Businesses of all sizes are proud to call California home. As you know, one aspect of managing a business can sometimes mean dealing with disputes. If you and another party dispute an issue, one way to solve this disagreement is through a covenant not to sue. It’s understandable if this term seems unfamiliar. Here’s a closer look at this type of legal agreement.
What is a covenant not to sue?
While it might sound complex, a covenant not to sue is easy to understand. This covenant states that one party that may want to file a lawsuit against another party agrees not to do so. Typically, companies use a covenant not to sue as a smart way to avoid going to court.
How does a covenant not to sue work?
A covenant not to sue can be an important document in commercial litigation. Imagine you own a commercial property that needs a lot of renovation work. For help with this problem, you contact a renovation business. After a few months of work, this company tells your business that renovations are complete. Unfortunately, a few weeks later, you discover that the renovators didn’t do everything they promised.
As the company that needed renovations, you could create a covenant not to sue against the renovation company. Instead of taking this business to court and seeking damages, this covenant can state that you won’t pursue legal action if the renovation company properly completes its job.
In conclusion, a covenant not to sue can be a way to resolve disputes with other companies. More often than not, this type of covenant helps all parties involved not spend a lot of time and money in a potentially heated legal battle.