Covenant

A promise made in a deed, which may or may not be 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 without having done any­ thing in return. Covenants were formerly used to minimize income tax. by trans­ferring income from higher rate taxpay­ ers to non-taxpayers (such as children or charities). However. since the Finance Act (1988) and the introduction of the  *gift aid system covenants can no longer be used for tax planning in this way. 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 lease­ hold, 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 the land.