Contract Glossary
Tolling Agreement
Definition
A tolling agreement pauses the statute of limitations clock on a potential legal claim. Instead of rushing to file a lawsuit before time runs out, both parties agree to freeze the deadline so they can negotiate a resolution.
In Practice
A software company discovers their vendor delivered a defective product 18 months ago. The statute of limitations is 4 years. Rather than spending $50,000 on litigation, they propose a 6-month tolling agreement to negotiate a fix, replacement, or refund.
Example Clause
The Parties agree that from the Effective Date through the Tolling Expiration Date, the running of any applicable statute of limitations shall be suspended and tolled. Upon expiration, the limitation period shall resume with the same time remaining as existed on the Effective Date.
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