This article discusses in detail the principles to be followed when giving or receiving an undertaking by a solicitor.
An undertaking is a statement where a firm or the solicitor acting on its behalf commit to its clients that they shall do something or refrain from doing something that is detrimental to the interest of the client. Such an undertaking can be given orally or in writing and the words ‘undertaken’ or ‘undertaking’ need not be included.
Although solicitors are not obligated to make such an undertaking, a situation may occur, when they are asked to give an undertaking on behalf of the client. Undertakings may be required when the buyer needs to obtain a bridging loan for deposits. In instances, when an undertaking is necessary, standard wordings provided by the Law Society should be used. The wordings should be read with context to the particular transaction. If the wordings are not applicable to the particular transaction, they should be amended.
Guidelines set by the SRA Warning Card on Undertakings should be followed. According to the guidelines, undertakings should be specific, measurable, agreed, realistic and timed. Thus, all undertakings should be completed within a reasonable period of time or within the agreed timescale.
Undertakings are a personal liability and hence it is important that both parties; the buyer and the seller should be careful about the wordings in the undertaking. Failure to comply with the terms of the undertaking is construed to be professional misconduct. There should also be a system to record when undertakings have been given. Even in the case of oral undertakings, they should be recorded in writing for evidential purposes. Once an undertaking has been drawn, and the parties have consented to the terms, they can be withdrawn only through an agreement.
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