Tolling Agreement

Leezer Kaur
Apr 14, 2023
3 min read

“Written by Leezer Kaur, a 3rd-year B.A.LL.B. student at Army Institute of Law, Mohali”

Introduction

The term ‘agreement’ is provided under Section 2(e) of the Indian Contract Act, 1872, as a promise for some valid consideration. The tolling agreement is a type of agreement mainly between the parties to a particular case only whereby they toll the statute of limitations for a certain period. It is an extra-judicial agreement. The term ‘tolling’ means the suspension of a statute of limitations. It can be done via a tolling agreement or by order of the court. Such an agreement is supposed to specify the party that has to toll the statute of limitations and the period for which such tolling is supposed to last. This process is utilized when a party is not aware of the legal suit or when the defendant goes abroad.

Particulars to be provided under these agreements

It is supposed to include the following particulars:

There can be two or more parties to such an agreement, and such an agreement is supposed to provide the details of the parties.
The details of the statute of limitation for which the agreement is made.
The duration for which the statute of limitation stands suspended. In case of an order of the court, the agreement lasts for about 90 days. In case of an agreement between the parties, it lasts for the period for which it is decided or agreed upon by the parties to the agreement.
The details of the party are supposed to take steps for the suspension of the statute of limitations.
It is also supposed to provide the details of the event, like an accident, breach of contract, etc., that gave rise to the need for a tolling agreement.
It may also specify the mode, like e-mail, fax, messages, etc., by which the parties shall notify each other of any developments related to the tolling agreement.
It can also provide for the remedies like filing a lawsuit, termination of contracts, etc., in case of breach of the agreement.
It may also provide for the conditions in which their agreement stands suspended.

In case of filing the lawsuit, the following essentials are supposed to be proved in a court of law to be successful in claiming the remedy:

The parties entered into a valid tolling agreement.
The defendant breached the tolling agreement. The plaintiff was not responsible for the breach of the agreement.
The plaintiff suffered damages because of the breach of contract committed by the defendant.

Merits of a Tolling Agreement

A tolling agreement is beneficial for both parties. The following are the merits of such an agreement:

It prevents wastage of time and money by limiting the application of the statute for a specified duration of time.
It encourages both parties to settle the dispute.
It increases leverage for plaintiffs.
It saves litigation costs which the parties would have been spending on hiring litigation lawyers, filing counterclaims, etc.

Uses of Tolling Agreement

A tolling agreement is used in the case of the following:

Claim for a personal injury
Claims related to car accidents
Medical malpractice-related claims
Slip and fall claims
Claims related to the breach of a contract.

Conclusion

Such an agreement is an extra-judicial agreement according to which the parties agree to suspend the statute of limitation. The process of tolling can be accomplished either by the order of the court or by way of an agreement. It is supposed to provide the details of the parties to the agreement, details of the statute of limitation, and the time duration for which such an agreement is going to be applicable. It may also provide for the conditions under which such an agreement can be terminated. It may also provide for the remedy in case of breach of such an agreement. It is mainly used in claims for medical malpractices, slips, and fall claims, claims related to the breach of contract, claims for personal injury, etc. It prevents wastage of both time and money and encourages the settlement of disputes, and increases leverage for the plaintiff.

References

'Tolling Agreement', Contracts Counsel, available at: https://www.contractscounsel.com/t/us/tolling-agreement