Free Tolling Agreement Template

Use a tolling agreement, also known as a standstill agreement, to “toll” or “suspend” a time-based statute that may be running on a claim. Below you can learn what a tolling agreement is, when you should use one and you can download a tolling agreement template.

Table of Contents

• What is a Tolling Agreement?
• Reasons to Consider Proposing a Tolling Agreement
• What to Include in a Tolling Agreement
• Consequences of Not Having a Tolling Agreement
• When Should I Consider Using a Tolling Agreement?
• Tolling Agreement Sample
• Frequently Asked Questions

What is a Tolling Agreement?

A Tolling Agreement is an agreement between two or more parties to a lawsuit, or a potential lawsuit, where the parties agree to “toll” or “suspend” certain rights, rules, or claims that typically govern legal actions. Some common rights, rules, and claims that may be mutually suspended by both parties include, the statute of limitations and statute of repose.

The agreement identifies and acknowledges the legal time limits which typically govern when lawsuits or crossclaims must be filed. In recognition of a looming time limit, tolling agreements:

• Toll, or suspend, the statute of limitations and the statute of repose time restraints governing an agreement; and
• Provide a mutual agreement between parties, where they both agree to give up their right to use the statute of limitations or the statute of repose as a defense against a lawsuit or crossclaim, should a suit be filed or pursued at a later date.

For definitions of the statute of limitations and the statute of repose, as well as an illustration of how they may be relevant, please see the FAQ section.

A tolling agreement in no way concedes guilt, responsibility, or liability. Nor does it waive a valid claim regarding the statute of limitations or the statute of repose before the agreement is put in place.

The only right a tolling agreement impacts is a party’s right to argue too much time has passed during the tolling period for a suit to proceed.

Reasons to Consider Proposing a Tolling Agreement

There are many reasons one might benefit from a tolling agreement. Usually, tolling agreements are used in order to give parties extra time to assess the validity and legitimacy of claims and damages, without having to file actions within the requisite timeframes. Other common reasons include:

• Providing certainty as to the statute of limitations or statute of repose
• Providing certainty as to the final date a suit may be filed
• Strategic benefits for plaintiffs
• Strategic benefits for defendants
• Encourages both parties to settle the dispute
• Avoid litigation costs
• Allow for more time to think

Providing Certainty as to the Statute of Limitations or Statute of Repose

The statute of limitations is a law providing for the length of time one can bring a claim after the occurrence of an alleged offense, such as collecting a debt; suing for medical malpractice; or pursuing a contract dispute. Statute of limitations timeframes vary by state, causing uncertainty for a great deal of litigants as to the time when the actual statute of limitations begins.

In most circumstances, the statute of limitations begins when someone knows, or should have known, they had a legal claim. Imagine a case where a medical instrument is inadvertently left inside a patient. Should the statute of limitations begin when the patient first feels pain from the foreign object? When they develop an infection? When they should have gone to the doctor? Or, when they actually went to the doctor?

By entering into a tolling agreement, there is no dispute between parties as to the appropriate “end date” of certain claims and rights. Nor do they risk an unfavorable ruling by the court.  Instead, the parties can focus on the merits (or lack thereof) of a potential suit, and working towards a possible resolution.

Tolling agreements do not waive valid arguments for a previously expired statute of limitations or repose, only for those during the tolling period.

Providing Certainty as to the Final Date a Suit May be Filed

A tolling agreement details several facts surrounding the date the suit may be filed. In addition to establishing an agreement to suspend the statute of limitations and the statute of repose, a tolling agreement includes an “end date.” The parties agree to waive the statute of limitations and the statute of repose in agreement and that no suit will be filed after a certain date, or after a certain condition is met.

This waiver allows for the parties to engage in an investigation and evaluation of the strength and weaknesses of the opposing party’s case, and their own, allowing for more meaningful negotiations.

Strategic Benefits For Plaintiffs

Plaintiff’s benefit from tolling agreements because they are able to extend the time they have to investigate and gather evidence to support their claim. Without a tolling agreement, and lacking sufficient facts to support an actionable claim before the statute of limitation expires, a plaintiff may forever lose their chance to file a suit.

Strategic Benefits For Defendants

Often times, causes of action are settled between parties without a suit ever being filed in court. Court filings are public and contents of certain lawsuits can be incredibly damaging to a defendant’s reputation or business. By signing off on a tolling agreement, a defendant can pursue settlement off the record. Without one, a plaintiff may have no choice but to file suit to preserve their claim.

Co-defendants may also use tolling agreements when dealing with counterclaims. Counterclaims can include crossclaims and third-party claims. Sometimes, before pursuing a counterclaim against a co-defendant, defendants want to take time in order to determine the strength of a plaintiff’s case to see if the plaintiff can establish any liability.

Encourages both parties to settle the dispute

A tolling agreement gives the parties a deadline to negotiate out of court before the plaintiff can follow the legal process. It helps avoid spending money and time in court, allowing both parties to consider out-of-court settlements.

Avoid litigation costs

From hiring litigation lawyers to filing counterclaims, litigation costs can add up. A tolling agreement can help avoid these expenses from building up as it pushes both parties toward formally settling the matter. Both parties can receive the benefits of litigation, without incurring the costs of initiating litigation.

Alternatively, if negotiations fail, the dispute could be handled through arbitration (an arbitration agreement could avoid litigation in future disputes). With arbitration, a neutral third party will make a ruling after seeing both parties’ cases. Arbitration incurs some costs, but significantly less than going to court.

