Covenant

A covenant generally refers to any type of promise or contract, whether it is made in writing or orally. In a more technical sense, a covenant is an agreement between two or more persons, entered into in writing and under seal, whereby either party:

  • Stipulates for the truth of certain facts.
  • Promises to perform or give something to the other.
  • Promises to abstain from the performance of certain things.

A covenant differs from an express assumpsit in that the former may be made verbally or in writing not under seal, while the latter must always be entered into by deed. In an assumpsit, a consideration must be shown, while in a covenant, no consideration is necessary to give it validity, even in a court of equity.

General Requisites of a Covenant

The general requisites of a covenant include:

  • Proper parties: The parties must be legally able to enter into a contract. If either for want of understanding, as in the case of a person who is mentally incapacitated, an infant, where the contract is not for the benefit, or where there is understanding, the parties are not proper. All parties must owe to certain causes as coverture. In every case, if the parties are not competent, they cannot bind themselves.
  • Words of agreement: There must be an agreement. The assent or consent must be mutual. If either party withheld assent to any of its terms, the agreement would be incomplete. The assent of the parties to a contract necessarily supposes a free, fair, serious exercise of the reasoning faculty. If from any cause this free assent is not given, the contract is not binding.
  • A legal purpose: A covenant against any positive law or public policy is void, generally speaking. An example of the first is a covenant by one man that he will rob another or a covenant by a merchant or tradesman that he will not follow his occupation or calling. This, if it be unlimited, is absolutely void, but if the covenant be that he shall not pursue his business in a particular place, such as that he will not trade in the city of Philadelphia, the covenant is no longer against public policy.
  • A proper form: To make a covenant it must, according to the definition above given, be by deed or under seal. No particular form of words is necessary to make a covenant, but any words which manifest the intention of the parties, with respect to the subject matter of the contract, are sufficient.

In some states, statutes declared that the words grant, bargain and sell shall amount to a covenant that the grantor was seized of an estate in fee, free from all encumbrances done or suffered by him, and for quiet enjoyment against his acts. However, it has been adjudged that those words in the Pennsylvania Statute of 1715 did not amount to a general warranty, but merely to a covenant that the grantor had not done any act, nor created any encumbrance whereby the estate might be defeated. This decision was applied equally to the statutory language in the other states.

Types of Covenants

The two main types of covenants are:

  • Express.
  • Implied.

An express covenant, or a covenant in fact, is one that is expressly agreed upon between the parties and inserted in the deed. The law does not require any particular language to form an express covenant. The word "covenant" is therefore not indispensably requisite. Other terms are held to be covenants as well, such as:

  • I oblige
  • I agree
  • I bind myself to pay so much on such a day
  • Words of a bond

However, words that merely import an order or direction that other persons should pay a sum of money, are not considered covenants.

An implied covenant is one which the law intends and implies, though it be not expressed in words. Some words do not serve to create an express covenant but can have similar operations when used in certain contracts. These may be referred to as covenants in law. They are as effectually binding on the parties as if expressed in the most unequivocal terms. A few examples include:

  • If a lessor demise and grant to his lessee a house or lands for a certain term, the law will imply a covenant on the part of the lessor, that the lessee shall during the term quietly enjoy the same against all incumbrances.
  • When the words "grant," "grant and demise," "demise," or "demiserunt," are used in a lease, they are instances of implied covenants.
  • The words "yielding and paying" in a lease imply a covenant on the part of lessee that they will pay the rent.

Another type of covenant is a real covenant, which has for its object something annexed to, or inherent in, or connected with land or other property. A real covenant, which necessarily runs with the land, as to pay rent, not to cut timber and the like, is said to be an inherent covenant. A real covenant runs with the land and descends to the heir. It is also transferred to a purchaser. Such covenants are said to run with the land, so that he who has the one is subject to the other.

