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Tolling Agreement

This Agreement is entered by and between Jonas Adam, individually or collectively as the "Signee" and Jane Smith, as the "Signer", together referred to as the "Parties".
The Contract is dated [the date both parties sign].

1. Agreement terms

The Parties agree that the following agreement is dependent on the terms presented as follow:

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Tolling Agreement

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What is a Tolling Agreement?

A Rolling Agreement is a legal contract that dictates an agreement between 2 or more parties to a lawsuit (or potential lawsuit). In this Tolling Agreement, the parties agree to suspend(or “toll”) some of their rights, claims, or rules that legal actions are usually governed by. These common rights and claims can be mutually suspended based on the agreement of both parties. The statute of repose and statute of limitations are regular subjects of Tolling Agreements. 

These Tolling Agreements serve to acknowledge the legal time limits that usually govern the time limit for filing lawsuits and cross-claims. When a time limit is drawing very close, the Tolling Agreement will suspend the statute of limitations and statute of repose time restraints that govern the agreement and allow for a mutual agreement between both parties where they will give up the right to use either the statute of repose or statute of limitations as a defense in the event of a lawsuit or cross-claim if one is filed in the future.  

Tolling Agreements are not admissions of guilt, fault, liability, or responsibility. These do not waive any valid claims when it comes to statutes of limitations or statutes of repose before the agreement is put in place, such as a release agreement or a settlement and release agreement would generally aim to do. The only extra right that a Tolling Agreement will impact is the party’s right to argue that too much time has passed during the tolling period for a lawsuit to be allowed to proceed. 

Tolling Agreements allow for more time to evaluate whether there is merit for a lawsuit to be filed. (Source)

What should a sample Tolling Agreement template identify?

We have provided a comprehensive sample Tolling Agreement template for you to base your claim and make small adjustments to rather than starting from scratch. Certain things must always be included in Tolling Agreements.

A Tolling Agreement should identify all parties that are participating in the agreement. They should identify an effective date for the start of the agreement that identifies the day it becomes effective. They also need to set an expiration date for when the agreement terminates. The Tolling Agreement also needs to include the date that any agreement extension needs to be reached by, should any parties wish to extend the Tolling Agreement.  

An Intent Not to Sue clause should be included. This agreement means that the parties all promise not to commence with any litigation while the Tolling Agreement is in full effect. They often include a Declaration of No Liability. This is a very clear statement that indicates that none of the parties involved are admitting any liability.  

A Neutrality Statement affirms that the agreement is not meant to be in favor of or against any of the involved parties. A Waiver of Time-0Based Defenses is the agreement that none of the parties involved will claim, assert, or plead a time-based defense that would pass during the period of the agreement's effect.

Finally, all of the relevant parties must sign the agreement. It never hurts to get it witnessed and notarized as well, which adds some extra legal protections in case any party tries to claim that they never signed the agreement. 

When should I use a Tolling Agreement?

Our sample Tolling Agreement template makes it easy for you to create this document but doesn't answer the question of when one is necessary. There are a few different reasons that a Tolling Agreement could be useful. Usually, they are used to give all of the parties involved some extra time to assess whether a claim or damage is legitimate and valid without being required to file an action in the requisite timeframe. 

Tolling Agreements can also provide some reassurance and certainty as to when the statute of limitations or repose is, provide certainty regarding the final date that a lawsuit may be filed, and provide strategic advantage to both the plaintiffs and defendants in a case. 

The statute of limitations provides a legally defined length of time after an alleged offense occurs that you are allowed to reasonably collect your debt, sue for malpractice, or pursue a dispute in the terms of a contract. These time frames can cause uncertainty because each state is different. 

Signing a Tolling Agreement offers more time to determine whether to pursue a claim or settle. (Source)

Most of the time, the statute of limitations begins the minute a party knows (or reasonably should have known) that they had a legal claim to the damages. What complicates things is what defines reasonable knowledge. Suppose that a doctor leaves a tool inside a patient after surgery. Should the statute of limitations begin the moment the patient feels pain, when an infection develops, when they should have seen a doctor, or when the doctor realizes the instrument is inside a patient? 

A doctor might argue that the statute of limitations should have begun immediately with the pain. A patient, on the other hand, could reasonably argue that high levels of pain and discomfort are reasonable expectations after a major surgery and without any medical knowledge themselves, they would not have any reasonable way to differentiate the pain of the tool inside of them from the pain of the surgery itself or any reasonable expectation that they should check for a doctor's error.  

These types of situations gave rise to Tolling Agreements, where it becomes clear to both parties when the end date of the claims and rights of filing lawsuits occur. This allows them the time they need to determine the case without risking that the courts will rule unfavorable towards them based on the length of time to suit. This will allow all of the parties to focus on the case itself, and whether the situation warranties one, or work for a settlement or resolution before taking the matter to court. 

What happens if I don’t use a Tolling Agreement?

If you do not use our sample Tolling Agreement template to enact a time frame for your lawsuit, there could be some consequences.  For example, a plaintiff might decide that it is in their best interest to file a lawsuit in order to ensure they are filing within the statute of limitations. This will preserve their claim.

Once the lawsuit is filed, the parties will continue the legal process of discoveries and gathering information. They are able to discuss a negotiated settlement agreement, too. Unfortunately, the facts of the case may dictate that filing the suit has motivated a defendant to settle or fight. This means that an effective bargaining chip you have on the table is lost. 

Without the Tolling Agreement, the plaintiff may not have enough factual evidence to have their case accepted and sent to trial. All of their legal claims would be lost because of the statute of limitations passing them by.

For a defendant, the Tolling Agreement can prevent a series of claims and counterclaims from slowing down the process. Tolling Agreements can delay the decision to claim or counterclaim while both parties evaluate the situation based on the evidence the plaintiff has collected.

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