Tolling Agreements: Pausing the Clock on Claims
What Is a Tolling Agreement?
A tolling agreement is a contract between parties in a potential dispute that pauses (tolls) the statute of limitations on legal claims. It gives both sides more time to investigate, negotiate, or attempt settlement without the pressure of an approaching filing deadline.
Without a tolling agreement, a party facing an expiring statute of limitations must either file a lawsuit or risk losing their claim forever.
Why Tolling Agreements Are Used
- Facilitate negotiations — Both parties can negotiate in good faith without the threat of a rushed lawsuit
- Allow investigation — The claimant gets time to gather evidence and assess the strength of their case
- Reduce litigation costs — Avoiding premature filing saves both parties the expense of active litigation
- Preserve relationships — Business partners may prefer private resolution without the adversarial nature of a filed lawsuit
- Complex claims — Multi-faceted disputes may need more time to evaluate than the statute allows
Key Terms in a Tolling Agreement
- Claims covered — Which specific claims are being tolled (all claims, or only certain ones)
- Tolling period — The specific dates during which the statute of limitations is paused
- Resumption — How the statute starts running again (upon expiration of the agreement, upon notice, or upon a triggering event)
- Remaining time — How much time remains on the statute after tolling ends
- Termination — How either party can end the tolling period, typically with written notice
- Defenses preserved — Confirmation that both parties preserve all other defenses
What to Watch For
- One-sided tolling — Ensure the agreement tolls limitations for both parties, not just one
- Broad claim language — If you are the potential defendant, narrow the scope of tolled claims
- Indefinite duration — Avoid open-ended tolling; include a defined end date
- Waiver of defenses — The agreement should explicitly preserve all defenses other than the statute of limitations
When to Consult a Lawyer
Before signing a tolling agreement, consider consulting an attorney to verify which statutes of limitations apply, how much time remains, and whether the agreement's terms adequately protect your position.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.