What is 'Continuing Undertaking Rule'

Continuing undertaking rule is 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.”

BREAKING DOWN 'Continuing Undertaking Rule'

Continuing undertaking rule is also called the continuous treatment 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.

Continuing Undertaking Rule and Healthcare

In the context of healthcare, the continuing undertaking rule is designed to postpone the starting date of the statute of limitations, until a medical professional has finished rendering treatment for a particular illness or condition. The rule is actually meant to give an opportunity to the doctor to correct any mistakes that may have occurred during the initial treatment, before the victim starts a lawsuit.

For instance, consider a negligent surgery that was performed on Jan. 1, 2010. Afterwards, the surgeon does series of follow up surgeries on the first of March, June and September of the same year to correct his mistakes. The surgeon then does a review of the surgeries on Oct. 1, 2010. In case the surgeon has not been able to correct his mistakes, then the statute of limitations for the patient will begin from October 1, 2010, not January 1, 2010.

RELATED TERMS
  1. Statute of Frauds

    A statute of fraud is a legal measure wherein certain types of ...
  2. Comparative Negligence

    Comparative negligence is a principle of tort law.
  3. Corporate Undertaker

    An informal term for liquidator. As the name implies, a corporate ...
  4. Anti-Takeover Statute

    An anti-takeover statute is a state regulation that prevents ...
  5. Unintentional Tort

    An unintentional tort is a type of unintended accident that leads ...
  6. Accountant's Liability

    Accountant's liability stems from legal exposure assumed while ...
Related Articles
  1. Financial Advisor

    How Trump Could Let the Fiduciary Rule Die on the Vine

    If Donald Trump keeps his promise to repeal the fiduciary rule his administration could do so by not defending it against pending lawsuits.
  2. Financial Advisor

    What Advisors Need to Know About Rule 3210

    Here's what advisors and brokers need to know about FINRA Rule 3210.
  3. Investing

    The Uptick Rule Debate

    This rule was deemed ineffective and repealed in 2007, but critics argue it protects the market from bear raids.
  4. Insights

    Can the Fiduciary Rule Be Saved?

    The rule has been delayed numerous times, with full implementation now scheduled for June 2019. However, recent federal court action threatens the rule.
  5. Insights

    U.S. May Allow Class-Action Suits Against Wall Street Firms

    The Consumer Financial Protection Bureau adopted a rule that would allow American clients to bring class-action suits against financial companies.
  6. Retirement

    Which Firms Are Sticking with Fiduciary Rule Changes Anyway?

    The Fiduciary Duty Rule is under scrutiny again and may be scrapped altogether, but that doesn't mean all financial firms will abandon the standard.
  7. Personal Finance

    What Does the Fiduciary Rule Have to Do With Food Inspectors?

    Regardless of what happens to the DOL Fiduciary Rule, investors can change the industry standard.
  8. Investing

    The Uptick Rule: Does It Keep Bear Markets Ticking?

    This rule prevents traders from driving stocks down, but its effect on market volatility is debatable.
  9. Trading

    Top 10 Rules For Successful Trading

    Whether you're a novice or an expert, these 10 rules should be the backbone of your trading career.
  10. Insights

    Volcker Rule: How It Will Affect You

    Learn how the Volcker Rule has a limited impact on individual investors but restricts the types of activities in which banks can engage.
RELATED FAQS
  1. Do I still owe debt collectors for a debt that's past the statute of limitations ...

    Learn more about the statutes of limitations that govern certain personal debts and why you maintain obligations as a debtor ... Read Answer >>
  2. What is the Rule of 72?

    The "Rule of 72" determines roughly how long an investment will take to double, given a fixed annual rate of interest. It ... Read Answer >>
  3. Debt and collection agency

    Find out what happens when your debt account is sold from one collection agency to another and the impact on your balance ... Read Answer >>
  4. What is the downtick-uptick rule on the NYSE?

    To ensure orderly markets, the New York Stock Exchange (NYSE) has a set of restrictions that it can implement when experiencing ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center