Currently, you can only fix things in your inventory.
Fixing things in an NPC’s inventory is problematic, because the NPC could move around, stop being friendly, or die while you’re fixing it. Two of those aren’t even possible when you’re fixing something, and the third handles itself, so the code makes some simplifying assumptions about where an event is happening.
I think it’s possible to get around those issues, but it’s not as simple as flipping a switch.