GA Code § 13-4-81 (2021)
2021 Georgia Code|Title 13 - Contracts|Chapter 4 - Modification, Extinguishment, and Renewal|Article 5 - Release|§ 13-4-81. Covenant Not to Sue; Bond to Indemnify Debtor Against Debt

 A covenant never to sue is equivalent to a release as is a bond to indemnify a debtor against his own debt.   (Orig. Code 1863, § 2802; Code 1868, § 2810; Code 1873, § 2861; Code 1882, § 2861; Civil Code 1895, § 3714; Civil Code 1910, § 4308; Code 1933, § 20-909.)   Law reviews.   - For survey article on torts, see 34 Mercer L. Rev. 271 (1982). For comment on Atlantic C.L.R.R. v. Ouzts, 82 Ga. App. 36, 60 S.E.2d 770 (1950), see 14 Ga. B.J. 246 (1951). For comment on Doster v. C.V. Nalley, Inc., 95 Ga. App. 862, 99 S.E.2d 432 (1957), concerning the distinction between a release and a covenant not to sue, see 21 Ga. B.J. 102 (1958).   JUDICIAL DECISIONS   Discussion of scope of section.    - See Kendrick v. J.B. O'Neil, Foster & Co., 48 Ga. 631 (1873).   Distinction between covenant not to sue and release.    - Covenant not to sue is different in legal effect from a release, in that where executed to one of two joint tortfeasors it does not release the other, though as to first it leaves the first tortfeasor in as good a position as to ultimate freedom from liability as if that tortfeasor had been expressly released. Atlantic C.L.R.R. v. Ouzts, 82 Ga. App. 36, 60 S.E.2d 770 (1950).    Even though O.C.G.A. § 13-4-81 provides that a covenant not to sue is "equivalent" to a release, the legal effect of a covenant not to sue is distinguished from the legal effect of a release. World Bazaar Franchise Corp. v. CCC Assocs. Co., 167 Bankr. 985 (Bankr. N.D. Ga. 1994).    Loan receipt agreement between plaintiff and joint tortfeasor in exchange for a forbearance to sue is an absolute payment and not a loan. As such, the agreement constitutes a covenant not to sue and not a release. American Chain & Cable Co. v. Brunson, 157 Ga. App. 833, 278 S.E.2d 719 (1981).   There is difference between accord and satisfaction or release and covenant not to sue.    - There is a decided difference between consequence of accord and satisfaction, or release of one defendant, and that of mere covenant not to sue one defendant. Moore v. Smith, 78 Ga. App. 49, 50 S.E.2d 219 (1948).    Covenant not to sue releases only one with whom it is entered. Pennsylvania Threshermen & Farmers Mut. Cas. Ins. Co. v. Hill, 113 Ga. App. 283, 148 S.E.2d 83 (1966).    While O.C.G.A. § 13-4-81 provides that a covenant never to sue is equivalent to a release, it applies to the parties with whom the covenant is made and not to another tortfeasor. A covenant not to sue one tortfeasor will not bar actions against another tortfeasor. American Chain & Cable Co. v. Brunson, 157 Ga. App. 833, 278 S.E.2d 719 (1981).    Law applies to parties with whom covenant is made and not to another tortfeasor. Ford Motor Co. v. Lee, 137 Ga. App. 486, 224 S.E.2d 168, aff'd in part, rev'd in part on other grounds, 237 Ga. 554, 229 S.E.2d 379 (1976).   General release bars any cause of action.   - When a release is general, i.e., one that releases the alleged tortfeasor from all claims arising out of an occurrence, in the absence of fraud such release will bar any cause of action by the person executing the release. Kaiser Aluminum & Chem. Corp. v. Ingersoll-Rand Co., 519 F. Supp. 60 (S.D. Ga. 1981).    Covenant not to sue one tortfeasor will not bar actions against another tortfeasor. Ford Motor Co. v. Lee, 137 Ga. App. 486, 224 S.E.2d 168, aff'd in part, rev'd in part on other grounds, 237 Ga. 554, 229 S.E.2d 379 (1976).   Covenant not to sue when multiple tortfeasors.    - Written covenant not to sue one of two joint tortfeasors is not, stating that it is equivalent to a release, a release of other joint tortfeasor, and does not bar proceeding against the other tortfeasor. Atlantic C.L.R.R. v. Ouzts, 82 Ga. App. 36, 60 S.E.2d 770 (1950).    Covenant not to sue between victim and joint tortfeasor does not bar action against remaining joint tortfeasor. City Express Serv., Inc. v. Rich's, Inc., 148 Ga. App. 123, 250 S.E.2d 867 (1978).    