A Contracts Tool You Can Use: Model Standstill/Tolling Agreement

Jonathan Lipson (top, right) and Norman M. Powell (bottom, right) offer a model standstill/tolling agreement to address these uncertain times.  The agreement is available both in an annotated and a clean format.  The authors explain their motivations for creating the document here.

In short, the thinking goes something like this:

• A lot of parties are going to miss payments or suspend payments during this crisis;
• Creditors will not be able to obtain relief because courts will be swamped with suits relating to defaults or delinquencies in payment and mass foreclosures would be “economically suicidal”;
• Negotiated solutions are best in this situation;
• But a lot of companies will not be able to retain counsel while also trying to stay afloat during an economic crisis; and
• The model agreement freezes everything in place until the commercial outlook becomes more clear (and hopefully more stable)

The authors offer this as a model and as the starting point for negotiations.  Parties may still want to avail themselves of legal counsel and amend, tailor, or supplement the model to meet their needs.