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Undertakings – What are they?

Gold nib fountain pen. What does the term undertakings mean?

Legal jargon – what on earth are undertakings?

There are two “types”.

An issue often confronted in Court is the need to have parties putting into place practical financial arrangements which may not fall within the powers of the Court. These are traditionally therefore the subject of promises known as “undertakings”. These generally come in two forms. First, an undertaking which is seen as a solemn binding promise. Failure to complete this (often within a set period of time) may be seen as a serious breach (a contempt of Court) and punishable by a fine and/or imprisonment. Where such an undertaking is given, the Court will expect the nature of the undertaking and the consequences of default to have been explained to the person giving it. That person will also be expected to sign a statement – acknowledging the possible consequences of default. 

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The second type of undertaking

The second type of undertaking is known as an undertaking for “best endeavours”. This again requires the person giving the undertaking to sign a statement acknowledging the possible consequences of default. However, such “best endeavours” undertakings are ones which the Court recognise may not be complied with because they involve a third party (who is not a party to the Court proceedings). The Court does not have control over such a third party. A good example of a “best endeavours” undertaking is in relation to the release of a party form a jointly-held mortgage. It is not uncommon in family law cases for a family home to be transferred into the name of one party. In return, the transferring party will generally look to the receiving party to obtain his/her release from the mortgage (so that the party who is no longer an owner of the property, can buy somewhere else to live (with a mortgage)). The Court cannot order the party retaining the property to release the mortgage as that is only in the power of the mortgage company. The mortgage company is not a party to the proceedings and therefore the Court cannot order them to provide the release. In those circumstances, the retaining party will be expected to offer a best endeavours undertaking to release the other party.

There are two types of undertaking and you may have to have one with regards to sthe sale of the family home in divorce
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It is not uncommon in such circumstances for the Court to provide a backstop for the release of the party who is no longer going to own the property. The Court may direct that the property is sold, but allow the retaining party a period of time in which to procure the release of the party who will not be an owner. If the release is obtained, the sale will not proceed.

Best Endeavours

There is a debate as to whether a “best endeavours” undertaking is a “one-off” undertaking or whether there is a continuing obligation to comply. Although the position is not clear, my view is that the Court will expect the “best endeavours” undertaking to be of a continuing nature – and therefore it would not be appropriate for a party to try once, fail, and then argue that they had no further obligation to comply with the undertaking.

If confronted by a request to give an undertaking to carry out certain actions ancillary to a financial Court Order, do not immediately think that this is a trap. It is often the only way in which certain parts of an overall settlement can be implemented. However, do think carefully about whether you would be able to comply with the undertaking without the intervention of a third party. Where a third party is involved, do consider giving only a “best endeavours” undertaking. If you are in any doubt, the prudent course is to take legal advice.

Written by James Myatt of Gregg Latchams

Gregg Latchams features in The Hug Directory and James has written other Expert blogs for us. They have offices in London and Bristol.

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