read more].

As the notes say, the requirement on the contractor in clause 3.2 is to carry out the work in accordance with good engineering practice – a phrase which does not lend itself to a ‘precise legal definition’.

As with MF/1 [read more], the express fitness for purpose in the Red Book is backed up with:

  • tests on completion (32.2) and take over tests and procedures (33.2) and performance tests (35)
  • the role of the final certificate as conclusive evidence of compliance (38.3)
  • limits on the contractor’s liability (45).

In summary

IChemE Red Book does not shy away from the phrase fit for purpose.

However, it then provides a woolly definition of where those purposes could be found. This could lead to arguments trotted out in Hojgaard v E.on about the requirement being ‘hidden’. As the specification is such a key document, it is inconceivable that the drafting committee intended that the parties could trawl through the undergrowth in the rest of the contract to find another purpose to use to pin liability on the contractor…

Like MF/1 , it is intended to focus on technical requirements proven by testing over vague legalese.  It is not quite as successful in doing so.

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