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When you conduct your business activity, not everything may go according to plan. You may find, for example, that you disagree with another business and end up in a commercial dispute. If this happens, you could resolve it through alternative dispute resolution (ADR). However, as a worst-case scenario, you could find the commercial dispute is no longer private information as you become a defendant or claimant in civil litigation. If so, you should take legal advice for the litigation process.
During court proceedings, it is possible for a party to offer a Solicitor’s undertaking to the commercial court, which concerns specific action. This article will explain what an undertaking to the court is in legal proceedings in a commercial dispute in the UK and provide some helpful points to note on undertakings.
What is a Commercial Dispute?
A commercial dispute is where two parties disagree in business. This could be between businesses or individuals. A commercial dispute can occur, for example, in relation to:
- selling goods or
- providing services.
A commercial dispute can arise, for example, due to:
- a business failure to carry out the terms of a contract;
- misunderstandings; or
- mismanagement.
A commercial dispute could end up as court litigation.
This guide outlines how to resolve commercial disputes.
What is an Undertaking to the Court in a Commercial Dispute?
An undertaking in general terms is either:
- an agreement;
- a person proposing to carry something out;
- a person agreeing not to do something; or
- a person agreeing not to provide something.
The promise is made to the court and applies to the other party of the commercial dispute, so is something you promise to do or not to do to them as part of the commercial litigation. There are many situations, including in commercial law, when an undertaking in a court case can occur.
An example of an undertaking to the court for commercial disputes could be:
- an agreement to pay money to the other party, which can be in one amount or instalments;
- an undertaking in damages;
- to appear in court at a particular time; or
- agreeing not to take action before a specific date.
Whichever type of undertaking your business gives to the court, the undertaking is legally binding. Your business is making a promise to the court, and if you do not keep it, the court can enforce it.
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Points to Understand About an Undertaking to the Court in a Commercial Dispute
Here we list some interesting and vital points for you as a business owner to understand about an undertaking to the court in a commercial dispute:
- a court can refuse a business undertaking to the court when they give it in a civil claim settlement. For example, they can refuse some contractual claim undertakings, such as if these are too broad or not specific enough. This is primarily because the court needs to be able to ensure that it can enforce any undertaking;
- where the commercial court agrees with your undertaking on a freezing order, you will need the court’s permission to enforce it outside the jurisdiction of England and Wales. However, this does not prevent you from asking another jurisdiction to make an order to seize specific assets of the respondents. This is because courts outside the English and Welsh jurisdiction are independent; and
- when you make an undertaking to a court in a commercial dispute, you will use Form N117. However, there are no legal requirements to record an undertaking in writing, although it is a good idea to.
Key Takeaways
If you are part of commercial litigation due to a commercial dispute, you may make an undertaking to the court. This is a legally binding promise to the court concerning the other party to the commercial dispute. An undertaking can be a promise to do something or provide something and can also be a promise not to do something or provide something. For example, in a commercial case, a promise to pay damages or a promise not to take action until a specific date.
Undertakings must be kept, so it is essential you only make them where you know you can carry them out. Not complying with an undertaking can result in a punishment such as a fine or even prison. There are many interesting points about undertakings. For example, a court can refuse them if they are not specific enough, such as a contractual undertaking, as the court may be unable to ensure if it can enforce it.
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