What Does “Covenant” Mean in a Contract?
A formal promise or binding agreement to do or not do something, often used for ongoing obligations.
Detailed Explanation
A covenant is a solemn promise that forms part of the contract. It's often used for continuing obligations rather than one-time actions. "Covenants not to compete" or "covenants to maintain insurance" describe ongoing commitments.
Covenants are typically more serious than simple "agreements to" do something. Breach of covenant can have significant consequences, and some covenants (like non-compete covenants) may survive the termination of the main agreement.
Example in a Contract
“Contractor covenants and agrees that during the term of this Agreement and for two years thereafter, Contractor will not directly or indirectly solicit any employee of Company.”
Why It Matters
Covenants are serious, often ongoing promises. They may outlast the contract itself. Understand what you're covenanting to do (or not do) and for how long.
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