Can a creditor and debtor agree to forbear enforcement of a debt?
Ontario, Canada
The following excerpt is from Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156 (CanLII):
At common law, a creditor and debtor can agree to forbear enforcement of a debt, and such an agreement would suspend the limitation period for the period of forbearance. In order to achieve this result, the creditor must promise not to enforce the debt, and the debtor must provide some consideration in exchange for this promise. In other words, a creditor’s promise to forbear will not suspend the limitation period unless the debtor provides consideration for that promise: Shook v. Munro et al, 1948 CanLII 8 (SCC), [1948] S.C.R. 539.
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