to recover damages. If an action for damages still lies, it follows from this that the contract itself must have survived for some purposes. Accordingly, the better view is that, where there is a repudiatory breach, the innocent party is discharged from performing his obligations under the contract, but the contract itself does not necessarily come to an end. The phrase ‘rescission for breach’ is the source of the confusion when it is used to describe discharge from performance. Assuming it is merely the obligation to perform that is discharged by breach, events arising after breach which allow an action for damages do not present a problem. Moreover, terms of the contract which relate to those events are also unaffected by the discharge. Accordingly, it can be said that there are primary and secondary obligations under a contract and the effect of the innocent party seeking discharge for breach is that he is no longer bound to perform his primary obligations, although the contract will survive in order to see off any secondary obligations such as the duty of the party in breach to pay damages in respect of any loss he has caused. Similarly, the likes of exclusion and limitation clauses which generally relate to a secondary obligation may continue to operate, even if this has the effect of reducing the defendant’s liability. In Photo Production Ltd v Securicor Transport Ltd, the respondents were a security company employed to guard the appellants’ premises. The service provided was one of the cheapest on offer by the respondents and consisted of little more than ‘flying’ visits to the appellants’ premises. During one of these visits one of the respondents’ employees negligently set a fire which caused extensive damage to the premises. It was accepted by the House of Lords that there was a serious breach of contract which was sufficient to allow the appellants to treat as being at an end their obligation to continue paying for the security service (primary obligation). However, a clause in the contract which limited the respondents’ liability continued to operate as it related to their obligation to pay damages (secondary obligation): Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, p 848

doi:10.4324/9781843141518-223

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to recover damages. If an action for damages still lies, it follows from this that the contract itself must have survived for some purposes. Accordingly, the better view is that, where there is a repudiatory breach, the innocent party is discharged from performing his obligations under the contract, but the contract itself does not necessarily come to an end. The phrase ‘rescission for breach’ is the source of the confusion when it is used to describe discharge from performance. Assuming it is merely the obligation to perform that is discharged by breach, events arising after breach which allow an action for damages do not present a problem. Moreover, terms of the contract which relate to those events are also unaffected by the discharge. Accordingly, it can be said that there are primary and secondary obligations under a contract and the effect of the innocent party seeking discharge for breach is that he is no longer bound to perform his primary obligations, although the contract will survive in order to see off any secondary obligations such as the duty of the party in breach to pay damages in respect of any loss he has caused. Similarly, the likes of exclusion and limitation clauses which generally relate to a secondary obligation may continue to operate, even if this has the effect of reducing the defendant’s liability. In Photo Production Ltd v Securicor Transport Ltd, the respondents were a security company employed to guard the appellants’ premises. The service provided was one of the cheapest on offer by the respondents and consisted of little more than ‘flying’ visits to the appellants’ premises. During one of these visits one of the respondents’ employees negligently set a fire which caused extensive damage to the premises. It was accepted by the House of Lords that there was a serious breach of contract which was sufficient to allow the appellants to treat as being at an end their obligation to continue paying for the security service (primary obligation). However, a clause in the contract which limited the respondents’ liability continued to operate as it related to their obligation to pay damages (secondary obligation): Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, p 848

DOI link for to recover damages. If an action for damages still lies, it follows from this that the contract itself must have survived for some purposes. Accordingly, the better view is that, where there is a repudiatory breach, the innocent party is discharged from performing his obligations under the contract, but the contract itself does not necessarily come to an end. The phrase ‘rescission for breach’ is the source of the confusion when it is used to describe discharge from performance. Assuming it is merely the obligation to perform that is discharged by breach, events arising after breach which allow an action for damages do not present a problem. Moreover, terms of the contract which relate to those events are also unaffected by the discharge. Accordingly, it can be said that there are primary and secondary obligations under a contract and the effect of the innocent party seeking discharge for breach is that he is no longer bound to perform his primary obligations, although the contract will survive in order to see off any secondary obligations such as the duty of the party in breach to pay damages in respect of any loss he has caused. Similarly, the likes of exclusion and limitation clauses which generally relate to a secondary obligation may continue to operate, even if this has the effect of reducing the defendant’s liability. In Photo Production Ltd v Securicor Transport Ltd, the respondents were a security company employed to guard the appellants’ premises. The service provided was one of the cheapest on offer by the respondents and consisted of little more than ‘flying’ visits to the appellants’ premises. During one of these visits one of the respondents’ employees negligently set a fire which caused extensive damage to the premises. It was accepted by the House of Lords that there was a serious breach of contract which was sufficient to allow the appellants to treat as being at an end their obligation to continue paying for the security service (primary obligation). However, a clause in the contract which limited the respondents’ liability continued to operate as it related to their obligation to pay damages (secondary obligation): Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, p 848

to recover damages. If an action for damages still lies, it follows from this that the contract itself must have survived for some purposes. Accordingly, the better view is that, where there is a repudiatory breach, the innocent party is discharged from performing his obligations under the contract, but the contract itself does not necessarily come to an end. The phrase ‘rescission for breach’ is the source of the confusion when it is used to describe discharge from performance. Assuming it is merely the obligation to perform that is discharged by breach, events arising after breach which allow an action for damages do not present a problem. Moreover, terms of the contract which relate to those events are also unaffected by the discharge. Accordingly, it can be said that there are primary and secondary obligations under a contract and the effect of the innocent party seeking discharge for breach is that he is no longer bound to perform his primary obligations, although the contract will survive in order to see off any secondary obligations such as the duty of the party in breach to pay damages in respect of any loss he has caused. Similarly, the likes of exclusion and limitation clauses which generally relate to a secondary obligation may continue to operate, even if this has the effect of reducing the defendant’s liability. In Photo Production Ltd v Securicor Transport Ltd, the respondents were a security company employed to guard the appellants’ premises. The service provided was one of the cheapest on offer by the respondents and consisted of little more than ‘flying’ visits to the appellants’ premises. During one of these visits one of the respondents’ employees negligently set a fire which caused extensive damage to the premises. It was accepted by the House of Lords that there was a serious breach of contract which was sufficient to allow the appellants to treat as being at an end their obligation to continue paying for the security service (primary obligation). However, a clause in the contract which limited the respondents’ liability continued to operate as it related to their obligation to pay damages (secondary obligation): Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, p 848

ABSTRACT

Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, p 848 Lord Diplock: My Lords, it is characteristic of commercial contracts, nearly all of which today are entered into not by natural legal persons, but by fictitious ones, that is, companies, that the parties promise to one another that something will be done, for instance, that property and possession of goods will be transferred, that goods will be carried by ship from one port to another, that a building will be constructed in accordance with agreed plans, that services of a particular kind will be provided. Such a contract is the source of primary legal obligations on each party to it to procure that whatever he has promised will be done is done. (I leave aside arbitration clauses which do not come into operation until a party to the contract claims that a primary obligation has not been observed.)

Where what is promised will be done involves the doing to a physical act, performance of the promise necessitates procuring a natural person to do it; but the legal relationship between the promisor and the natural person by whom the act is done, whether it is that of master and servant, or principal and agent or of parties to an independent subcontract, is generally irrelevant. If that person fails to do it in the manner in which the promisor has promised to procure it to be done, as, for instance, with reasonable skill and care, the promisor has failed to fulfil his own primary obligation. This is to be distinguished from ‘vicarious liability’, a legal concept which does depend on the existence of a particular legal relationship between the natural person by whom a tortious act was done and the person sought to be made vicariously liable for it. In the interests of clarity the expression should, in my view, be confined to liability for tort.