Covenants for Title

There are five covenants for title:

  • Covenant for seisin.
  • That the grantor has the perfect right to convey.
  • That the grantee shall quietly possess and enjoy the premises without interruption, called a covenant for quiet enjoyment.
  • The covenant against encumbrances.
  • The covenant for further assurance.

Additionally, there is another type of covenant frequently resorted to in the United States, which is often relied on more than any other, called the covenant of warranty.

A personal covenant relates only to matters personal, which distinguishes them from real, and is binding on the covenantor during life, and on his personal representatives after his decease, in respect of his assets. According to Sir William Blackstone, a personal covenant may be transformed into a real covenant by the mere circumstance of the heirs being named and having assets by descent from the covenantor. A covenant is personal in that the covenantor is bound to fulfill the covenant himself, such as to teach an apprentice.

Personal covenants are also said to be transitive and intransitive. Transitive covenants refer to when the duty of performing them passes to the covenantor's representatives. Intransitive covenants are limited to himself, such as in the case of teaching an apprentice.

Covenant Classes

As they impact each other in the same deed, covenants may be divided into several classes:

  • Dependent covenants are those in which the performance of one depends on the performance of the other. There may be conditions which must be performed before the other party is liable to an action on his covenant. To determine whether covenants are dependent or not, the intention of the parties is to be sought for and regarded rather than the order or time in which the acts are to be done, or the structure of the instrument, or the arrangements of the covenant.
  • Concurrent covenants are mutual conditions to be performed at the same time. In these cases, when one party is ready and offers to perform his part, and the other refuses or neglects to perform his, he who is ready and offers has fulfilled his engagement and may maintain an action for the default of the other, though it is not certain that either is obliged to do the first act.
  • Covenants are independent or mutual, when either party may recover damages from the other for the injury he may have received by a breach of the covenants in his favor, and when it is no excuse for the defendant to allege a breach of the covenants on the part of the plaintiff.

Covenants are affirmative and negative.

  • An affirmative covenant is one by which the covenantor binds himself that something has already been done or shall be performed hereafter. Such a covenant will not deprive a man of a right lawfully enjoyed by him independently of the covenant, such as if the lessor agreed with the lessee that he shall have thorns for hedges growing upon the land, by assignment of the lessor's bailiff; here no restraint is imposed upon the exercise of that liberty which the law allows to the lessee, and therefore he may take hedge-bote without assignment.
  • A negative covenant is one where the party binds himself that he has not performed and will not perform a certain act, such as that he will not encumber. Such a covenant cannot be said to be performed until it becomes impossible to break it. On this ground, the courts are unwilling to construe a covenant of this kind to be a condition precedent. In one example, a tailor assigned his trade to the defendant and covenanted to desist from carrying on the said business with any of the customers. The defendant, in consideration of the performance thereof, covenanted to pay him a life annuity of some amount. It was held that if the words "in consideration of the performance thereof," should be deemed to amount to a condition precedent, the plaintiff would never obtain his annuity because as at any time during his life he might exercise his former trade, until his death it could never be ascertained whether he had performed the covenant or not. The defendant, on a breach by plaintiff, might have his remedy by a cross-action of covenant. There is also a difference between a negative covenant, which is only in affirmance of an affirmative covenant precedent, and a negative covenant which is additional to the affirmative covenant. To a covenant of the former class a plea of performance generally is good, but not to the latter; the defendant in that case must plead specially.

Joint and Several Covenants

In regard to the parties who are to perform them, nd the decision will equally apply to the statutory language in the other states,)

  • A joint covenant is one by which several parties agree to perform or do a thing together. In this case, although there are several covenantors. there is but one contract. If the covenant is broken, all the covenantors living must be sued. Sincethere is not a separate obligation of each, they cannot be sued separately.
  • A several covenant is one entered into by one person only. It frequently happens that a number of persons enter into the same contract, and that each binds himself to perform the whole of it. In such a case, when the contract is under seal, the covenantors are severally bound for the performance of it. The terms usually employed to make a several covenant are "severally" or "each of us." In practice, it is common for the parties to bind themselves jointly and severally, and then the covenant is both joint and several.

