Covenant Not To Sue Form: Everything You Need to Know
A covenant not to sue form is a contract in which a person or party agrees not to sue the person that has caused them damages.3 min read
A covenant not to sue form is a contract in which a person or party agrees not to sue the person that has caused them damages. It can mean that:
- The claimant cannot sue ever
- The claimant cannot sue for a certain period of time
There can only be two parties in a covenant not to sue. Therefore, if a third party wishes to make a claim or sue, it has full rights to do so.
The reason two parties might enter into such a covenant is to settle legal issues without involving the courtroom. For example, one or both parties may wish to avoid a drawn out and costly lawsuit.
Instead of letting the courts decide the outcome, the claimant might receive a predetermined sum as compensation for damages or a promise that the accused will perform a specific action.
Example of a Covenant Not to Sue
One example of a scenario that could involve a covenant not to sue is between a state government and a manufacturing firm.
Imagine that the state government has just discovered that the manufacturing firm is not properly disposing of hazardous waste products. One option for the state is to initiate a lawsuit to have the company pay a fine. However, since the agency's real goal is to force the company to clean up the mess and take measures to fix disposal procedures in the future, it would be better off considering a covenant not to sue instead.
The covenant not to sue would tell the company to clean up its processes. If it fails to do so, then the state would have the right to sue.
Steps to Creating a Covenant Not to Sue
If you're interested in creating a covenant not to sue, there are a few options you can take.
- Search for an example of an existing covenant to base yours off of. Using a template can help you draft your covenant so that it is professional and legally binding. You might also look at releases or non-exclusive license agreements depending on your exact situation.
- Gather information for your covenant, including documents related to your interests and documents about the other party. If you're already in a lawsuit involving the matter, make sure to include the case number, title, and other court documents. If your problem involves patents, you'll need the patient number, title, or trademark registration number.
- Format your covenant, so it resembles a traditional contract format. This means there should be an outline with numbered paragraphs. If no one has filed a lawsuit yet, generally one paragraph explaining the claim is good enough. Then, you'll just need to get the aggressor to promise not to file a lawsuit in the interim.
- Clearly identify everyone involved in the matter, including yourself and your aggressor. You can use pronouns if your covenant is just one page, but otherwise, always write out the names on longer documents. This means you'll need:
- Full names
- Legal business names
- Street addresses
- Define the purpose of the covenant in a clear and easy-to-understand way. Keep everything factual and outline the entire series of events that led you to this point. You may also want to insert legal clauses, known as "whereas" clauses, as these will better explain what led to the agreement.
- Add a release statement that can end the covenant if you wish. A release lets the aggressor party off the hook for their indiscretions as long as you don't sue them. Releases usual also cover your employees or your insurance, which will prevent these parties from acting independently against the party.
- Specify your claims so that it's reasonably specified. You can't just demand that the other party never sues you for anything; instead, you'll need to clarify the exact incident in question. If there's a lawsuit involved, it's easy to pick out the claim, as it will be whatever the focus of the lawsuit is. Otherwise, you'll need to carefully consider the initial incident as well as any future claims that could come up.
- Outline the considerations so that each party knows what they are getting. For example, note down any sums of money that will be exchanged to keep the battle out of court. If a lawsuit was already in progress, specify the exact amount of money that's going toward the settlement. For covenants that cover multiple claims, specify how much money goes toward each incident.
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