Related topics

Breach of Contract

Damages

Obligations under the Contract, Secondary

Strict Obligations

Rescission


Law and Sea.
Law of Contract: Breach

Under a breach of contract is usually understood such state of affairs between the contracting parties when one of them without lawful excuse fails or refuses to perform his contractual obligations. A breach is also deemed to be committed when performance rendered by a party to contract is defective, or a party disables himself from performing.
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Obligations under the Contract, Primary
Last updated: 06-Oct-2014

Moschi v Lep Air Services Ltd. [1972] 2 All ER 393, per Lord Diplock (p.403):

… the rescission of the contract puts an end to the primary obligations of the party not in default to perform any of his contractual promises which he has not already performed by the time of the rescission. It deprives him of any right as against the other party to continue to perform them. It does not give rise to any secondary obligation in substitution for a primary obligation which has come to an end. The primary obligations of the party in default to perform any of the promises made by him and remaining unperformed likewise come to an end as does his right to continue to perform them. But for his primary obligations there is substituted by operation of law a secondary obligation to pay to the other party a sum of money to compensate him for the loss he has sustained as a result of the failure to perform the primary obligations. This secondary obligation is just as much an obligation arising from the contract as are the primary obligations that it replaces (see R V Ward Ltd v Bignall [1967] 1 Q.B. 534).

Although this is the general rule as to the effect of rescission of the contract on obligations of which it was the source, there may be exceptional primary obligations which continue to exist notwithstanding that the contract has been rescinded. These are obligations that are ancillary to the main purpose of the contract--which is, of course, that the parties should perform their primary obligations voluntarily. Mutual promises to submit to arbitration disputes arising as to the performance by the parties of their other obligations arising from the contract may be expressed in terms which make it clear that it was the common intention of the parties that their primary obligation to continue to perform these promises should continue notwithstanding that their other primary obligations had come to an end ( Heyman v Darwins Ltd. [1942] AC 356).


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