Covenant Not to Sue in South Carolina
The covenant not to sue was developed at common law to permit the release of one or more joint tortfeasors without affecting the covenantor's rights against the other joint tortfeasors. A covenant not to sue is a covenant by one who had a right of action at the time of making it against another person, by which he agrees not to sue to enforce such right of action. 76 C.J.S. Release 4 (1994). "Such covenant does not extinguish a cause of action and does not release other joint tort-feasors even if it does not specifically reserve rights against them." Black's Law Dictionary 364 (6th ed. 1990). However, one tortfeasor is entitled to credit for the amount paid by another tortfeasor for a covenant not to sue. See Powers v. Temple, 250 S.C. 149, 156 S.E.2d 759 (1967).
A covenant not to sue is not a release. 76 C.J.S. Release 4. "The difference is one of intent and grows out of the construction placed on the terms of the instrument, since a covenant not to sue is not a present abandonment or relinquishment of a right or claim but merely an agreement not to enforce an existing cause of action, and, although it may operate as a release between the parties to the agreement, it will not release a claim against joint obligors or joint tort-feasors." Id.
In the case of a release, there is an immediate discharge; where as, in the case of a covenant not to sue, there is merely an agreement not to prosecute a suit. 66 Am. Jur. 2d Release 2 (1973). It is nothing but a contract and should be so construed. Id.
In Ackerman v. Travelers Indemnity Co., 318 S.C. 137, 456 S.E.2d 408 (Ct. App. 1995), the Court discussed the genesis of the covenant not to sue:
"At common law, a valid release of one joint tort-feasor was usually a release of all the joint wrongdoers and was a bar to a suit against any of them for the same wrong. At the base of this rule was the theory that there could be but one compensation for the joint wrong. If the injured party was paid by one of the wrongdoers for the injury he had suffered, each wrongdoer being responsible for the whole damage, his cause of action was satisfied in exchange for a release, and he could not proceed against the others. Thus a release of one joint wrongdoer released all. But when the consideration received for the release was not full compensation for the injury, the purpose for the harsh rule did not exist. To allow for this, the covenant not to sue was developed." (Ackerman, 318 S.C. at 146-47, 456 S.E.2d at 413.)