The Society is continuing to receive a considerable number of complaints relating to undertakings. While many of these complaints are ultimately resolved, the investigation of them suggests that many members of the profession still fail to understand the obligations imposed upon them when they give an undertaking. This practice note has therefore been reissued to remind practitioners that non-compliance with an undertaking amounts to misconduct.

Not only is dealing with a complaint of this nature likely to take up a great deal of time that could have been spent more profitably, it may also involve a substantial financial claim, with the additional possibility of a referral to the Solicitors Disciplinary Tribunal. Undertakings considered to have been given negligently have also given rise to a considerable number of insurance claims. resulting – inevitably – in a substantial increase in premiums. The affairs of clients are more easily transacted because people can rely on a solicitor’s undertaking. An undertaking should not, therefore, be given or accepted carelessly.

Remember
Undertakings should be clearly understood and agreed, and they should always be confirmed in writing. If an undertaking involves the payment of a sum of money, make sure the amount is clear or that it is easy to calculate. Ambiguous undertakings will generally be construed in favour of the recipient, and they are binding even if they do not include the word ‘undertake’.

A solicitor’s undertaking is a professional conduct issue. Consideration is not required for it to be enforceable, and undertakings are not subject to any limitation period.

There is no obligation on a solicitor either to give or accept an undertaking, and a client cannot instruct you to do so. Likewise, you cannot avoid complying with an undertaking because you have been instructed to do so, or because it is no longer in your client’s interests.

Undertakings should refer to a particular task or action that is clearly identified and defined. Do not give general undertakings, such as an undertaking to discharge ‘all outstanding mortgages on a property’ or ‘pay costs on the conclusion of the case’. Do not give ‘the usual undertaking’, or think in terms of ‘routine’ or ‘standard’ undertakings. An undertaking to pay monies out of a fund should be qualified by the proviso that the fund comes into your hands, and that it is sufficient.

Undertakings should be achievable at the time they are given. You must consider carefully whether you will be able to implement it. Likewise, an undertaking should only be accepted if it relates to matters under the direct control of the person giving the undertaking. If any events must happen before you will be able to comply with your undertaking, you should spell out those events in the undertaking, and only give a qualified undertaking.

Undertakings should indicate when they will be complied with. In the absence of an express term, there is an implied term that an undertaking will be performed within a reasonable time.

Particular care should be taken if you agree to hold title deeds, documents, cheques, money, or anything else on accountable trust receipt or ‘to the order’ of another solicitor or third party, as you may well be deemed to have given an undertaking to do so.

Litigation
Do not ask other solicitors to provide an undertaking in terms you would not give yourself. This applies particularly to undertakings as to costs. Do not give, or expect another solicitor to give, an open-ended undertaking to pay costs. Refer to specific bills if possible but, if not, at least make provision for the costs to be ‘taxed in default of agreement’. It should be clear from the terms of the undertaking when and how such costs are to be paid.

You should not pay out monies due to your client on the successful conclusion of a case without ensuring that you have sufficient funds to discharge undertakings that may have been given on their behalf. Make sure that such undertakings have been given with your client’s written agreement, and that they understand that these monies do have to be repaid out of their damages/settlement. You should think very carefully before giving what may amount to a financial guarantee for your client.

Conveyancing
Make sure that an undertaking to discharge a mortgage specifies exactly which mortgage(s) you intend to discharge. Vague replies may result in you being liable to discharge all mortgages, whether you know of them or not. Particular care should be taken with ‘all sums due’ or ‘all monies’ mortgages.

You should not accept carelessly worded undertakings to provide missing plans, planning documents or deeds, which are often outside the control of the vendor’s solicitor. An undertaking is only binding upon the parties to it. It cannot compel a third party to do anything. If a document is not available, consider whether you should be closing the transaction without it at all.

For this reason, particular care should be taken when acting for a purchaser of a property/apartment in a new development. A distinction must always be made between those issues that are in the contract/lease and are to be dealt with by the vendor/developer, and those that are to be the subject of an undertaking given by their solicitor. You should not therefore give an unqualified undertaking to provide a copy of a deed that, for example, deals with the conveyance of the common areas, if that is something that will only be executed by the vendor/developer at some point in the future.

A solicitor cannot assign the burden of an undertaking (and claim to be released from its obligations) without the express agreement of the recipient of the undertaking. The recipient can assign the benefit of an undertaking, but you should be cautious of accepting such an assignment unless there is a good reason why the original undertaking has not been complied with. For this reason you should not accept a ‘chain of undertakings’, as these could prove to be unenforceable.

Do not treat the Law Society’s approved form of undertaking for residential mortgage lending as a mere formality. In giving that undertaking, you undertake, among other things, that you “are in funds to discharge all stamp duty and registration fees”, that you will lodge the deed for stamping “within the time prescribed by law” and, following receipt of the deed stamped, lodge it and the mortgage deed in the appropriate registry “as soon as practicable but in any event within four months”.

Good management
Principals are responsible for undertakings given by staff, whether qualified or not. Clear guidance should be given to all staff as to who is permitted to give or accept undertakings. You should also consider drawing up approved forms of undertakings that are to be used unless otherwise agreed.

Make sure that undertakings are not overlooked, by indicating on the file that an undertaking has been given and its date. You could, for example, print off a copy of the undertaking on different-coloured paper so that it can easily be identified. It should be apparent to anyone taking over a matter that an undertaking is still outstanding. If you do not already have one, you should set up a register of undertakings.

The recipient of an undertaking is entitled to make reasonable enquiries as to the discharge of the undertaking, and you must therefore ensure that such enquiries are not ignored. This specifically includes letters received from banks and other financial institutions. Such letters often make it clear that a complaint will be made to the Society if a response is not forthcoming; a short reply may therefore save a quite unnecessary complaint being made.

The Society’s Complaints Section has received an unprecedented amount of complaints about undertakings from lending institutions within the last 18 months, the majority of which were triggered by a complete lack of response from the solicitor to the lending institution’s queries. There have been some complaints made in error, or prematurely, and solicitors are understandably annoyed when this happens. Thankfully, most of the complaints made to the Society are resolved through correspondence and that is the end of the matter. However, in a small but significant number of cases, the Society’s enquiries reveal that the solicitor, for a variety of reasons, cannot comply with the undertaking and, in these cases, the Society has no choice but to initiate disciplinary proceedings.

Have available and refer to the current Law Society publications on the subject, in particular the Guide to Professional Conduct of Solicitors in Ireland (2nd edition), as this practice note is in addition to, rather than in substitution for that material. Practice notes are not legal advice; they are notes issued by the Law Society for the use and benefit of its members. The Law Society will not therefore accept any legal liability in relation to them.

John Elliot, Director of Regulation and Registrar of Solicitors