Tolling agreement limitations and how to navigate them

A tolling agreement is a legal agreement made between two parties in which one party agrees to suspend its legal rights to file a lawsuit or take legal action against the other party for a specific period of time. In exchange, the other party agrees to undertake specific actions that will benefit the first party.

However, while tolling agreements can be a useful tool in resolving disputes, there are limitations to their use that must be considered carefully. Here are some key limitations and how to navigate them:

1. Limited time frame

One of the most significant limitations of a tolling agreement is that it is temporary. Once the agreed-upon time frame has expired, the claimant can proceed with legal action if the underlying issues have not been resolved.

To navigate this limitation, it is crucial to ensure that the tolling agreement provides enough time to address the issues that led to the agreement in the first place. It may be helpful to work with legal counsel to determine what a reasonable time frame might be based on the complexity of the case.

2. Limited scope

A tolling agreement typically only suspends the right to file a lawsuit with respect to certain claims or issues. This means that if a different issue arises during the tolling period, the claimant may still be able to proceed with legal action related to that issue.

To navigate this limitation, it is important to clearly define the scope of the tolling agreement. This can be done through detailed language in the agreement itself or through a separate document that outlines the specific claims or issues that are covered.

3. Limited parties

A tolling agreement only suspends legal action between the two parties involved in the agreement. This means that if there are other parties involved in the dispute, the tolling agreement may not necessarily prevent them from pursuing legal action.

To navigate this limitation, it may be necessary to consider additional tolling agreements that involve all parties to the dispute. Alternatively, it may be possible to negotiate a broader agreement that covers all parties, but this will depend on the specific circumstances of the case.

4. Limited enforceability

Finally, it is important to consider the enforceability of a tolling agreement. If one party fails to uphold its end of the agreement, it may be difficult to enforce the agreement and prevent legal action from being taken.

To navigate this limitation, it is essential to work with legal counsel to ensure that the tolling agreement is drafted in a manner that is legally enforceable. This may involve including specific language that outlines the consequences of a breach of the agreement or securing additional guarantees or collateral from the other party.

In conclusion, tolling agreements can be a useful tool in resolving disputes, but it is essential to navigate their limitations carefully. By working with legal counsel and carefully defining the scope and time frame of the agreement, it may be possible to achieve a successful outcome.