- An agreed action to be undertaken ( Positive) or not done ( Negative). A breach of a covenant is a default. Bloomberg Financial Dictionary————A stipulation in a loan agreement which restricts the borrower's freedom of action while the loan is outstanding. Designed to protect the interests of the lender. Dresdner Kleinwort Wasserstein financial glossary
* * *covenant cov‧e‧nant [ˈkʌvnənt] noun[countable, uncountable] LAW a formal written agreement to do something or not to do something, or to pay an amount of money:
• We are tied by a covenant which prohibits the stadium from being put to any other use.
• The covenant to pay the rent on the due date is absolutely fundamental.
• Under this ruling, the landlord would not have a claim against the tenant for breach of covenant (= breaking the agreement ) .— see also deed of covenantreˌstrictive ˈcovenant [countable] LAWa covenant where someone agrees not to do certain things:
• Restrictive covenants are the most common legal restriction imposed on the purchaser.— covenant verb [intransitive, transitive] :
• All the agency's profits are covenanted to third world charities.
* * *A promise in a formal agreement that some activity will or will not be carried out. In a debt agreement a breach of covenant may mean that the whole debt is immediately due. Covenants can cover issues as varied as dividend payments, gearing ratios or the amount of working capital.
* * *Ⅰ.covenant UK US /ˈkʌvənənt/ noun [C or U]► LAW a part of a formal written agreement in which it is stated what must or must not be done, or in which someone promises to do or pay something: »
The lease contains a covenant that no animals can be kept on the property.»
Any loss of rent may be claimed as damages for breach of covenant (= failure to do as promised).→ See also DEED OF COVENANT(Cf. ↑deed of covenant), RESTRICTIVE COVENANT(Cf. ↑restrictive covenant), RESTRICTIVE COVENANT(Cf. ↑restrictive covenant)Ⅱ.covenant UK US /ˈkʌvənənt/ verb [I]► LAW to officially agree to do or not do something: »
If business premises suffer serious fire damage the landlord usually covenants to reinstate the premises.
Financial and business terms. 2012.