Twyla's dock is damaged in an accident caused by Ulric's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulric fails to pay, Twyla can bring an action for breach of contract. This is

a covenant not to sue.

Explanation:

A covenant not to sue is a legal agreement between the parties in which the party seeking for the damages assent not to sue covenantee. According to this lawsuit, the claimant or the covenantor will not institute any actions or prosecution against the damage caused by the covenantee or the second party. Instead of taking any legal actions against the conventanee, the covenantor comes in this agreement, in which the covenantee agrees to compensate the amount outside of the court.

In the given case, Twyla has agreed and has come into a covenant not to sue with Ulric. In case, Ulric fails to give the compensation amount, Twyla can take action for breaching the covenant not to sue.

So, the correct answer is a covenant not to sue.