DifferenceBetween Covenant and Contract

【Abstract】A Covenant is an agreement or written promise between two or more partiesthat constitutes a pledge to do or refrain from doing something. It is, thus, atype of contract and in some instances may form part of the contract itself.

Covenant vs Contract

Thedifference between Covenant and Contract is notidentifiable at the first glance. Indeed, given that both terms areloosely interpreted as a promise between two or more persons, the distinctionbetween the two becomes more ambiguous. The termcontract is not an uncommon word and we have all heard its usage in day-to-dayconversations. Covenant, however, is less familiar. Thekey to understanding the difference between the terms lies in closely examiningtheir definitions. It is only then that the distinction becomes evident.

 

What is a Covenant?

Acovenant is defined as an agreement or writtenpromise between two or more parties that constitutes a pledge to door refrain from doing something. Thus, an agreement that requires theperformance of some act is termed an “affirmativecovenant” while an agreement that restricts or refrains a person fromperforming something is called a “negative covenant.”In other words, a covenant is a type of contract and falls within the purviewof contracts in general. The person making the pledge or promise is calledthe covenantor while the person towhom such promise is made is known as the covenantee.In addition, covenants are also included in a contract, therebyforming part of the contract. In certain instances, it may constitute aparticular condition in a contract. For example, covenants or pledges areincluded in contracts of sale or deeds of real property.

 

Thenature of a covenant may take several forms: it may bea mutualcovenant wherein both parties agree to perform something at thesame time; it may be a dependent covenant oreven an independent covenant. In law,however, the concept of a covenant is frequently heard and used with respect toreal property, particularly pertaining to land and the use of land. These arealso known as real covenants. Realcovenants are conditions attached to the deed of a property. Such covenants arefurther divided into several categories, namely, covenantsrunning with the land and covenants for title. Covenants runningwith the land typically restrict or stipulate the use of the land. Thus,for example, the covenant will state that the person owns the land subject tothe restriction that the land is only to be used for agriculturalpurposes. Covenants for title typically provide the new owner of theland certain protection measures or benefits. These Covenants include acovenant for seisin, covenant of the right to convey, covenant against encumbrances,covenant for quiet enjoyment, covenant of warranty, and others. Collectively, such covenants ensure that the person inpossession or ownership of the land enjoys quiet possession and is protectedfrom outside claims, rights, or any other burdens.

 

What is a Contract?

Insimple terms, a contract is an oral or written promise that is enforceableby law. It is defined in law as a voluntary agreement between two ormore parties, who intend to create legal obligations,in which there is a promise to do or perform some work or service for avaluable consideration or benefit. A contract is a common phenomenon. It isfrequently used in dealings between businesses, corporations, banks, owners ofland, and other transactions. Of course, a written or oral promise between twoparties to perform something is not sufficient to constitute a legal contract. For a contract to be valid in law, it must incorporatecertain elements: firstly, there must be an offer and anacceptance of that offer; secondly, there must be an intention tocreate legal relations between the parties; the agreement must bemade for a valuable consideration such as payment; the parties must havelegal capacity to enter into the contract and the object or subject matter ofthe contract must be legal.

 

Contractsmay take various forms and the structure of contracts depends on the nature ofthe contract and the parties. Examples of a contract include an agreement toprovide a service, or an agreement to exchange certain goods.

 

What is the difference between Covenant andContract?

Thedifference between covenant and contract is thus evident. A contract representsa broad area in that it refers to a legally binding agreement or promise madebetween two or more parties, while covenant constitutesa type of contract.

• Definition of Covenant and Contract:

• ACovenant is an agreement or written promise between two or more parties thatconstitutes a pledge to do or refrain from doing something. It is, thus, a type of contract and in some instances mayform part of the contract itself.

• Acontract is a voluntary agreement between two or more parties, who intend tocreate legal obligations, in which there is a promise to do or perform somework or service for a valuable consideration or benefit. It is enforceable bylaw.

• Concept of Covenant and Contract:

• Acovenant may be a mutual covenant wherein both parties agree to performsomething at the same time, or it may be a dependent covenant, or anindependent covenant.

• Acontract must contain certain elements in order to be enforceable by law.

–there must be an offer and an acceptance of that offer,

–there must be an intention to create legal relations between the parties,

– theagreement must be made for a valuable consideration such as payment,

– theparties must have capacity to contract,

– thesubject matter of the contract must be legal.

• Examples of Covenant and Contract:

•Examples of covenants include mutual covenants, restrictive covenants, covenantagainst encumbrances, covenant for quiet enjoyment and others.

•Examples of a contract include an agreement to provide a service, or an agreementto exchange certain goods.

 

DifferenceBetween Deed and Agreement

 

【Abstract】A deed is a legal instrument that contains all rights and obligations ofparties entering the contract and is legally binding on both parties. A deedmust be signed, sealed, and delivered to become a legal instrument.

