Question

Explain how a covenant is similar and dissimilar to a contract.

Answer 1

Answer:

Covenants are promises of future action or inaction. It’s a contractual statement that a party will do, or will not do, something during a period of time (often the term of the agreement). An example of a positive contractual covenant is “Party A shall issue a press release announcing the relationship within 30 calendar days of the Effective Date”; an example of a negative covenant is “Party A shall not issue a press release or make any public statement regarding the terms of the Agreement during the term of this Agreement.”

Answer 2

While a contract is an agreement between parties, a covenant is a pledge between two parties.