General undertakings: Overview, definition, and example
What are general undertakings?
General undertakings refer to broad, non-specific promises or commitments made by one party to another, typically in a contract or agreement. These undertakings may involve a variety of obligations, such as acting in good faith, adhering to specific standards, or maintaining certain conditions throughout the duration of an agreement. Unlike specific promises related to particular actions or performance (like a delivery date), general undertakings are often more about overall conduct, ensuring that the parties involved fulfill their responsibilities in a manner consistent with the terms of the agreement.
For example, in a business contract, a general undertaking might be a commitment to comply with applicable laws or act in a manner that does not negatively affect the other party's interests.
Why are general undertakings important?
General undertakings are important because they establish a framework of behavior and expectations that guide how parties interact throughout the term of the agreement. These commitments often create a foundation for trust and cooperation, ensuring that the parties act responsibly and consistently. General undertakings can also be used to address situations where specific provisions may not be outlined but are still necessary to ensure the agreement is executed properly and fairly.
For businesses and organizations, general undertakings help mitigate risk by providing broad assurances that all necessary actions will be taken in a manner that benefits both parties and upholds the integrity of the agreement.
Understanding general undertakings through an example
Imagine a joint venture agreement between two companies. One of the general undertakings might be a commitment to act in good faith and make decisions that are in the best interest of the joint venture, even if the agreement doesn't specify every possible action. This commitment ensures that both companies operate with mutual trust and are working toward the same goal.
In another example, a real estate contract might include a general undertaking for the seller to maintain the property in good condition until the transfer of ownership, ensuring that the buyer receives the property as agreed, even if no specific maintenance tasks are detailed in the contract.
Example of a general undertaking clause
Here’s how a general undertaking clause might appear in a contract:
"The Party agrees to make all reasonable efforts to fulfill its obligations under this Agreement and to act in good faith to avoid actions that could materially disrupt the performance of the other Party's obligations. The Party further undertakes to comply with all applicable laws and regulations in relation to the execution of this Agreement."
Conclusion
General undertakings are a vital component of many contracts, ensuring that the parties maintain ethical and professional conduct throughout the duration of the agreement. These broad promises help establish trust and ensure that all necessary actions are taken to support the spirit and integrity of the contract, even when not explicitly stated.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.