FIDIC / Legal Reference: FIDIC Yellow Book / Silver Book — Contractor’s design obligation
An obligation under which the contractor warrants that the completed Works will be fit for the specific purpose stated in the contract — a stricter standard than the professional obligation to exercise reasonable skill and care. Fit for Purpose obligations are common in design-build contracts.
What it means in practice
Under a Fit for Purpose obligation, the contractor is strictly liable if the Works do not achieve the stated purpose — regardless of whether it exercised reasonable care in its design. FIDIC Yellow Book Clause 4.1 imposes a Fit for Purpose obligation where the contractor’s design is concerned.
The most significant practical consequence of a Fit for Purpose obligation is its interaction with professional indemnity insurance. Most professional indemnity policies cover a reasonable skill and care standard — they do not cover strict Fit for Purpose obligations.
Where disputes arise
A contractor who accepts a Fit for Purpose obligation without adequate insurance coverage is exposed to uninsured liability. This is a critical risk management issue at tender stage.
UAE Context
In UAE design-build contracts — particularly for infrastructure and utility projects — Fit for Purpose obligations are common. UAE contractors should scrutinise design obligations carefully at tender stage and seek specialist insurance advice.
Related terms
Fit for Purpose obligations and design liability disputes require specialist FIDIC expertise. e-Basel provides expert witness and advisory services for design-build disputes in the UAE.
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