Covenant

In general, a covenant (서약/誓約, 맹약/盟約) means an agreement in writing under seal (날인증서/捺印證書), or a particular clause in such an agreement.

In the latter usage of covenant, the covenantor makes a promise to a covenantee to do (affirmative covenant 작위/作爲) or not do some action (negative covenant 부작위/不作爲).

In the United States, the covenant must be in writing to satisfy the Statute of Frauds. The original parties to the agreement must have intended that successors be bound by the agreement. A subsequent owner must have had actual notice, inquiry notice, or constructive notice (record) of the covenant at the time of purchase.

In Korea
Covenants are necessary to induce the other party to enter into an agreement, as exemplified below.

In common law contries, like the representatives and warranties, the covenant is regarded as a consideration (약인/約因) of a contract. Such covenants are explained as one party's self-inflicted duty and forbearance, and the other party's reliance thereon.

Example
In a typical international loan agreement, the Borrower covenants to the Lender that, during the life of the loan agreement, it shall:
 * 1) forward promptly to the Lender at any time such financial information regarding its affairs as the Lender may reasonably request;
 * 2) pay to the Lender on demand out-of-pocket expenses including legal fees;
 * 3) pay all taxes, assessments and governmental charges upon it or upon its properties promptly when due;
 * 4) as soon as possible give written notice to the Lender of any event of default or any event which, with the giving of notice or passage of time, or both, has resulted in a material adverse change in the Borrower's financial condition;
 * 5) maintain its corporate existence in good standing in compliance with all applicable laws and regulations;
 * 6) obtain and continue in full force and effect all governmental approvals, consents, licenses, authorizations, declarations, filings and registrations as may be necessary or advisable for the performance of all the terms and conditions of the Loan Agreement and every document, the execution and delivery of which is contemplated herein, and to take all such additional action as may be proper or advisable in connection therewith;
 * not, without prior written consent of the Lender, permit any indebtedness, obligation or liability, actual or contingent, of the Borrower to be secured by or to benefit from any lien, pledge, mortgage, charge, encumbrance, security interest or segregation or other preferential arrangement (whether or not constituting a security interest) in favor of any creditor or class of creditors (i) for taxes or other governmental charges on properties or assets of the Borrower, (ii) imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business and not material in amount, (iii) arising out of pledges or deposits under workmen's compensation laws, unemployment insurance, or social security benefits or similar legislation, or (iv) on properties or assets of the Borrower created at the time of acquisition of such properties or assets solely to secure the purchase price of such property or assets.
 * not, without the prior written consent of the Lender, (i) merge or consolidate with any other corporation or organization, (ii) acquire all or a substantial part of the assets of any other corporation or organization, (iii) liquidate or dissolve, or (iv) sell, transfer or otherwise dispose of its business, or any significant portion of its property or assets.