 

Deed vs Agreement

Differencebetween deed and agreement is very subtle that it is giving rise to thequestion why are some contracts labeled as agreementswhile others are called or referred to as deeds?  In fact, deed and agreement are two commonlyencountered words in the context of contracts between individuals and parties.Whether you are buying property, entering into a partnership, becoming afranchisee of a company or buying stocks of a company, you sign documents tocontain details of the contract between you and the other party. However, thereare systems in every country to determine the legality of such documents as towhether they can be challenged in courts in the case of disputes betweenparties. This difference in legality is what separatesagreements and deeds with deeds being enforceable in courts to settle disputeswhile agreement mostly being only a mutual understanding between two parties.This article attempts to further highlight the difference between deed andagreement to help the readers to decide the document they require in aparticular circumstance.

 

What is an Agreement?

Supposeyou have taken money from your friend at an interest of 24% payable per annum,and there are no papers made in this regard and the agreement is betweenfriends and verbal only. After some time, yourfriend asks for an amount in the form of interest that is not reasonable andcorrect according to you. You find that you cannot challenge the contention ofyour friend in courts as there is no legal document in your possession toappeal in a court of law. Even if you have it written on a piece of paper, itis still an agreement that is useless in case of a dispute.

 

What is a Deed?

On theother hand, a deed is a special document thatbinds two parties andclearly elucidates theirrights and duties. The commitments and obligations areclearly defined in a deed and the instrument or the document is testified infront of an attorney, which implies that the instrument or deed as it isreferred to in legal circles is enforceable in a court of law. Some commonexamples of documents that are legal and binding upon parties are indemnitydeed, deed of termination, LC, and guarantees of various kinds.

Thisdichotomy is important in cases where there may be situations of dispute.Suppose you buy an electronic product from a retailer and then the appliancedevelops a snag within the warrantee period. You have the invoice duly signedby the retailer with you, which is what can become a basis of your claim in acourt of law if the shopkeeper and the manufacturer refuse to listen to yourlegitimate grievances.

 

What is the difference between Deed and Agreement?

• An agreement is a mutual understanding between two parties that may bewritten or verbal. It may not be enforceable in a court of law.

• A deed is a legal instrument that contains all rights and obligations ofparties entering the contract and is legally binding on both parties.

• A deed must be signed, sealed, and delivered to become a legalinstrument.

 

Difference Between Contract and Agreement

【Abstract】Many people tend to think that contract andagreement are similar terms; it is not so. A contract is a legally bindingagreement between two or more entities, but a legal agreement is not always acontract. A contract comprises of terms and representations and may beterminated in four ways. Agreement refers to meeting of minds at a certainpoint. An agreement becomes a contract when it is made legally binding and onmeeting the three conditions. They also differ from each otner with respect tothe remedies and the presumptions of intention to create legal relation.

 

Contract vs Agreement 

Since the words contract and agreement are oftenused in legal contexts, it is very important for everyone to know thedifference between contract and agreement. Contract is a legal agreementbetween two more entities, enforcing an obligation to do something or torefrain from doing certain things. However, all legalagreements are not contracts. Contract and agreement are a part of life.Many people tend to think that contract and agreementare similar terms; it is not so. As we enter into contracts andagreements essentially in many aspects of our life, we need to know thedifference between contract and agreement.

 

What is a Contract?

A contract is a legally binding agreementbetween two or more entities, but a legal agreement is not always a contract.Any agreement is considered to be legally binding and becomes a contract whenthree conditions are met. The conditions are Offer and Acceptance, intention tocreate legal relation and consideration. If any one of these conditions is not met then the contract is not legallybinding and it cannot be enforced on the other party.

 

A contract comprises of terms and representations. Terms are contextual statements that become bindingwhereas representations are statements that might induce a contract, but arenot terms of a contract. Contract may be terminated infour ways: through performance, breach of contract, frustration and throughanother contract. Mostly where contract is terminated by performance,the performance is 100%. Complete. If a serious term of a contract is breachedthen the affected party can terminate the contract. When the conditions aresuch that contract becomes impossible to perform , then the contract isterminated due to frustration. Parties of the contract may enter into anothercontract with mutual consent and can terminate the previous contract.

 

What is an Agreement?

Agreement refers to meeting of minds at a certainpoint. Agreement may be on business views, commercial views or domestic views.If an agreement is not legally binding it cannot be enforced by law. Agreementswhere consent is not genuine are called voidable agreement s. An agreement becomes a contract when it is made legallybinding and on meeting the three conditions.

 

When the parties enter into an agreementthey define the terms and conditions of the agreement themselves, whereas insome specific contracts terms and conditions are implemented by law.

 

What is the difference between Contract and Agreement?

 

• The basic difference betweencontract and agreement is that the remediesforbreach of contract and breach of an agreement are way too different.

• Contract becomes enforceable once threeconditions of legally binding agreement are met while agreement can be workedupon when two minds meet at a certain point.

• A gentlemen agreement is not enforceable by lawwhereas a contract can be enforceable by law.

• Contract starts when there is an offer andacceptance, whereas it is not necessary for an agreement to be started fromoffer and acceptance.

 

Contracts come into existence through agreement.Agreement, if not legally binding cannot be enforced by law. Contracts andagreements can be of various types. There arecertain presumptions of intention to createlegal relation in contract. It is presumed that in a domestic contract there isno intention to create legal relation and in a business contract it is highlyintended to create legal relation. Agreements , on the other hand, do not havesuch presumptions. They can be between domestic as well as business partiesuntil they intend to be legally bound on that.

 

 

（文章来源：实务法律英语）