Executed and Executory Covenants

  • An executed covenant is one which relates to an act already performed.
  • An executory covenant is one to be performed at a future time.

Obligatory or Declaratory Covenants

  • An obligatory covenant is one which is binding on the party himself, and shall never be construed to raise a use.
  • A declaratory covenant is one which serves to limit and direct uses.

Principal and Auxiliary Covenants

  • A principal covenant is one which relates directly to the principal matter of the contract entered into between the parties. For example, party A may covenant to serve party B for one year.
  • An auxiliary covenant is one that does not relate directly to the principal matter of the contract between the parties, but relates to something connected with it. For example, party A may covenant with party B that party C will perform his covenant to serve him for one year. In this case, if the principal covenant is void, the auxiliary is discharged.

Legal or Illegal Covenants

  • A legal covenant is one not forbidden by law. Covenants of this kind are always binding on the parties.
  • An illegal covenant is one forbidden by law, either expressly or by implication. A covenant entered into that is in violation of the express provision of a statute is absolutely void. A covenant is also void if it is of an immoral nature, such as a covenant for future illicit intercourse and cohabitation or against public policy. It is also illegal if the covenant is in restraint of trade, when the restraint is general or fraudulent between the parties.

In the disjunctive or alternative, covenants are those which give the covenantor the choice of doing, or the covenantee the choice of having performed, one of two or more things at his election. One example is making a covenant to make a lease to Titus or pay him one hundred dollars on the fourth day of July, as the covenantor or the covenantee shall prefer.

Collateral covenants concern some collateral thing, which does not at all or not so immediately relates to the thing granted. For example, a collateral covenant might be to pay a sum of money in gross that the lessor shall distrain for rent on some other land than that which is demised or the like. These covenants are also termed covenants in gross.

Remedies are instituted for the recovery of damages for the breach of a covenant or promise under seal.

The subject will be considered with the following references:

  • To the kind of claim or obligation on which this action may be maintained.
  • The form of the declaration.
  • The plea.
  • The judgment.

In order to support this action, there must be a breach of a promise under seal. Such promise may be contained in a deed-poll, or indenture, or be express or implied by law from the terms of the deed, or for the performance of something in the future, or that something has been done. In some cases, though it relates to something in the present, the covenantor has a good title. In general, a covenant will not lie on a contract inpresenti, as on a covenant to stand seized or that a certain horse shall henceforth be the property of another. The action of covenant is the peculiar remedy for the non-performance of a promise under seal where the damages are unliquidated. The action may also depend on the amount on the opinion of a jury, in which case neither debt nor assumpsit can be supported. However, the covenant, as well as the action of debt, may be maintained upon a single bill for a sum certain. When the breach of the covenant amounts to misfeasance, the covenantee has a choice to proceed by the action of a covenant or by action on the case for a tort, as against a lessee for waste, but this has been questioned. When the contract under seal has been enlarged by parol, the substituted agreement will be considered together with the original agreement as a simple contract.

The declaration must state that the contract was under seal and it should make proffer of it or show some excuse for the omission. It is generally not required to state the consideration of the defendant's promise because a contract under seal usually imports a consideration. However, when the performance of the consideration constitutes a condition precedent, such performance must be averred. Only so much of the deed and covenant should be set forth as is essential to the cause of action. Although it is usual to declare in the words of the deed, each covenant may be stated as to its legal effect. The breach may be in the negative of the covenant generally or, according to the legal effect, and sometimes in the alternative and several breaches may be assigned at common law. If damages are the object of the suit, they should be laid sufficient to cover the real amount.

No strict or general issue exists in this action, though the plea of non est factum has been said to be the general issue. However, this plea only puts in issue the fact of scaling the deed. Non infregit conventionem and nil debet have both been held to be insufficient.

The judgment is that the plaintiff recovers a named sum for his damages, which he has sustained by reason of the breach or breaches of covenant, together with costs.