Legal Definitions - inherent covenant

An inherent covenant refers to a promise or agreement that is legally understood to be a part of a contract or relationship, even if it is not explicitly written down in the document. These covenants are implied by law or by the fundamental nature of the agreement itself, ensuring fairness, reasonable conduct, or the fulfillment of the contract's basic purpose.

Here are some examples:

• Residential Lease Agreement: When a tenant signs a lease to rent an apartment, there is an inherent covenant known as the "covenant of quiet enjoyment."

  • Example: Sarah rents an apartment from Landlord A. The lease agreement does not explicitly state that Sarah has the right to live without constant disturbance from the landlord. However, Landlord A begins frequently entering Sarah's apartment without notice or permission, or allows construction crews to work loudly directly outside her window at all hours, making the apartment uninhabitable.

    Explanation: Even though not written, the law implies an inherent covenant that the tenant will have the right to occupy the property without unreasonable interference from the landlord. