You can simply agree to go with the drunk guards at the bridge to avoid fighting them.
Some enemy opponents can be talked out of fighting.
Of course, You can, but that's not the point.

I don't mean being able not to fight someone, I mean being able to fight someone and not kill him/her.
Like, have You ever tried to roleplay someone with Batman's personality in an RPG? It's impossible. Batman does not avoid combat, and defeats his opponents, but he never kills, as a rule. In RPGs defeating = killing.
In Gothic/Risen (two more games inspired by Ultima VII) enemies were divided into two cathegories. "Monster" enemies fought to the death and could only be defeated by killing them. They also killed you, if they defeated you. But there were also "Human" enemies, which were left with 1 HP after defeating them, fell to the ground unconscious and could only be killed if you performed an explicit coup the grace when they were lying on the ground. These enemies also did not kill you when they defeated you, and instead took your money before leaving (for example).
"Human" and "Monster" cathegories is my simplification. For example, there were many enemies who were humans and who fought to the death.
I also don't mean exactly implementing morale system. Morale system is just one way of handling non-lethal combat, but it is not equal to it. Baldur's Gate had a morale system where outmatched enemies would run away, but then would turn hostile again after their fear wore off, and that's not what I mean for D:OS. Gothic/Risen had no morale system but they handled non-lethal combat regardless, as mentioned above.