Undertakings

Question 1

what is an undertaking?

Answer 1

a statement given orally or in writing, to someone who reasonably relies on it, that you or a third party will do, or refrain from doing, something
o The statement need not include the word ‘undertake(ing)’
o A promise to give a UT is often interpreted as a UT

Question 2

what does the solicitor need to give an undertaking?

Answer 2

• A solicitor must have express authority for each UT before making it

Question 3

what effect does an undertaking have?

Answer 3

• UTs are binding on the solicitor and the firm. An undertaking can only be withdrawn by agreement.

Question 4

when must an undertaking be complied with?

Answer 4

• UTs must be complied with in the agreed timeframe, or if there is not one then a reasonable amount of time. ‘reasonable’ is fact dependent.

Question 5

is a solicitor obliged to give/accept undertakings?

Answer 5

no

Question 6

what principle is breached if a solicitor fails to maintain an undertaking?

Answer 6

to act honestly

Question 7

if a solicitor fails to keep an undertaking, what is the consequence of this?

Answer 7

• The solicitor can be sued in a personal capacity for breach of a UT, unless this has been expressly excluded in the wording of the UT
• Solicitor is also likely to face disciplinary action

Question 8

how can a solicitor avoid breaching an undertaking?

Answer 8

• A solicitor will need to perform a UT they have agreed to, even if it will put them in breach of duty to their client

Question 9

who would be liable if there is a breach of an undertaking and a poor undertaking policy in place?

Answer 9

• If the firm has a poor UT policy in place and as a result a UT is not performed, the solicitor, firm and COLP will be in breach if their obligations

Question 10

what does not discharge a solicitor from their obligation to perform the undertaking?

Answer 10

• The fact a solicitor cannot perform a UT due to an act which is outside of their control (i.e. a third party won’t cooperate) does not discharge them from their obligation to perform the UT
• If the UT has been drafted as being ‘on behalf of the solicitor’s client’ this does not prevent the UT from being enforced against the solicitor

Question 11

how are undertakings enforced?

Answer 11

through the court only.

The LO, SRA, SDT do not have the power to enforce a UT but they can impose disciplinary sanctions

Question 12

how can the court enforce an undertaking?

Answer 12

A UT can be enforced through the court by either:
o Civil claim i.e. breach of contract and remedy of specific performance
o The court exercising its inherent jurisdiction to enforce the UT (the court can only exercise its inherent jurisdiction against an individual solicitor, not a LTD firm or LLP)

Question 13

what is good practice in relation to undertakings?

Answer 13

o For UTs to be in writing, to minimise later disputes
o If a UT is given orally, for an attendance note to be written up
o UTs should be carefully drafted, i.e. limiting liability to pay to the proceeds of sale
o There must be a good UT policy in place
o To avoid UTs reliant on the actions of third parties
o If the solicitor does agree to undertake such a matter, it should include wording such as ‘reasonable endeavours’. This may be less likely to be accepted by the o/s
o Always check with the client that they agree to the UT, even if they have previously provided ‘irrevocable’ authority

Question 14

how is an undertaking to pay costs interpreted?

Answer 14

• An UT to pay costs will be interpreted to mean ‘proper costs’ unless a specific amount is agreed

Question 15

what are ‘proper costs’?

Answer 15

Proper costs = costs that are properly incurred (i.e. they need not be reasonable, so long as they are legitimate)