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Simple English definitions for legal terms
letter of undertaking
Read a random definition: altius non tollendi
A quick definition of letter of undertaking:
A letter of undertaking is an agreement made by a shipowner to prevent their ship from being seized by creditors. The shipowner agrees to provide security for the ship and promises to pay any debts owed, even if the ship is lost. This letter is often issued by the shipowner's insurance company. It helps to avoid court costs and the inconvenience of having the ship arrested. The letter is treated as if the ship had been seized and released on bond, which saves time and money for everyone involved.A more thorough explanation:
A letter of undertaking is an agreement made by a shipowner to prevent creditors from seizing their ship. The shipowner agrees to post security on the ship and to acknowledge ownership. They also agree to pay any final decree entered against the vessel, whether it is lost or not. This letter is often issued by the shipowner's liability insurer.
For example, if a shipowner owes money to a creditor, the creditor may try to seize the ship to get their money back. However, if the shipowner provides a letter of undertaking, the creditor will not be able to seize the ship. Instead, the shipowner agrees to pay the creditor's claim.
Letters of undertaking are useful because they save court costs and avoid the inconvenience of having the ship arrested. They are treated as though the ship has been seized, and the shipowner has filed a claim and executed a stipulation to abide by decrees with sureties. This avoids needless cost, time, and inconvenience to everyone involved.