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Covenants or Conditions: Use or loose it!



I am often baffled when a prospective client storms into my office pleading my help when his "air tight contract" (which yours truly did NOT draft!) has caused him consternation, because there is a dispute as to who is supposed to do what obligations? In the majority of time, it is a question of proper drafting of the "clauses" that trigger a clear direction as to what one party is supposed do. One of the best ways of avoiding such a confusion is sprinkle the agreement, the contract, with meaningful and clear Covenants and Conditions. And to do the later, you must first have a firm grip on the meaning and use of each. So, listen class:


I. Covenant is the language that when breached, broken or violated it raises the wrath of ...

you get the picture above? In simple term, when a Covenant one of the parties has been given to follow and he/she fails to follow it, then that person is the breaching party of the contract and such person will be "punished". The word Covenant ought to stay with you, like the tablets above. So, the breach of Covenant gives the non-breaching party a RIGHT of action for damages, and may excuse a duty to perform if the breach is sufficiently serious.


Example: If the covenant says: Party A, thy shall NOT chew gum in the class. Then if he chews gum, wham!! that's it. Your are in breach of covenant and your punishment is to stand in the corner with one foot off the ground for one hour. Ouch!

In another words, there is a straight line from breach of the Covenant to the punishment. No meandering or schmoozing after-talk, will get you out, if the language is unequivocally clear. Hence, on the important matters of the heart of your contract, identify your intent in the contract as a COVENANT and repeat it like Moses did, with clouds and thunder for special effects! (well may be the weather phenomena could be dropped).


II. The Condition, on the other hand, is the language which, when if fails or occurs, it excuses a duty to perform. Such failure does NOT automatically, translates to a breach of the contract and hence any punishment. There may be a series of such failure that may or may not end up becoming fatal at the end, but in itself, failure of conditions is NOT a breach. A Condition can be distinguished from covenant by the legal consequences of its failure to occur or failure to be performed.


Example: If the condition say: If Party A chews gum in the class, then he/she will be subject to two hour interrogation to determine if that person should be punished. So the condition, triggers a further step or steps towards the goal. It is not a card blanche breach "punishment".


So, now that you see the difference, the nuances of such language properly drafted by a skillful counsel, can and will save you from thousand of your "favorite currency" when any dispute arises. In sum, let the professionals do this and don't try this at home by yourself!





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