Covenant vs Contract (Legal Definition And Key Differences)

What is Covenant vs Contract?

What is the difference between contract and covenant?

What are the important elements you should know!

Keep reading as we have gathered exactly the information that you need!

Let’s dig into our legal dictionary and contract law!

Are you ready?

Let’s get started!

Covenant vs Contract 

What is the difference between covenant and contract?

What distinguishes one from the other?

Is a covenant a contract?

To start with, a contract is a legal document reflecting the terms and conditions agreed by the parties.

On the other hand, a covenant is a promise to do or not to do something.

Covenants can be legally binding when the promises are made in a contract or morally binding when the person making the promise considers a moral obligation to maintain the promise.

For instance, covenants in a contract can include a promise not to compete with another or solicit another’s employees or clients.

In contractual language, the legal words or terms used when dealing with a covenant are statements such as:

• The party “promises” not to compete with the other
• The party “undertakes” not to solicit the other’s clients
• The party “agrees” not to disparage the other

Covenants are legal promises that must be respected by the party making such commitments. 

Contracts typically provide for a mechanism to remedy breaches of covenants or if it cannot be remedied, parties may seek damages in court or file for injunctive relief.

Moral, spiritual or religious covenants are unconditional promises made by a party to uphold their end of the bargain regardless of whether the other party breaches the terms of their reciprocal covenant.

In a sense, a moral covenant can be a permanent promise for a person to observe the terms of the promise fully.

Contract definition

To better differentiate contracts and covenants, let’s look at the legal definition of contracts and what it means.

A contract is a legally enforceable agreement between parties.

To form a contract, you need:

• An offer (made by the offeror)
• Acceptance (offer accepted by offeree)
• Legal capacity (parties must have the legal right to contract)
• Consideration (there must be a benefit to the parties)
• Legality (the object of the contract must not be prohibited)

Contracts can be formed in writing or orally.

Covenant legal definition 

Now, let’s define a covenant.

Fundamentally, a covenant is a person’s promise to do or not to do something.

When a person pledges to do something, we refer to that as an affirmative covenant.

On the other hand, when a person pledges not to do something, we refer to that as a negative covenant.

The person making the covenant is the covenantor and the person benefiting from the covenant is the covenantee.

In business, it is quite common to find covenants in contracts.

When a promise is made contractually, that promise becomes a legally binding promise and enforceable by law.

In this case, when a person or entity fails to respect the terms of the covenant as per the contract, the other party may:

• Enforce the terms of the covenant by law
• Consider the contract terminated due to a material breach of contract
• Claim damages for the breaching party’s failure to respect the covenant 

In essence, the breach of covenants can trigger the same legal remedies as the breach of contract.

Covenant religious definition 

In addition to the legal meaning of covenant, the term covenant can have a religious basis or moral influence on a person.

It’s a term or word used throughout the Bible.

A moral covenant is a type of promise or commitment that is made by one party to uphold its end regardless of whether or not the other party keeps his or her part of the agreement.

In other words, when there is a covenant, the promising parties must keep their promise regardless of the other party’s breach of their promise. 

The moment you make a promise, you are bound to perform and fully execute the terms of your promise.

Let’s take the marriage covenant as an example.

Marriage can be viewed as a legal contract when two people formally get married under the law.

However, from a religious point of view, a marriage can be argued to be a covenant as the promise is for two people to join “until death do us apart”.

In other words, even though a spouse may breach the terms of the covenant after their marriage, they both must respect the terms of their covenant when they were pronounced husband and wife.

Difference between covenant and contract

To simplify the assessment, here is a list of differences between contract vs covenant.

Here is a quick summary of the characteristics of a contract or a legal covenant:

• Contracts are generally binding for a defined period of time
• Contracts typically deal with a specific action or require specific performance 
• There must be a benefit to the parties, a consideration or mutual benefit 
• A contract provides for a possibility of a breach and how it can be compensated 
• A contract is enforceable by law
• A contract has a logical “if-then” where if something happens, then something else should happen 

Here are some of the characteristics of a religious or moral covenant:

• A person making a covenant makes it for the benefit of another 
• The covenant is unconditional 
• The covenantor views the relationship as a permanent relationship 
• The breach of a covenant is a moral failing by the breaching party 
• A religious covenant may not be enforceable by law but overseen by God
• A covenant is based on the trust of the parties and involves mutual sacrifice 
• A covenant is an agreement underpinning a long-term relationship 

Takeaways 

So what is the legal definition of Covenant vs. Contract?

What are the key characteristics of covenant versus contract?

Let’s look at a summary of our findings.

Covenant vs Contract:

Related legal terms