DEFINITION of ‘Continuing Undertaking Rule’
A legal rule that temporarily stops the statute of limitations from moving to expiry for claims of negligence. The continuing undertaking rule is a feature of tort law, and the temporary stoppage is referred to as a “toll.”
Also called the continuous treatment rule.
BREAKING DOWN ‘Continuing Undertaking Rule’
Courts may place a limit on the amount of time that can pass between when an individual or business experiences a loss or damage and when that individual or business files a claim. This limits the filing of a lawsuit if too much time has passed.
The continuing undertaking rule typically applies to situations in which there is a long-term relationship between the claimant and the defendant. This is because it can be difficult for the future claimant to determine that negligence has occurred until after relationship has concluded. The statute instead will begin when the claimant discovers that an injury or damage has occurred (actual discovery) or when the claimant had enough information to determine that it should have discovered that an injury or damage had occurred (constructive discovery).
A major reason that the continuing undertaking rule exists is that defendants are more likely to know that they are acting in a negligent manner than claimants are to discover it. In some cases, there may actually be multiple incidents of negligence spread over a period of time.
For example, a company uses the services of a law firm for a number of years during contract negotiations over a merger. The statute of limitations is paused during this time because the relationship between the lawyer and the firm is ongoing. If the company later discovers that it was not provided the proper legal advice, it may take the law firm to court. The statute of limitations is extended because the company did not realize that there was negligence until after business was concluded.