After an accident with a vehicle licensed to Guardian Security Company, Heidi signs a covenant not to sue Guardian Security for damages in a tort action if it pays for the damage to her car. This covenant is
A) a bar to recovery if Guardian Security pays.
B) an illusory contract.
C) barred by the preexisting duty rule.
D) barred by the doctrine of promissory estoppel.

Question

After an accident with a vehicle licensed to Guardian Security Company, Heidi signs a covenant not to sue Guardian Security for damages in a tort action if it pays for the damage to her car. This covenant is
A) ​a bar to recovery if Guardian Security pays.
B) ​an illusory contract.
C) ​barred by the preexisting duty rule.
D) ​barred by the doctrine of promissory estoppel.

Quizplus · Accepted Answer

The covenant not to sue is a contract in which one party agrees not to sue another party for damages in a tort action in exchange for something of value, such as payment for damages. The covenant not to sue is enforceable, and if Guardian Security pays for the damage to Heidi's car, she cannot sue them for damages in a tort action. Therefore, the covenant not to sue is a bar to recovery if Guardian Security pays.

After an Accident with a Vehicle Licensed to Guardian Security