Covenant to deliver: Overview, definition, and example
What is a covenant to deliver?
A covenant to deliver is a contractual obligation requiring one party to provide goods, services, documents, or other agreed-upon items to another party within a specified timeframe. This ensures that the delivering party fulfills its promise under the contract.
For example, in a sales agreement, a supplier may have a covenant to deliver a shipment of products by a certain date, ensuring the buyer receives the goods on time.
Why is a covenant to deliver important?
A covenant to deliver is important because it creates a binding commitment, preventing delays and ensuring both parties receive what they agreed to. Without it, there may be uncertainty about when or if the delivery will happen, leading to disputes or financial losses.
For businesses, this clause is critical in supply chain agreements, real estate transactions, and service contracts. It ensures accountability and provides a legal basis for action if the delivering party fails to meet their obligations.
Understanding a covenant to deliver through an example
Imagine a construction company orders building materials from a supplier. The contract includes a covenant to deliver requiring the supplier to provide the materials by a set deadline. If the supplier fails to deliver on time, the construction project may be delayed, causing financial losses. The construction company could then enforce the covenant to seek remedies for the delay.
In another scenario, a business selling its assets agrees to provide legal documents transferring ownership. A covenant to deliver clause ensures the seller delivers the required documents to complete the transaction. If they fail to do so, the buyer may have legal grounds to demand compliance or seek damages.
An example of a covenant to deliver clause
Here’s how a covenant to deliver clause might appear in a contract:
“Seller covenants to deliver the Goods to Buyer no later than [Delivery Date], in accordance with the specifications set forth in this Agreement. Failure to deliver as agreed shall constitute a material breach of contract.”
Conclusion
A covenant to deliver ensures that one party fulfills its contractual promise to provide goods, services, or documents within an agreed timeframe. This clause helps prevent delays, protects against financial losses, and holds parties accountable for their obligations. Whether in supply agreements, real estate transactions, or service contracts, a well-defined covenant to deliver is essential for clear and enforceable commitments.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.