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Abandonment, the Doctrine (Marine Insurance)

Primary Obligations

Abandonment of a Contract
Last updated: 06-Oct-2014

Per Lord Diplock in Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal(The Hannah Blumenthal), [1983] 1 All ER 34 at p.48:

Abandonment of a contract (the former contract) which is still executory, i.e. one in which at least one primary obligation of one or other of the parties remains unperformed, is effected by the parties entering into a new contract (the contract of abandonment) by which each party promises the other to release that other party from further performance of any primary obligations on his part under the former contract then remaining unperformed, without such non-performance giving rise to any substituted secondary obligation under the former contract to pay damages.

It is the latter part of the promise by each party, i.e. the release of the other party from all further secondary as well as primary obligations, that distinguishes the legal concept of abandonment of the former contract from the extinction of unperformed primary obligations of both parties under the former contract by fundamental breach of a primary obligation (or breach of condition) by one of them, followed by the election of the party not in breach to put an end to all primary obligations of both parties under the former contract remaining unperformed. Unlike the contract of abandonment, this leaves the secondary obligations under the former contract of the party who committed the breach enforceable against him by the other party.

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