Fit for the intended purpose language rife with liability

Under American law, design professionals are required to exercise reasonable skill and care in their designs, but that normal (and insurable) legal requirement can be modified by an expressed or implied fitness for purpose obligation. Unfortunately, this is an issue we continue to see in our contract reviews for policyholders.

Beyond the Standard of Care

A design professional must meet the standard of care when providing professional services, but when clients insist on a fit for the intended purpose provision, they are imposing a stricter contractual obligation for the design professional. A standard of care obligation essentially requires a client to prove that the design professional was negligent. There is no implied warranty that the services, the design created by those services, or the instruments of professional services that document the design are fit for their intended purpose.

Negligence requires the client to show that the design failed to measure up to the standard of a competent professional design professional, and that depends on what a competent design professional would have done in similar circumstances. This question will need to be decided by a jury, judge, or arbitrator who takes into account evidence from expert witnesses. This subjective element of the standard of care, and the need to prove that what has been designed is below that expected in the industry, is one of the principal protections for design professionals. And it is the reason many clients push for an express fitness for purpose obligation.

Insurance Coverage at Stake

A design professional’s acceptance of a fitness for purpose obligation effectively guarantees that the design will meet the requirements of the client and that project deliverables are without error or ambiguity. That being the case, the client merely needs to prove that the plans are inadequate or the completed building does not work as intended; there is no need to show that the design professional has been negligent.

While design professionals can warrant that they will meet the standard of care by which professional services and the project will be judged, warranting that services, deliverables, or the final project is fit for the intended purpose changes the professional’s legal obligation and jeopardizes professional liability insurance coverage. Additional resources on warranties and the standard of care can be found in our Management Advisory library.

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