After an accident with a driver for General Transport Company (GTC), Paul signs a covenant not to sue GTC for damages in a tort action if it pays for the damage to his car. This covenant
A) bars recovery only if GTC pays.
B) is an illusory contract.
C) is barred by the preexisting duty rule.
D) is unconscionable.

Question

Quizplus · Accepted Answer

The covenant not to sue GTC for damages in a tort action is conditional upon GTC paying for the damage to Paul's car. Therefore, if GTC pays for the damage, Paul cannot sue for additional damages in a tort action. This is a valid and enforceable contract as long as the consideration is present.

After an Accident with a Driver for General Transport Company