What a Tolling Agreement Is

A tolling agreement is a legal contract signed by two parties that extends the statute of limitations on a claim. This agreement suspends or “tolls” the time limit for filing a lawsuit, giving both parties additional time to resolve their dispute outside of court.

In simpler terms, a tolling agreement allows the parties involved to pause the clock on a legal matter, without losing their right to file a lawsuit or pursue legal action down the line.

Tolling agreements are common in a variety of legal matters, including personal injury cases, contract disputes, and employment law cases. They are often used when one party needs more time to investigate a claim or gather evidence, or when both parties wish to negotiate a settlement out of court.

For example, imagine that a company hires an employee, but later discovers that the employee may have stolen trade secrets from a previous employer. Under normal circumstances, the company may only have a limited amount of time to file a lawsuit against the employee for breach of contract or misappropriation of trade secrets.

However, if both parties agree to sign a tolling agreement, the clock on the statute of limitations would stop ticking while the company gathers evidence and investigates the situation further. This gives both parties more time to negotiate a settlement or resolve the matter outside of court.

Tolling agreements can have several benefits for both parties involved. For the plaintiff, it can give them additional time to build a stronger case, gather evidence, and negotiate a settlement before resorting to a lawsuit. For the defendant, it can provide more time to prepare a defense and potentially avoid costly litigation.

However, tolling agreements can also have potential drawbacks. For example, they can result in delay and uncertainty, as the parties involved may not know when or if a lawsuit will be filed. Additionally, they can be used to delay legal action indefinitely, particularly if one party is not acting in good faith.

In conclusion, a tolling agreement is a legal contract that suspends the statute of limitations on a claim, giving both parties involved more time to negotiate a settlement or resolve a legal matter outside of court. While they can have both benefits and drawbacks, tolling agreements are a common tool used in a variety of legal matters.

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