Legal Definitions - secondary obligation

A secondary obligation is a duty or responsibility that arises only when a primary, or main, obligation has been broken or not performed. It is typically a remedial duty, meaning it aims to compensate for the failure to meet the primary obligation, or to put the injured party back in the position they would have been in had the primary obligation been fulfilled. Unlike a primary obligation, which is the core duty agreed upon, a secondary obligation is a consequence triggered by a breach of that core duty.

• Example 1: Construction Contract Breach

  Imagine a homeowner hires a contractor to build a new patio. The contractor's primary obligation is to complete the patio according to the agreed specifications and timeline. If the contractor fails to finish the patio by the deadline, or builds it incorrectly, they have breached their primary obligation. This breach then triggers a secondary obligation, which might be to pay the homeowner a penalty for the delay (if specified in the contract), or to cover the cost of another contractor fixing the shoddy work, or even to refund part of the payment. The duty to pay penalties or fix errors only arises because the main duty of building the patio properly and on time was not met.

• Example 2: Loan Guarantee

  Consider a small business owner who takes out a bank loan. The business owner has the primary obligation to repay the loan according to the agreed schedule. If the business owner's parent acts as a guarantor for the loan, the parent undertakes a secondary obligation. This means the parent is only required to make payments on the loan if, and only if, the business owner (the primary borrower) defaults on their primary obligation to repay the bank. The parent's duty to pay is contingent upon the primary borrower's failure.

• Example 3: Software License Agreement

  A company licenses a specialized software program from a vendor. The vendor's primary obligation is to provide a functional software product and ongoing technical support as per the license agreement. If the software contains a critical bug that prevents the company from using it as intended, and the vendor fails to provide a fix within a reasonable timeframe, the vendor has breached its primary obligation. This breach could then trigger a secondary obligation for the vendor, such as providing a partial refund of the license fee, offering a credit for future services, or compensating the company for losses incurred due to the software malfunction. These remedial duties only become active because the vendor failed to uphold its initial promise of a working product and support.