In Independiente Ltd & Ors v Music Trading Online (HK) Ltd – Lawtel 26.1.07 the Defendants, as part of a settlement agreement, gave an undertaking to the court not to carry out certain acts. When they breached that undertaking, the question before the Court of Appeal, was whether the Claimants were entitled to bring proceedings for damages for breach of contract based on the Defendants' alleged breaches of the undertakings, or whether the only remedy was an application for contempt of court.
The judge at first instance had held that it was open to the Claimants to bring a claim for damages against the Defendants for breach of the undertakings contained in the draft orders on the basis that, albeit by implication, the undertakings in question were given to them as well as to the court. On appeal, the Court of Appeal held that the correct construction of the settlement agreement was that the Defendants were contractually bound not to do the acts that would breach the undertakings they had given to the court. By agreeing to give undertakings to the court, they had also agreed with the Claimants not to do the acts that they had undertaken to the court not to do. That was a slightly different approach from the one taken by the judge, who found that there was an implied term of the contract, but there was nothing wrong in the way he had approached the matter.