A Tolling Agreement, and What It Should Say

Litigation started to protect a limitation period is expensive, and the alternative is a page of text. The document is simple enough that it is frequently drafted in an afternoon and wrong in one of the same five ways.

The five things it must fix

The claims covered. Described by subject matter rather than by legal theory, so that a recharacterized claim is still inside the agreement.

The parties bound. Every entity that might sue or be sued, including subsidiaries, parents and anybody with a related claim.

The start date. Stated expressly, because a period already expired cannot be revived by a document signed afterwards.

The end mechanism. A fixed date, a notice period or both, so that neither side is surprised by the pause ending.

The effect on time. Whether the period is suspended, whether the elapsed time is disregarded, or whether the defense is simply waived.

These are not interchangeable. Suspension stops the clock; waiver of the defense leaves the period running but unusable.

Silence produces argument. Every unstated element becomes a question that has to be resolved before the underlying dispute is reached.

A page is enough. The document does not need to be long, and length is not what makes it effective.

Getting the scope right

Describe the facts, not the causes of action. A claim reframed as a different theory should still be covered, which requires factual description.

Cover counterclaims. An agreement protecting one side only invites the other to sue during the pause.

Include related claims. Contribution, indemnity and third-party claims arising from the same facts belong inside the scope.

Deal with new claims discovered later. Investigation during the pause frequently uncovers matters nobody had in mind at signature.

Say whether it covers foreign proceedings. Where a claim could be brought elsewhere, the agreement should say what happens there, per two jurisdictions, two limitation periods.

Exclude anything deliberately left out. An express exclusion is safer than silence, which reads as an oversight.

Keep the description checkable. Somebody reading the agreement in two years should be able to tell whether a claim is inside it.

Avoid defined terms that drift. A scope defined by reference to a project or a transaction should say which documents identify it.

Start, end and what happens next

Sign before the period expires. An agreement made after expiry addresses a defense that has already accrued, which is a different exercise entirely.

Check the accrual position on both sides. Each party should satisfy itself when its own claims arose rather than relying on the other's view of it.

Confirm the period has not run. Both sides should satisfy themselves of the accrual position first, per when a claim accrues.

Use a fixed end date. Open-ended agreements drift, and one side eventually discovers the other stopped treating it as live.

Add a notice period for termination. Thirty days is common, and it gives the claimant time to issue if talks collapse.

Say what happens to the remaining period. Whether the balance resumes or a fixed period follows termination decides the next deadline.

Diarize the end date immediately. The whole point of the agreement is defeated if its expiry is missed.

Extend in writing, not by conduct. Continuing to negotiate after the end date does not extend the agreement in most systems.

Record every extension the same way. A short amendment referencing the original keeps the chain clear.

Effect and enforceability

Suspension is the usual mechanism. Time stops for the agreed period and resumes afterwards, leaving the balance intact.

Waiver is an alternative. The defendant agrees not to plead limitation, which is simpler and depends on the promise being enforceable.

Some periods cannot be tolled. Jurisdictional limits and repose periods are generally immune to agreement, per deadlines that are jurisdictional.

Consideration may be required. Where the system needs it, the mutual promises usually supply it, and the document should not leave it in doubt.

Authority matters. The person signing has to be able to bind the entity, and a signature from the wrong office is a real problem.

Third parties are not bound. An agreement between two parties does nothing about a claim by or against anybody else.

It does not preserve evidence. The pause protects the claim and nothing else, per evidence that decays while waiting.

Confidentiality is a separate clause. Most tolling agreements are also used to protect the negotiation, and that should be stated.

Practical handling

Propose it early. The natural moment is when a dispute is identified and both sides would rather investigate than issue.

Keep it short. A page that fixes the five essentials beats five pages that fix four of them.

Circulate a standard form. Organizations that face this repeatedly should have a template rather than draft each time.

Check the counterparty's group structure. Missing entities is the most common scope failure and the easiest to prevent.

Diarize the expiry and a reminder before it. Two dates, one to prepare and one to act.

Do not treat it as a substitute for investigation. The pause buys time for work rather than time instead of work.

Review it if the dispute changes shape. New claims, new parties and new jurisdictions each need the agreement revisited.

Keep the executed copy accessible. It is the document somebody will need urgently and at short notice, usually while under pressure.

Note who signed and in what capacity. Authority questions surface later, and a record of the signatory's position answers them cheaply.

A tolling agreement is one of the cheapest protective documents available and one of the most consistently under-drafted.

Five elements decide whether it works: the claims covered, the parties bound, the start date, the end mechanism and what happens to the period afterwards.

Scope should be described factually rather than by legal theory, and every entity in a group that might sue or be sued needs to be named rather than assumed.

Some periods cannot be tolled at all. Jurisdictional limits and statutes of repose are generally immune to agreement, and an agreement covering them offers false comfort.

The document buys time for investigation rather than instead of it, and its own expiry date is the deadline most often missed, which is why it belongs in the diary immediately.