Allow for more time to think

A tolling agreement must state how long both parties want to suspend the statute of limitations. This allows both parties to have more time to think about how best to resolve the dispute. The defendant has more time to build a defense, or negotiate out of court, while the plaintiff has more time to consider the strengths and weaknesses of the claim.

What to Include in a Tolling Agreement

A typical tolling agreement will identify the following elements:

• Party Information: identity of the parties to the agreement;
• Start Date: the date the agreement is effective;
• End Date: the date the agreement expires or terminates;
• Tolling Period: Include the period in which any statutes of limitation, statutes of dispose, or other defenses the respondent may
  have with respect to any claim by the claimant, that is not otherwise barred as of the Effective Date, shall
  be tolled until;
• Intent Not to Sue: an agreement promising not to commence litigation during the pendency of the tolling agreement;
• Declaration of No Liability: a clear statement indicating no admission of liability by any party;
• Neutrality Statement: a statement affirming the agreement is not for, or against, any party;
• Waiver of Time-Based Defenses: an agreement that no party shall plead, assert, or claim any time-based defenses which may pass during the tolling period;
• Extension Agreement Date: the date by which any agreement for an extension to the agreement must be reached; and
• Party Signatures: the signatures of the relevant parties.

Consequences of Not Having a Tolling Agreement

There are a variety of consequences for not having a tolling agreement. Keep in mind that the consequences for plaintiffs and defendants are different.

Consequences For Plaintiffs

In a case where a suit has not yet been filed, one of two outcomes may occur without a tolling agreement.

• A plaintiff may choose to file a lawsuit within the statute of limitations. This preserves the claim.

Once filed, the parties may continue with discovery, gathering more information. They are also free to discuss a possible negotiated settlement. However, sometimes depending on the facts of the case, the mere threat of filing a suit in court motivates a defendant to settle. By filing the claim, this bargaining chip is lost.

• Alternatively, without a tolling agreement, it is possible a plaintiff will not have enough factual evidence to proceed, and any legal claim will be lost because the statute of limitations or the statute of repose has passed.

Consequences For Defendants

On one hand, without a tolling agreement, personal, private, and potentially damaging information may be included in a lawsuit filed by the plaintiff to preserve a claim. On the other hand, without a tolling agreement, it is possible no claim will be filed, and the potential defendant escapes any liability.

Consider, for example, a woman has a valid claim against a defendant. She has details of a sexual relationship with the defendant while she was underage. Consider further, the defendant was married at the time and is running for Congress. The defendant benefits from a tolling agreement as the attorneys work to settle the case. The case will undoubtedly include a confidentiality agreement.

Thus, any whisper of inappropriate conduct is silenced without a record of any allegations, and any details which would necessarily be included in a suit filed with the court.

On the other hand, the defendant may doubt the woman has evidence of such an affair. He may be confident there is no evidence, as the conduct he is accused of never happened. He could refuse to sign a tolling agreement or engage in settlement discussions. Without enough facts to state a claim, no suit can be filed.

Thus, the defendant retains his privacy and does not pay to resolve an unfounded claim.

In cases where co-defendants might use a tolling agreement, a failure to have such an agreement may result in filing counterclaims which aren’t very productive. It is important to remember tolling agreements don’t prohibit filing counterclaims later.

Rather, it just delays the decision to counterclaim while the parties evaluate the situation at hand, based on the evidence the plaintiff may have.

Recap of Consequences For Parties Who Don’t Use a Tolling Agreement

Except in cases where a defendant will prevail outright, due to the plaintiff lacking a sufficient basis to file a claim, there is little downside to a tolling agreement if facing a time limitation.

In numerous circumstances, even in cases where the plaintiff doesn’t currently have a sufficient basis for a claim, an agreement to additional time won’t change the basis of the claim.

When Should I Consider Using a Tolling Agreement?

There are two key situations where you should consider using a tolling agreement:

• The first is when the statute of limitations or the statute of repose is approaching.
• The second involves co-defendants.

When Deadlines are Approaching

If either side desires more time to gather evidence, a tolling agreement may be used. Similarly, if the parties believe they are close to an agreement for a negotiated settlement, and don’t want to file a suit, a tolling agreement is useful. Finally, in cases where the parties disagree about the date and time the statute of limitations began, a tolling agreement can be an effective way to protect all parties from an adverse ruling.

Co-Defendant Tolling Agreements

Tolling agreements among co-defendants are less common, but still occur with some regularity. In some states, co-defendants are required to file counterclaims while the case is pending and prior to trial. For strategic reasons, co-defendants may opt for a tolling agreement to provide them with additional time to assess the strength of a plaintiff’s claims.

As a general rule, tolling agreements are not public. They are, however, contracts, therefore, more detail about the agreement, rather than less, is typically considered better.

Less Common Situations for Tolling Agreements

Some less common situations involving tolling agreements include:

• Cases where some, or all, of the alleged conduct involved a juvenile plaintiff;
• Some bankruptcy proceedings; and
• When natural or other disasters occur.

If either the statute of limitations or the statute of repose has any chance of providing a defense to a suit based on any interpretation of the accrual of a claim, a tolling agreement is a good idea for a plaintiff.

Likewise, for a defendant, the possibility of losing a defense argument based on timing may provide a valid reason to enter into a tolling agreement in an attempt to settle a claim.

Tolling Agreement Sample

Here’s what a typical tolling agreement looks like:

Tolling Agreement

You can download a template above or use our document builder to make the writing process simpler.

Frequently Asked Questions