Covenant

The Definition

A covenant is a contract between two people or parties, where they come to an agreement to do or not to do something. It's also seen as a sort of covenant of good faith between two parties. Within the covenant, parties pledge to one another that they will fulfill all terms, requirements, and agreements laid out in the covenant, in hopes of reaching common ground in a situation. Covenants are also made for legal purposes, whereas if one party does not meet their part of the agreement within the covenant, it can be enforced or argued in a court of law. Covenants can also entail within the contract that the party or parties are prohibited from performing certain actions.

Types of Covenants

Depending on the nature of the covenant, it could be an affirmative covenant or a negative covenant. In an affirmative covenant, it is an agreement that the covenantor makes with the promise of doing something. In a negative covenant, it is an agreement that the covenantor makes with the promise of not doing something.

For example, in the legal world, there are two types of covenants. One type is a covenant running with the land, and the other is a covenant for title.

In a covenant running with the land, it is an agreement that the covenant will not be separated from the land, or the land transferred without it. The covenant is annexed with the land, and it cannot be removed from the land.

In a covenant for title, it is a covenant that comes with a deed or with a title to a property. In this covenant, the grantor if the title promises to make certain guarantees to the grantee.

There are also contracts called restrictive covenants. In restrictive covenants, especially here in the United States, those can be considered as "non-compete" clauses.