Can a party waive all future claims?

A party can waive many claims by contract, but courts may refuse to enforce overbroad waivers, especially for intentional wrongdoing or where public policy limits waiver. Tailor scope and consider judicial attitudes in the governing state.

Is notarization required to make this enforceable?

Notarization is not universally required for covenants or indemnities, but state or transaction‑specific rules may demand notarization or witnesses for related instruments; check local law before execution.

Does an indemnity require insurance coverage?

Indemnity language does not automatically trigger insurance coverage. Tender to insurer per policy terms and confirm that indemnity obligations are not excluded by policy wording.

What happens if names are incorrect?

Incorrect party names can void or limit enforceability. Use exact legal entity names and, if necessary, include a correction clause or ratification by the intended entity.

Can the covenant be revoked later?

Revocation depends on contract terms; include explicit termination clauses or mutual release provisions to allow agreed revocation, and consider notice and cure periods.

Are electronic signatures valid for this agreement?

Yes; electronic signatures are generally valid under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, provided the eSignature meets intent, consent, attribution, and record retention requirements.

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Covenant Not to Sue and Indemnity Agreement

Covenant Not to Sue and Indemnity Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

What this Covenant Not to Sue and Indemnity Agreement means

A Covenant Not to Sue and Indemnity Agreement is a contract in which one party agrees not to initiate legal action over specified claims and, separately or together, agrees to indemnify the other party for losses arising from those claims. It typically identifies the covered claims, the parties, any monetary consideration, and the scope and duration of the waiver and indemnity obligations. Parties use this combined instrument to manage litigation risk, allocate responsibility for third‑party claims, and define obligations for defense and payment of liabilities.

Why parties use this combined waiver and indemnity

A Covenant Not to Sue plus indemnity clarifies risk allocation, reduces litigation exposure, and preserves business relationships by settling disputed claims while assigning defense and indemnity responsibilities.

Who typically prepares and signs these agreements

Tailor the agreement to the transaction, industry standards, and any regulatory constraints; counsel review is recommended when high dollar exposure exists.

General counsel and in‑house legal teams responsible for enterprise risk and dispute resolution.
Small business owners and contractors seeking to avoid costly lawsuits and transfers of liability.
Insurers and claims professionals negotiating settlement terms or defense obligations.

Primary signatory profiles

General Counsel

Company counsel who approves the covenant and indemnity language, ensures conformity with corporate authority limits, and confirms that the obligations do not conflict with existing insurance policies or regulatory duties.

Contractor Owner

A business owner or principal who accepts the covenant and indemnity terms on behalf of the company and is responsible for ensuring the company can meet defense and indemnity obligations described in the agreement.

Key clauses to include in a professional agreement

A well‑drafted Covenant Not to Sue and Indemnity Agreement reduces ambiguity by setting definitions, limits, procedural rules, and remedies. Include clear language on scope, exclusions, and dispute handling.

Parties

Identify each legal entity and any agents; include full legal names, business type (LLC, corporation), and contact address to avoid later ambiguity.

Covered Claims

Define precisely which claims are waived and which are preserved; use specific dates, transactions, and factual triggers rather than broad descriptions when possible.

Indemnity Scope

State whether indemnity covers defense costs, settlements, judgments, and whether it is limited to third‑party claims or includes first‑party losses.

Defense Obligations

Specify who controls defense, requirement to tender claims to insurer, duty to cooperate, choice of counsel, and cost allocation arrangements.

Consideration

Record monetary or non‑monetary consideration that supports enforceability, such as settlement amounts, contract credits, or performance obligations.

Duration & Termination

Include effective date, survival provisions for indemnity and confidentiality, and any conditions that terminate the covenant or limit future claims.

Step‑by‑step: completing the Covenant Not to Sue and Indemnity Agreement

Follow a clear sequence to minimize omissions and ensure each party understands obligations before signing.

01

Prepare draft: Assemble transaction facts, name parties, and draft claim descriptions clearly.
02

Review terms: Confirm indemnity scope, defense control, and any monetary caps with counsel.
03

Execute: Obtain authorized signatures and dates from each party; notarize if required.
04

Distribute copies: Provide executed copies to counsel, insurers, and relevant operational teams.

Customizing and automating online completion

Set up a digital workflow that enforces required fields, signer order, and retention rules to prevent incomplete or unsigned agreements.

Field	Configuration
Party Name Field	Required, exact-match validation
Effective Date Field	Required, MM/DD/YYYY format
Indemnity Cap Field	Conditional field if 'Cap' selected
Signature Field	Signer authentication required

Where to send or file the executed agreement

After execution, distribute the agreement to stakeholders and retain a certified copy in your records; route to insurers if required by policy.

Legal Department: Store executed originals and confirm corporate authority compliance.
Risk & Insurance: Provide copies to insurer and claims teams for coverage validation.
Operations: Share with project managers or contract administrators for operational compliance.
Records Retention: Archive per document retention policy, including secure digital backup.

