Covenant Not To Sue

This term is pretty straight-forward. A covenant not to sue is a legal document showing that one party...will not sue another. The party does have grounds to sue the other, but the two parties have agreed to handle the dispute on their own without the use of the court system. This helps the parties involved avoid the massive legal fees they would face by going to court.

If you and your buddy are doing donuts in the Taco Bell parking lot, and you smash into his car in an attempt to avoid soaking your Browns jersey in Baja Blast, you might want to draw up a covenant not to sue, to avoid legal fees and, well...embarrassment.