A "Covenant Not to Sue" or "Mutual Release" is a legal agreement in which the party seeking damages agrees not to sue the party that it has cause against. A covenant not to sue may indicate that the potential claimant will not sue in perpetuity, or may indicate that the claimant may postpone a lawsuit for a defined period of time.
A covenant not to sue legally obliges a party that could initiate a lawsuit not to do so. The covenant is specifically made between two parties, and any third party that wants to make a claim is legally allowed to do so. Covenants not to sue are used to settle specific legal issues outside of the court system. Parties may enter into this type of agreement in order to prevent a protracted, expensive lawsuit. In exchange for the covenant, the party that could seek damages may be provided with compensation or may be given assurances that the other party in the agreement will conduct a specific action.