Covenant
A covenant is a promise within a contract to do something (an affirmative covenant) or to refrain from doing something (a negative or restrictive covenant). Breaching a covenant is a breach of contract that can trigger remedies or default.
What it means
Covenants are the operative promises that define each party's ongoing obligations. Affirmative covenants require action — maintaining insurance, delivering reports, keeping records. Negative (restrictive) covenants prohibit action — non-compete, non-solicitation, and confidentiality covenants are common examples. In finance, covenants govern a borrower's conduct; in real estate, covenants can run with the land. Courts assess restrictive covenants for reasonableness, and breach can give rise to damages, injunctions, or acceleration of obligations.
Read more
- Non-Compete Law by State: The 2026 Complete Guide — Non-compete enforceability depends entirely on state law. This 2026 guide covers every state's rules, salary thresholds, full bans, and the FTC reversal.
- Non-Solicitation Clause Explained: Rules, Limits & Drafting (2026) — A non-solicitation clause stops former employees or partners from poaching your clients or staff. Learn how it works, what makes it enforceable, and how state laws differ.
- What Makes a Contract Legally Binding? — Learn the five elements every legally binding contract must have — offer, acceptance, consideration, capacity, and legality — with real examples and jurisdiction notes.