If you are involved in a legal dispute, you may be asked to give an undertaking. Most people do not fully understand what this means or that an undertaking is a serious legal commitment. Understanding what an undertaking requires before making one can save serious headache down the road.
What is an undertaking?
An undertaking is a formal promise to do, or not to do, a particular thing. Unlike a playground pinky-promise, an undertaking entitles the recipient to rely on it, and the law will enforce it.
Undertakings are usually given in one of three ways:
- to the court, binding you personally, whether you give it yourself or through your lawyer
- to the other party, binding you personally, and usually given in correspondence between lawyers
- to another solicitor, binding your solicitor personally, and given by your solicitor on your behalf
An undertaking to the court carries much the same weight as a court order. The main difference is that you give it voluntarily, rather than the court imposing it on you. No one can compel you to give an undertaking. If you decline, however, the other party may ask the court to make an order instead.
When might someone ask you to give an undertaking?
Undertakings arise across most areas of law. Common examples include the following.
In general litigation:
- A party undertakes not to sell or mortgage a disputed property until the final hearing, which avoids an urgent and expensive contested application.
- A party who asks the court for an urgent injunction gives the “usual undertaking as to damages”. This is a promise to submit to any order the court considers just to compensate anyone the injunction affects. The promise applies if it later turns out the court should not have granted the injunction.
In commercial disputes:
- A former employee or business partner undertakes not to use confidential information, or not to approach the business’s clients. The undertaking lasts while the parties resolve a dispute about their obligations.
- A company undertakes to keep funds in a particular account, or not to transfer assets out of the business, pending the outcome of proceedings.
In family law:
- A separated spouse undertakes not to sell, transfer or borrow against the former matrimonial home until property settlement.
- A party undertakes to keep paying the mortgage or household expenses while the matter proceeds.
- In parenting disputes, a parent undertakes not to remove a child from a particular area, or to communicate with the other parent only in a particular way.
In transactions, including family property settlements:
- Your solicitor undertakes to hold sale proceeds or settlement money in a trust account until an agreed event occurs.
Undertakings given by your solicitor
When your solicitor gives an undertaking on your behalf, the obligation is personal to the solicitor. Rule 6.1 of the Australian Solicitors’ Conduct Rules requires a solicitor to honour any undertaking given in the course of legal practice, unless released by the recipient or by a court. A breach can amount to unsatisfactory professional conduct or professional misconduct.
For this reason, your solicitor will not give an undertaking without your clear written authority and will usually require you to put them in a position to perform it, for example by placing funds in their trust account first.
What must you consider before giving an undertaking?
Before giving an undertaking, or authorising your solicitor to give one, consider the following:
- The exact wording. The law will hold you to what the undertaking says. Its words must match what you intend to do, and nothing more.
- Whether performance is within your control. If you need a bank, a business partner or a family member to act before you can comply, you may not be able to keep the promise.
- How long it lasts. An undertaking may run “until further order”, until the final hearing, or until a fixed date.
- Your financial exposure, particularly under an undertaking as to damages.
- Whether you are making any admission. Parties often offer undertakings in disputes “without admissions”. Where appropriate, you should confirm that the undertaking includes that wording.
- Who else needs to know. If staff or family members could inadvertently cause a breach, tell them what the undertaking requires.
How do you give an undertaking?
The process depends on who receives it.
- An undertaking to the court is commonly given orally in the courtroom, through your lawyer, and recorded in the court’s orders, usually in the form “the court notes the undertaking of the defendant that…”. It may also be given in a signed written document filed with the court. The court may ask you personally to confirm that you understand and accept its terms.
- You usually give an undertaking to the other party through a letter between lawyers that sets out the precise terms.
- Your solicitor gives a solicitor’s undertaking in writing, on your instructions.
Whichever form it takes, keep a copy and note any deadlines.
What to remember
An undertaking can usually be released or varied only by the person who received it or by the court. If your circumstances change and you cannot comply, seek a release or apply to the court before any breach occurs. A court will view an application made in advance far more favourably than an explanation offered afterwards.
A breach of an undertaking to the court can be dealt with as contempt, with penalties that may include a fine or, in serious cases, imprisonment. A breach also damages your credibility before the court for the rest of the proceedings.
Conclusion
An undertaking can be a practical way to resolve an urgent issue, avoid a contested hearing, or allow a transaction to proceed. Its value lies entirely in its reliability. Give one only when you are certain you can perform it and you understand its terms, and obtain legal advice before you do.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
Article Written by Louisa Englund, Law Graduate
