Legal Definitions - dormant claim

A dormant claim refers to a legal right or demand that exists but is not currently being actively pursued or enforced. It is essentially "on hold" or "sleeping," often due to an agreement between the parties involved, a court order, or external circumstances. While inactive, it retains the potential to be revived or acted upon in the future, provided it remains within any applicable legal time limits.

Here are some examples to illustrate this concept:

• Example 1: Personal Injury Case Awaiting Full Recovery

  Imagine Sarah was injured in a car accident. She has a valid claim against the at-fault driver for medical expenses, lost wages, and pain and suffering. However, her doctors inform her that her injuries are complex and will require several months of physical therapy and potentially another surgery before the full extent of her damages can be accurately assessed. Rather than filing a lawsuit immediately and risking an inaccurate settlement, Sarah's attorney advises her to wait until her medical treatment is complete. During this waiting period, Sarah's right to compensation is a dormant claim. It exists and is valid, but it is not being actively litigated or settled because the full scope of her damages is not yet known.

• Example 2: Business Dispute Pending Regulatory Decision

  Two technology companies, InnovateTech and FutureSystems, have a dispute over a licensing agreement for a new software patent. InnovateTech believes FutureSystems has violated the terms, giving rise to a claim for damages. However, a critical regulatory body is currently reviewing the patent itself, and its decision could significantly impact the validity or interpretation of the licensing agreement. Both companies agree to pause any legal proceedings until the regulatory decision is announced. InnovateTech's claim for patent infringement and damages becomes a dormant claim during this period. It is a legitimate claim, but its active pursuit is suspended pending an external event that will clarify its legal standing.

• Example 3: Uncollectible Debt with Future Potential

  A small business, "Local Goods," is owed a significant amount of money by a former client, Mr. Henderson. Local Goods has a valid claim for the unpaid debt. However, Mr. Henderson recently declared bankruptcy, and currently has no assets that Local Goods could seize to satisfy the debt. While Local Goods could pursue a judgment, they decide it's not financially practical to do so right now, as there's nothing to collect. They keep the claim on file, hoping that Mr. Henderson's financial situation might improve in the future, or that they might discover hidden assets. For the time being, Local Goods' demand for payment is a dormant claim. It is a legitimate debt owed, but active collection efforts are suspended due to the debtor's current inability to pay.