A covenant is a promise made in a deed under seal. Such a promise can be enforced by the parties to it as a contract, even if the promise is gratuitous: for example, if A covenants to pay B 100 per month, B can enforce this promise even though he has done nothing in return. Covenants may also be used to minimise income tax, by transferring income from higher rate taxpayers to non-taxpayers (such as children or charities). However, since the Finance Act (1988), only covenants made to charities offer much scope for tax planning.
Covenants may be entered into concerning the use of land, frequently to restrict the activities of a new owner or tenant (e.g. a covenant not to sell alcohol or run a fish-and-chip shop). Such covenants may be enforceable by persons deriving title from the original parties. This is an exception to the general rule that a contract cannot bind persons who are not parties to it. If the land is leasehold, a covenant 'touching and concerning land' may be enforced by persons other than the original parties if there is 'privity of estate' between them, i.e. if they are in the position of landlord and tenant. If the land is freehold, the benefit of any covenant (i.e. the rights under it) may be assigned together with the land. The burden of the covenant (i.e. the duties under it) will pass with the land only if it is a restrictive covenant. This means that it must be negative in nature, such as a covenant not to build on land. Research Covenant
Abbreviations
Money
Research Covenant