Civil litigation is a standard option used to seek justice when someone wrongs individuals or businesses. However, it's imperative to follow a thoughtful strategy when filing a lawsuit.
The statute of limitations sets a timeframe in which you must file a lawsuit. Not filing a lawsuit within the statute of limitations may mean you forfeit your ability to file a case.
Before you initiate arbitration, it's wise to consider a tolling agreement. A tolling agreement helps prevent disputes by suspending the statute of limitations for a period agreed upon by both parties.
A tolling agreement is an extrajudicial agreement between two parties to toll the statute of limitations for a certain period of time. Since tolling agreements are contractual, they are crafted specifically for individual cases.
Here is an article about tolling in law.
Meet some lawyers on our platformIn law, tolling refers to the suspension of a statute of limitations. It can be accomplished through an agreement between the parties or court order. Tolling is typically used in two scenarios:
In the first scenario, the plaintiff must notify the lawsuit's defendant. Suppose the defendant cannot be found or is evading service. In that case, the statute of limitations will be tolled until the defendant can be served appropriately.
In the second scenario, if the defendant is out of the country and cannot be served, the statute of limitations will be tolled until the defendant returns to the country.
Both parties must agree to its terms for a tolling agreement to work. For example, the deal will usually specify which party has to toll the statute of limitations and how long the suspension will last.
The agreement can be oral or in writing. But it's best to put the agreement in writing, so there is no dispute or breach of contract later.
Here is an article about the breach of contract.
Image via Pexels by Pavel Danilyuk
The litigation lawyers craft tolling agreements specifically for each case. But in general, a tolling agreement will include the following:
The tolling agreement also has information about what will happen if a party breaches the agreement. The aggrieved party has a few options:
If the aggrieved party decides to file a lawsuit for breach of contract, they will need to prove the following:
Suppose you're thinking of filing a lawsuit. In that case, it's essential to speak with an experienced litigation lawyer to discuss your case and find the best strategy. In addition, litigation lawyers can help you craft a tolling agreement with all its components.
Here is an article about considerations to consider when entering a tolling agreement.
The tolling period can last for a set duration of time, or it can be indefinite. Both parties must agree on when the suspension will end when the course is set. Typically, the agreement tolls the litigation by 90 days or three months.
If the suspension ends and the plaintiff has not filed a claim, the defendant can use this as a defense to state that the statute of limitations has expired. Meanwhile, if the suspension is indefinite, the parties must periodically renegotiate the agreement to keep it in effect.
Here is an article about the statute of limitations for different crimes.
A tolling agreement can be beneficial for both parties. The defendant can avoid being served with a lawsuit and the possibility of a default judgment.
Meanwhile, the plaintiff can buy themselves more time to investigate the case, gather evidence, and file a claim. Here are some benefits of a tolling agreement:
A tolling agreement gives a deadline for both parties to negotiate out of court before the plaintiff can follow the legal process. Since most people don't want to spend time and money in court, a tolling agreement gives them the space they need to consider out-of-court settlements.
The defendant knows that the plaintiff can file a lawsuit at any time. So, they're more likely to settle faster or agree to the terms of the tolling agreement.
The plaintiff has more leverage in this situation. They can capitalize on the defendant's fear of litigation and counterclaims.
When the statute of limitations expires, the case can no longer be filed in court. This is why both parties need to agree on a suspension duration. If the plaintiff waits until the last minute to file a claim
Hiring litigation lawyers, filing counterclaims, and miscellaneous costs can be pretty hefty, depending on the sensitivity of the case. A tolling agreement can help prevent these costs from piling up as it steers both parties towards a formal settlement.
When parties settle out of court, they save money that they'd otherwise have to spend on attorney fees. One party has to send a demand letter to resolve a dispute in most cases.
The demand letter is a legal document that notifies the other party of the dispute and demands a resolution. The demand letter should include the following:
Alternatively, if the parties cannot resolve their dispute through negotiation, they may resort to arbitration. In this process, both parties present their case before a neutral third party, who will then make a ruling.
While crafting an arbitration agreement and finding an arbitrator incurs some costs, it's still a more pocket-friendly approach than going to court.
Here is an article about arbitration agreements.
You should sign a tolling agreement if you want more time to investigate the case and file a claim. It will prevent the statute of limitations from expiring as you waive a right to file a lawsuit during the period specified in the tolling agreement.
You should understand the facts before signing, as tolling agreements can be used against you if the case goes to trial. It also helps to be in touch with breach of contract lawyers if the other party does not comply with the tolling agreement.
If you're the defendant, it may be in your best interest to sign a tolling agreement if the statute of limitations is about to expire. It will give you more time to settle out of court.
Ensure that you fully understand the consequences of not complying with the agreement. If you're facing a lawsuit, hiring a lawyer can help strengthen your case and increase your chances of winning.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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Attorney with 14 years experience in transactions, civil litigation and criminal law
After 30 years of practice I large, publicly traded companies, I went out on my own. I engaged in general practice for 10 years before retiring. I continue to do work on a contract basis.
Dennis Sponer co-founded ScripNet, a uniquely designed Pharmacy Benefit Management (PBM) company in 1997. After serving as In-House Counsel for one of Las Vegas’ largest healthcare conglomerates, Dennis devised a payor based technological solution to the challenge of pharmaceutical payment and remittance. As one of the first workers’ compensation specific Pharmacy Benefit Managers in the industry, Dennis pushed the boundaries of what a PBM can do. ScripNet was a three-time winner of the Inc. 500 and was named to the Inc. 5000 numerous times thereafter. Clients of ScripNet included some of the largest carriers, governmental entities, and self-insured employers in the nation, including FedEx, Starbucks, Lockheed Martin, the Cities of Dallas, Atlanta and Philadelphia as well as the State of Texas and the State of Nevada. After fifteen years of exceptional growth and class leading industry recognition, ScripNet was acquired in 2012 by Optum Healthcare Solutions. After selling ScripNet, Dennis served as Executive Vice President for the acquiring company and was successful in integrating ScripNet into the larger entity. His latest venture, HSARx, was a consumer facing Pharmacy Benefit Manager focused on the owners of health savings accounts. He sold HSARx to SwiftScript in October of 2023. Dennis obtained his Juris Doctorate from Brigham Young University where he served as Note and Comment Editor of the Law Review. He then obtained his Master of Laws in Taxation (L.L.M.) from the University of San Diego. After selling ScripNet, Dennis returned to school to earn his TRIUM MBA, the program jointly administered by New York University's Stern School of Business, the London School of Economics and HEC Paris. Dennis is a member of the 1999 Leadership Las Vegas graduating class, was named by InBusiness Las Vegas to its annual Top 40 Under 40 list, is a graduate of MIT's prestigious Birthing of Giants program and holds a certificate in full stack development from MIT. Dennis is licensed as an attorney in California and Nevada and is a past President of the Las Vegas Chapter of the Entrepreneurs' Organization. He serves on the Southern Utah University School of Business National Advisory Board, the SUU Entrepreneur Leadership Council and the UNLV College of Liberal Arts Board. Through his consultancy, SRX Advisors, Dennis serves as an advisor and legal counsel to various startups, health care technology and artificial intelligence firms.
