Standstill agreements to extend or suspend a limitation period have become a regular part of civil proceedings. They allow parties to focus on the requirements of the pre-action protocol without having to worry about restrictions. You can also reduce court costs if the dispute is settled before the appeal. So what`s the problem? Two recent cases – Russell vs. Stone and Muduroglu vs. Stephenson Harwood – illustrate the flip side of the status quo agreements. The benefits and pitfalls are studied. In Muduroglu against Stephenson Harwood, the applicant commenced proceedings under the standstill agreement without notice. The defendant argued that this was a breach of the agreement, which meant that the applicant could not invoke the limitation period agreement.
The court decided that the infringement did not go to the root of the contract. The termination provision is not a condition precedent and an infringement of it therefore did not prevent the applicant from benefiting from the limitation period. Potential beneficiaries should carefully assess their possibilities when approaching the expiry of a limitation period. Coulson J observed that status quo agreements are becoming more frequent and noted that he had “the overwhelming feeling that they may just be a self-inflicted complication.” He suggested that if the statute of limitations is an issue and it takes longer to work, the claimants should instead consider initiating the proceedings within the statute of limitations and applying for a stay. A standstill agreement is a contract and is subject to the same rules as other contracts. Although, in the most recent cases, these are disputes regarding the terms of the respective standstill agreements, problems may also arise during the conclusion of the contract. The agreement may be oral, but as a general rule, the parties agree not to be bound until the agreement is in writing, often using the phrase “contrarian”. The General Court found that the effect of the agreements had suspensive effect and that the proceedings had therefore been initiated in good time. Of particular note is the judge`s proposal that standstill agreements are a “self-inflicted complication” in construction disputes. He considered that the much more appropriate step in which the restriction was a concern was simply to adopt a procedure and suspend it. In Exsus Travel Ltd v Baker Tilly, counsel for the applicant misinterpreted the operation of the standstill period.
The Tribunal rejected the argument that a violation of the law is due to the convention – there is no evidence that the defendant`s lawyer shared the wrong assumption or was aware of the error. As Coulson J put it in Russell vs. Stone, “status quo agreements have become much more frequent than ever” and yet, as this case showed, they are often far from negotiating and documenting simple agreements. This practice note addresses some issues related to the use of status quo agreements and contains links to precedents. if the limitation period is extended, the limitation period generally expires on the date of expiry of the extension period. This will usually be a date by which the original limitation period was due to end, but this type of agreement can also be used – When the claimants entered into the third standstill agreement, they still had more than three weeks to bring proceedings before. If the defendant`s position was correct and the applicants were no longer in time after the expiry of the third standstill agreement, the conclusion of the agreement might cause the applicants to lose their right to assert their rights. The objective of the status quo agreement was to preserve rights, not to risk their loss. In Russell, the parties did not understand the structure and intent of the practical law proposal. The model suspends the limitation period, so that at the end of the standstill period, the parties are in the same situation as at the time of the conclusion of the agreement. . .
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