Implied fitness for purpose - clear as mud

The case of Trebor Bassett Holdings Ltd and the Cadbury UK Partnership vs ADT Fire and Security plc (2012) EWCA Civ 1158 has raised the thorny question of implied fitness for purpose obligations in construction contracts and to be honest, rather than clarifying matters, the decision has further clouded the waters.  Up until this point case law has pointed to contractors being under an implied obligation to design and build complete products and systems that are reasonably fit for purpose.

ADT entered into a contract with Trebor to design and build a bespoke fire suppression system for Trebor's factory.  A fire broke out at the factory and it burnt down - obviously the fire suppression system had not suppressed the fire.  Trebor sued in both tort and contract and was successful in its case that ADT's design was negligent, however the court found Trebor's actions were also negligent and damages to Trebor were reduced by 75%.  Trebor therefore claimed that the system was a supply of goods and was therefore subject to an implied fitness for purpose under the Sale of Goods and Services Act 1982 ("SGSA").

Not so according to the Court of Appeal.

The court held that primarily what ADT was supplying was not "goods" but the supply of design services so the SGSA did not apply.  The components that were used in the system were of an acceptable quality, it was the design that was negligent.  

For the employers out there it might be worth reviewing your standard contract terms and amending them so that the implied warranties for fitness for purpose also cover systems.