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In answer to the first question, a warranty of fitness refers to one of two implied warranties that typically and automatically accompany many products, including software. The two warranties, of fitness for a particular purpose and of merchantability, generally provide some assurance that the product you have purchased will work as it was intended and designed and as one would reasonably expect products of that kind to work.
The theory arose decades ago when people were injured by such things as pieces of glass inside soda bottles, malfunctioning lawn mowers and the like. These protections apply to software, as well, but the license agreement (or clickwrap or shrink-wrap agreement) that accompanies off-the-shelf software typically limits a consumer's rights under all implied warranties.
In the open source world, virtually every open source license disclaims all warranties, i.e. distributes the code on an "as is" basis, in some manner. That's because the kind of organized, rigorous testing that is allegedly applied prior to the distribution of proprietary software is not available in the open source distribution model. Without such disclaimers, the exposure for licensors of software with untested modifications, for example, could be substantially greater than the financial compensation that the licensor is receiving for the code that she is distributing.
Whether you need such a warranty depends on a variety of factors, including what you intend to do with the application, whether such a warranty is available and, if so, at what cost. That is the subject of more detailed discussions that should be held between IT managers/CIOs and legal counsel. It would be nice to acquire software for virtually nothing that is accompanied by full-fledged guarantees that the software will do everything it is supposed to do. We can all look forward to that day.
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