What Is a Covenant Not to Sue in a Contract?

Why it matters

It can quietly give up claims you did not know you had. In US practice it is related to a release but not the same, and the wording decides the difference.

How common is it?

In the 510 public-company commercial contracts of the CUAD dataset (The Atticus Project, CC BY 4.0), 100 (19.6%) contain a covenant not to sue.

Among contract types with at least 20 contracts in the set, it shows up most in co-branding agreements (9 of 22), distribution agreements (13 of 32) and license agreements (11 of 33).

These are larger-company deals, not a sample of every contract — a reference point, not a rule. Full method: /data/cuad.

What to watch for

• Claims covered “known or unknown.”
• No end date, and coverage that extends to the other side's affiliates or customers.
• A one-way promise with nothing given in return.

A realistic example

A franchisee signs a renewal that includes a covenant not to sue over “any matter arising before renewal.” The franchisee later finds the covenant may bar a claim over a billing error from the previous year.

What to ask for

1. A list of the specific claims covered.
2. Mutual wording, and an exception for claims you have already raised in writing.

Related terms: arbitration clause · indemnification · right of first refusal

Related guide: 7 things to negotiate before you sign a contract

See how the covenant not to sue reads in your contract — 👉 Analyze your contract free — your first analysis is free, no card, no deadline to use it.

Not legal advice. This is an educational definition of a common contract term. Details vary by jurisdiction — this page explains common U.S. usage. For high-stakes agreements, have a lawyer review the final version.