Christy Bieber, J.D.
Adam Ramirez, J.D.
Published: Feb 1, 2023, 5:02am
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Table of Contents
- What Is a Tolling Agreement?
- Why Would You Need a Tolling Agreement?
- What Types of Cases Is a Tolling Agreement Used For?
- What Should Be Included in Your Tolling Agreement
- Benefits of a Tolling Agreement
- Should you Sign a Tolling Agreement?
- Frequently Asked Questions (FAQs)
If you are involved in a civil case and are in the process of negotiating a settlement, a tolling agreement could potentially give you more time to resolve your dispute without filing a lawsuit.
What is a tolling agreement? This guide explains how tolling agreements works, why you might want to draft one and what should be included.
What Is a Tolling Agreement?
A tolling agreement is a formal written agreement to suspend the statute of limitations for a period of time.
State and federal laws establish a statute of limitations for filing a civil lawsuit. This statute of limitations sets a time deadline for moving forward with a claim. For example, an injured victim hurt in a car accident might be given a period of two years to file a lawsuit (although the specific time varies based on the statute governing the case).
If a plaintiff waits too long and doesn’t file a claim within the statute of limitations, the claim will be time barred. The plaintiff won’t be able to use the courts to seek a legal remedy. Plaintiffs obviously do not want this to happen.
A tolling agreement essentially involves pushing the pause button. The potential plaintiff and potential defendant agree in writing not to follow the statute of limitations that would ordinarily apply to the case. Instead, the tolling agreement dictates how long the plaintiff has to move forward.
As long as the plaintiff acts by the deadline established in the tolling agreement, they are still able to pursue a civil lawsuit if they choose to do so.
Why Would You Need a Tolling Agreement?
Tolling agreements can be used in circumstances where both parties want more time to negotiate a settlement.
Civil lawsuits can be resolved out of court if a defendant and plaintiff agree on an appropriate remedy. For example, a car accident claim settles if the defendant offers to pay the plaintiff a set amount of money and the plaintiff accepts. Settlements can be better for both parties in many situations because the uncertainty of a court verdict is eliminated.
Sometimes, though, a settlement is not easy to reach. If parties are actively negotiating and a plaintiff doesn’t want to lose the chance to sue because the statute of limitations is running out, the parties could decide to enter into a tolling agreement.
Once the agreement is signed, there is no need for the plaintiff to rush to file a lawsuit by the statute of limitations because a new deadline determined in the agreement applies to their claim.
What Types of Cases Is a Tolling Agreement Used For?
A tolling agreement can be used in any kind of civil case where an individual plaintiff sues an individual defendant. This can include the following types of cases:
- Personal injury claims
- Slip and fall claims
- Car accident claims
- Medical malpractice claims
- Breach of contract claims
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The key is that the potential plaintiff and potential defendant are in agreement that the statute of limitations should be suspended temporarily. A plaintiff cannot decide on their own to take longer than allowed to file a lawsuit or the plaintiff risks the claim being time barred.
What Should Be Included in Your Tolling Agreement
A tolling agreement should generally contain specific details on the following issues:
- The parties to the agreement. They need to be clearly identified. All potential defendants should sign onto the agreement–otherwise, the plaintiff could lose the right to make a claim against some of the parties responsible for covering their damages.
- The event leading to the civil case. Whether it’s a breach of contract, an accident, or some other issue, the tolling agreement should clearly define the incident that the claim arises out of.
- The date the tolling agreement becomes effective.
- The tolling period. This is the length of time established by the agreement for the plaintiff to move forward. It sets the new deadline by establishing how long the statute of limitations will not run.
- Clauses specifying that there are no admissions of liability and no further agreements between the parties, other than the pausing of the statute of limitations
In most cases, you should not try to draft a tolling agreement yourself. That’s because creating this type of enforceable contract requires knowledge beyond being able to answer the question, what is a tolling agreement. An experienced attorney can help you to create an agreement that protects your rights and that will be enforceable in a court of law.
Benefits of a Tolling Agreement
There are several key benefits of a tolling agreement:
- It provides more time for parties to negotiate a settlement, potentially avoiding the stress and uncertainty involved in court proceedings.
- It establishes a clear deadline for filing a lawsuit. This can be helpful if it is ambiguous when the statute of limitations started running. This might be the case, for example, in a medical malpractice claim when a plaintiff did not discover injuries until months or years after the doctor’s negligence.
- It allows the potential parties to litigation to take control over when a case will move forward, rather than being forced to abide by a statute that applies to all similar claims
Both plaintiffs and defendants must weigh whether these benefits justify signing a tolling agreement.
Should you Sign a Tolling Agreement?
You may wish to sign a tolling agreement if you want more time to pursue a potential civil case or if you want more time to negotiate a settlement before court proceedings are initiated.
An attorney can provide assistance in determining whether signing an agreement makes sense in your specific situation, so always consult a lawyer before making this choice.
Frequently Asked Questions (FAQs)
How long can a tolling agreement last?
The parties to a tolling agreement decide how long the statute of limitations will be paused or extended for. The agreement could specify a set period of time, such as 30 days or 90 days, or it could be indefinite. But, both parties must come to a consensus on the new deadline set by the agreement.
What does tolling mean in legal terms?
Tolling refers to stopping a time period from running. The term is often used to describe a tolling agreement that puts a pause on the statute of limitations. The statute of limitations normally establishes a time limit within which a person can bring a legal cause. A tolling agreement can pause this time, giving the parties more time to negotiate a settlement before a new mutually-agreed-upon deadline.
Why would you enter into a tolling agreement?
Plaintiffs and defendants may enter into a tolling agreement if the potential pirates to a civil lawsuit want more time before a plaintiff is forced to file a civil lawsuit or lose the opportunity to do so. Plaintiffs benefit by not having to file a lawsuit before they are ready and defendants benefit by potentially avoiding litigation if they can come to an agreement with the plaintiff.
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