Digital signing and eSubmission considerations

For healthcare or regulated industries, ensure the eSignature platform supports HIPAA BAA, 21 CFR Part 11, or other required controls before eSigning sensitive agreements.

Authentication: Require email verification or stronger multifactor authentication for high‑risk agreements.
Audit Trail: Capture timestamps, IP addresses, and action history for evidentiary support.
Document Formats: Accept PDF and DOCX and preserve an unalterable signed PDF copy for retention.

Typical timing and processing expectations

Agree on and document deadlines for review, signature, delivery, and any cure periods to avoid disputes over timeliness.

Review Period:

Allow 5–10 business days for legal and insurance review.

Signature Deadline:

Specify a firm date for execution to lock in consideration and effective date.

Delivery Requirement:

Define how executed copies will be delivered (email, portal, courier).

Cure Period:

If breach alleged, specify cure timeline to preserve the covenant where applicable.

Notice Times:

Require written notice periods for claims tender or indemnity demands.

Key milestones from negotiation to retention

Track milestones to ensure enforceability and readiness for potential claims down the line.

01

Drafting Completed

Negotiated language finalized and approved by counsel.

02

Signatures Obtained

Authorized representatives sign and date the agreement.

03

Copies Distributed

Executed copies delivered to legal, insurance, and operations.

04

Records Archived

Original saved in secure retention system for the required period.

Common mistakes to avoid

Using overly broad 'all claims' language without specific time or scope limits, which can create unintended future obligations and litigation uncertainty.
Failing to specify defense control and counsel selection, leading to disputes when third parties assert claims and both parties wish to control litigation.
Neglecting to confirm whether the indemnity conflicts with insurance policies or requires insurer consent; this can nullify expected coverage.
Omitting accurate party legal names or failing to have an authorized signatory, which can render the agreement unenforceable against the intended entity.

Penalties and exposure for incorrect or incomplete agreements

Waiver Invalidity: Overbroad waivers may be unenforceable.

Indemnity Costs: Potential obligation to pay defense and settlement costs.

Insurance Denial: Insurer may deny coverage if policy terms breached.

Attorney Fees: Litigation over ambiguities can generate substantial fees.

Regulatory Risk: Consumer or healthcare statutes may limit waiver enforceability.

Reputational Harm: Public disputes can damage business relationships.

How this document differs from related instruments

Compare common attributes to choose the right document type for your transaction.

Criteria	Covenant Not to Sue	Indemnity Agreement
Primary Purpose	prevent lawsuit	allocate loss responsibility
Claims Covered	defined claims only	third‑party claims typically
Monetary Obligation	often none	often includes defense costs
Third‑Party Defense	rare	common

Real‑world scenarios where this agreement is used

Two common scenarios illustrate how the covenant and indemnity work together to resolve disputes and allocate risk.

Settlement Between Vendor and Client

A vendor and client negotiate a release for a performance dispute dated 03/15/2025 that resolves outstanding claims

The covenant prevents future suit on that dispute
The agreement also requires the vendor to indemnify the client for third‑party claims arising from the same services and assigns defense obligations to the vendor, preserving business continuity while clarifying financial responsibility.

Contractor Subcontractor Arrangement

A prime contractor obtains a covenant from a subcontractor for defect claims related to a project completed in 2024

The covenant limits direct suit by the contractor against the subs for specified issues
The subcontractor agrees to indemnify for third‑party property damage and to defend with counsel approved by the contractor, protecting the prime contractor from cascading liabilities.

Frequently asked questions about these agreements

Practical answers to common questions help avoid drafting and execution errors that affect enforceability.

Need help? Contact support

Can a party waive all future claims?
A party can waive many claims by contract, but courts may refuse to enforce overbroad waivers, especially for intentional wrongdoing or where public policy limits waiver. Tailor scope and consider judicial attitudes in the governing state.
Is notarization required to make this enforceable?
Notarization is not universally required for covenants or indemnities, but state or transaction‑specific rules may demand notarization or witnesses for related instruments; check local law before execution.
Does an indemnity require insurance coverage?
Indemnity language does not automatically trigger insurance coverage. Tender to insurer per policy terms and confirm that indemnity obligations are not excluded by policy wording.
What happens if names are incorrect?
Incorrect party names can void or limit enforceability. Use exact legal entity names and, if necessary, include a correction clause or ratification by the intended entity.
Can the covenant be revoked later?
Revocation depends on contract terms; include explicit termination clauses or mutual release provisions to allow agreed revocation, and consider notice and cure periods.
Are electronic signatures valid for this agreement?
Yes; electronic signatures are generally valid under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, provided the eSignature meets intent, consent, attribution, and record retention requirements.

eSignature vendor pricing and feature comparison for signing agreements

Compare common pricing and compliance features across platforms; signNow is listed first per comparative format requirements.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	No	No	Yes, limited	Yes, limited
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

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