Sovereign immunity (also known as governmental immunity) in American law was derived from the British common law doctrine that the King could do no wrong—and thus could not be sued. Sovereign immunity varies from state to state, but typically applies to state governments as well as the federal government.

But federal and state governments (generally the U.S. Congress and state legislatures) have the ability to waive their sovereign immunity. Waivers of sovereign immunity are usually included in state and federal statutes, and interpreted and applied by state and federal courts in court opinions.

For example, sovereign immunity protects the state and its various provisions of state government—including agencies, boards, hospitals, and universities—from liability and from suit—unless the immunity has been waived. Similarly, sovereign immunity protects political subdivisions—including counties, cities, and school districts—from liability and from suit—unless the immunity has been waived.

Thus, sovereign immunity encompasses two principles: (1) immunity from suit and (2) immunity from liability. Immunity from suit bars a suit against the state or other governmental entity unless the Legislature expressly gives consent. Immunity from liability protects the state or other governmental entity from judgments even if the Legislature has expressly given consent to sue.

In some states, when a governmental entity contracts, it is liable on contracts made for its benefit as if it were a private person. Consequently, when a governmental entity contracts with private citizens it waives immunity from liability. But the governmental entity does not waive immunity from suit simply by contracting with a private person. Legislative consent to sue is still necessary.

A party may establish legislative consent by referencing a statute or a resolution granting express legislative permission. Legislative consent to sue the state or other governmental entity must be expressed in clear and unambiguous language.

In New Mexico, sovereign immunity is a legal doctrine that prevents the state government, including its agencies, boards, hospitals, universities, and political subdivisions such as counties, cities, and school districts, from being sued or held liable in lawsuits unless this immunity has been explicitly waived by statute. The New Mexico Tort Claims Act is the primary statute that waives the state's sovereign immunity for certain types of claims, allowing individuals to sue the state or its entities in specific circumstances. However, even with this waiver, there are limitations and procedural requirements that must be followed. Immunity from suit means that a lawsuit cannot proceed against the state without legislative consent, and immunity from liability means that the state is protected from judgments even if consent to sue has been granted. When the state enters into contracts, it may waive immunity from liability as if it were a private party, but it does not waive immunity from suit merely by entering into a contract. Legislative consent to sue must be clearly and unambiguously expressed in a statute or resolution.