Tolling Agreement: Template and How to Draft One (2026)

What a tolling agreement is A tolling agreement is a contract in which one party sends raw material to another party, who processes it into a finished or semi-finished product for a fee called the toll. The owner of the material keeps title throughout. The processor never buys the input and never sells the output; it only supplies capacity, labour and know-how and hands the product back. You see tolling in oil refining, chemicals, metals and mining, food processing, and in power, where a buyer supplies fuel to a plant and pays a fee to have it converted into electricity. There is a second, unrelated meaning. In litigation, a tolling agreement is a short contract in which parties agree to pause, or toll, the running of a limitation period so they can negotiate without anyone losing the right to sue. The two meanings share only the word. Most people searching for a template want the processing contract, so that is the focus below, with a short note on the litigation version at the end. This page is general information, not legal advice. Processing contracts touch tax, customs, environmental and product-liability rules that differ by country, so have a qualified professional review a live deal. ## When a tolling agreement makes sense Tolling suits a party that owns or can buy raw material cheaply but lacks a plant, and a processor that has spare capacity but does not want to carry the price risk of owning the commodity. Because title stays with the owner, the arrangement keeps the material off the processor's books and separates the margin on processing from the margin on the commodity. That separation is the whole point: each side is paid for what it actually brings. ## A tolling agreement template you can copy ```

TOLLING (TOLL PROCESSING) AGREEMENT Date: [date] Owner: [legal name, address] ("Owner") Processor: [legal name, address] ("Processor") 1. PURPOSE Processor will process Owner's Material into the Product described in Schedule 1 and return it to Owner. Title to the Material and the Product stays with Owner at all times; Processor holds them as a bailee. 2. MATERIAL AND PRODUCT Owner delivers [material] meeting the specification in Schedule 1 to [delivery point] by [dates / schedule]. Processor converts it into [product] meeting the output specification in Schedule 1. 3. TOLLING FEE Owner pays a toll of [amount] per [unit of output / input], invoiced [monthly / per batch], due within [number] days. The fee covers [processing, utilities, standard consumables]. [List any pass-through costs, for example energy above a stated index.] 4. YIELD, LOSS AND SCRAP Expected yield is [percentage]. Normal process loss up to [percentage] is borne by [Owner / Processor]. Loss above that is treated under clause 9. By-products and scrap belong to [Owner / Processor]; [handling terms]. 5. QUALITY AND ACCEPTANCE Processor meets the output specification and the quality procedure in Schedule 2. Owner may inspect and reject Product that fails spec within [number] days; rejected Product is [reprocessed / credited]. 6. DELIVERY, STORAGE AND RISK Risk of loss or damage passes to Processor on receipt of Material and back to Owner on [collection / delivery of Product]. Processor stores Material and Product separately and clearly identified as Owner's. 7. CAPACITY AND SCHEDULING Processor reserves [capacity / run time] for Owner as set in Schedule 3. [Minimum volume, take-or-pay or reserved-capacity terms, if any.] 8. COMPLIANCE AND ENVIRONMENT Processor holds the permits needed to process the Material and complies with applicable environmental, health and safety law. Owner provides accurate safety data for the Material. 9. LIABILITY AND INDEMNITY Processor is liable for loss caused by its negligence or failure to meet spec, up to [cap]. Each party indemnifies the other for [stated claims]. Neither is liable for indirect or consequential loss except [carve-outs]. 10. TERM AND TERMINATION This agreement runs from [start] for [term] and renews [terms]. Either party may end it on [notice] or for material breach not cured within [number] days. On termination, Owner collects its Material and Product. 11. FORCE MAJEURE, INSURANCE, DISPUTES, GOVERNING LAW [Force majeure events]; each party insures its interest; disputes go to [arbitration / courts] under the law of [jurisdiction]. SCHEDULES

1. Material and output specification 2. Quality procedure
2. Capacity and schedule 4. Pricing and pass-through costs SIGNED for Owner ____________ SIGNED for Processor ____________

- Fee charged on input when losses are high. Charging on input volume can leave the owner paying to process material that never became saleable product.
- No loss band. Without an agreed normal-loss figure, every shortfall becomes a dispute.
- Vague specification. A product spec by reference to a vague standard invites rejection fights; attach a precise schedule.
- Permits assumed, not confirmed. Processing often needs environmental and handling permits. Confirm the processor holds them. ## The litigation meaning, briefly If you came looking for the other kind, a litigation tolling agreement is far shorter. It names the parties and the potential claim, states that the limitation or prescription period is paused from an agreed date until a stated event or notice, confirms it is without admission of liability, and is signed by both sides. It buys time to settle without a protective lawsuit. Local limitation rules differ sharply, so confirm that your courts honour a private tolling agreement before relying on one. ## Keeping a tolling contract under control A tolling arrangement rarely sits still. Volumes change, the energy pass-through re-indexes, a spec is revised, a renewal comes due. The work that outlasts signing is keeping the schedules current, spotting a clause that quietly shifts loss or liability onto you, and knowing which version is live. Drafting from a clean template, flagging a term that leaves one side carrying all the risk, editing a clause in plain language, and holding every version with its date can live in one AI workspace tuned to how your company contracts. [Adira](https://adiralaw.com) is built around that single-workspace idea for business contracts. For a one-off processing job the template above is enough; the point worth keeping is that a contract and its schedules are easier to trust when they stay in one place and in step.