In California, when a party owes money to another party, but cannot pay it immediately, they may enter into a tolling agreement. A tolling agreement is a contract that extends the time for a party to sue for a debt. This type of agreement is often used in business-to-business transactions and is typically entered into when one party is unable to pay a debt on time and wants to avoid a lawsuit.

However, many people are unaware of the statute of limitations on tolling agreements in California. A statute of limitations is the legal time limit for bringing a lawsuit. In California, the statute of limitations for a tolling agreement is four years from the date the agreement was breached.

It is important to note that the statute of limitations for a tolling agreement can be extended if the debtor acknowledges the debt or makes a partial payment. This is known as the “triggering” event and resets the clock on the statute of limitations. For example, if a debtor makes a payment on a debt owed under a tolling agreement, the statute of limitations starts over from that date.

It is also worth mentioning that there are different types of tolling agreements. For instance, a tolling agreement may be entered into voluntarily by both parties, or it may be imposed by a court. In some cases, a tolling agreement may be required by law.

In conclusion, if you are involved in a tolling agreement in California, it is crucial to be aware of the statute of limitations. If you are owed money under a tolling agreement and it has been more than four years since the agreement was breached, you may not be able to file a lawsuit to recover the debt. On the other hand, if you are the debtor and are aware of the debt owed, it is advisable to make a partial payment or acknowledge the debt to avoid resetting the clock on the statute of limitations.