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Tolling Agreement

Definition - What does Tolling Agreement mean?

A tolling agreement is a legally binding arrangement, where the count of time is delayed for some particular reason.

A tolling agreement can last for any length of time, as determined by the court.

Justipedia explains Tolling Agreement

A common example is when a litigant is a minor; by waiting until the person is over the age of consent, there would be different levels of access to law or damages, and a statutory time limit for taking a claim.

If a litigant's rights would change based on their age and it is in a close time frame to that age changeover, the case will be postponed. By this nature, it is considered a better application of law for the statutory time limit to be paused or tolled.

For example: a 17-year-old commits a crime that has a different sentencing guideline for people of age 18 or over. If the 17-year-old turned 18 within a few months of the case being enacted, it may be postponed so that the person could be tried as an adult.

In non-criminal cases, the most common examples are by way of companies agreeing to undertake mutual processes that create liabilities that could otherwise be excluded after some time, but that—by agreement—will not be, due to the mutual understanding that the agreed works will take longer than that time to finish.

The tolling agreement also makes a provision that both parties waive any statute of limitation that would otherwise come to fruition on the case matter. The tolling agreement does not limit the ability for either party to take litigation in the future, but rather allows for the possibility.

Tolling agreements can also be used in other non-criminal cases, such as in manufacturing and product liability, and between corporations relating to provision of services. The reason why a business or corporation might take such a view would be due to the fact that they could not foresee the process being taken care of within the time frame allowed under the legal statute of limitation for such actions under general commercial law. When both parties are in agreement, a tolling clause or separate agreement is agreed.

Tolling agreements in non-criminal cases are considered to be a special provision. There are also specialized tolling agreements found in the energy sector, which are completely different; in the energy sector, a tolling agreement is a processing agreement to convert an input fuel to be converted to a different type of fuel for resale. This most commonly happens between natural gas and LPG gas, but is being seen more often in the renewable energy sector as well. The use of such agreements are between a power buyer and a power generator, where the end product is meant to be resold to the person or company that supplied the initial energy source. Between companies operating in the energy sector, a tolling agreement can also include the requirement to have a set amount of raw material run through the process by one party to the other.

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