Effect of covenant not to sue on wrongful death action.  See Wade v. Watson, 527 F. Supp. 1049 (N.D. Ga. 1981), aff'd, 731 F.2d 890 (11th Cir. 1984).    Amount paid under covenant not to sue may be pled by joint obligor for credit. Pennsylvania Threshermen & Farmers Mut. Cas. Ins. Co. v. Hill, 113 Ga. App. 283, 148 S.E.2d 83 (1966).   Reducing damages based on joint obligor's payment.    - Any sum received pursuant to covenant not to sue may be pleaded and proved by remaining joint obligor in reduction of damages to be awarded by jury. Atlantic C.L.R.R. v. Ouzts, 82 Ga. App. 36, 60 S.E.2d 770 (1950).    Any amount which jury might award against joint tortfeasor may be reduced by amount of any sums previously received by other joint tortfeasor in consideration of covenant not to sue issued to that tortfeasor. City Express Serv., Inc. v. Rich's, Inc., 148 Ga. App. 123, 250 S.E.2d 867 (1978).    Agreement never to sue upon written obligation must be written to be equivalent to release. Jennings v. Powell, 58 Ga. App. 416, 198 S.E. 809 (1938).    Agreement that payee of note obligated oneself not to bring suit thereon should be in writing in order to furnish valid defense as covenant equivalent to release within meaning of this section. Crooker v. Hamilton, 3 Ga. App. 190, 59 S.E. 722 (1907); Turner v. Strauss-Epstein Co., 20 Ga. App. 735, 93 S.E. 234 (1917) (see O.C.G.A. § 13-4-81).   Consideration generally required for covenant not to sue to operate as release of preexisting obligation.    - If covenant never to sue is relied upon as release of preexisting obligation to pay, such covenant would not be binding unless founded upon sufficient consideration; but this is not true when covenant never to sue comes into existence contemporaneously with obligation to pay. Martin v. Monroe, 107 Ga. 330, 33 S.E. 62 (1899).    Cited in Mansfield v. Barber, 59 Ga. 851 (1877); Marietta Sav. Bank v. Janes, 66 Ga. 286 (1881); Manley v. Ayers, 68 Ga. 507 (1882); Haymans v. Bennett, 29 Ga. App. 265, 114 S.E. 923 (1922); Jordan v. Wiggins, 66 Ga. App. 534, 18 S.E.2d 512 (1942); Maryland Cas. Co. v. Stephens, 76 Ga. App. 723, 47 S.E.2d 108 (1948).   RESEARCH REFERENCES   Am. Jur. 2d.   - 66 Am. Jur. 2d, Release, § 28.   21B Am. Jur. Pleading and Practice Forms, Release, § 7.   C.J.S.   - 17 C.J.S., Contracts, § 116. 76 C.J.S., Release, § 2.   ALR.    - Promise to marry as consideration for note or other executory obligation made some time thereafter, 63 A.L.R. 1184.    Return or tender of consideration for release or compromise as condition of action for recission or cancellation, action upon original claim, or action for damages sustained by the fraud inducing the release or compromise, 134 A.L.R. 6.    Release of (or covenant not to sue) one tortfeasor as affecting liability of others, 148 A.L.R. 1270.   Interest on consideration returned or tendered as condition of setting aside release or compromise, 53 A.L.R.2d 749.   Manner of crediting one tortfeasor with amount paid by another for release or covenant not to sue, 94 A.L.R.2d 352.   Recovery of litigation expenses allegedly incurred as result of breach of covenant not to sue, 30 A.L.R.3d 1433.   Validity and effect of "loan receipt" agreement between injured party and one tortfeasor, for loan repayable to extent of injured party's recovery from a cotortfeasor, 62 A.L.R.3d 1111.   Prospective buyer's release of prospective seller from liability for injuries resulting from trial use or inspection of product for sale, 93 A.L.R.3d 1296.   Refusal to pay debt as economic duress or business compulsion avoiding compromise or release, 9 A.L.R.4th 942.   Release of, or covenant not to sue, one primarily liable for tort, but expressly reserving rights against one secondarily liable, as bar to recovery against latter, 24 A.L.R.4th 547.   Recovery of attorneys' fees and costs of litigation incurred as result of breach of agreement not to sue, 9 A.L.R.5th 933.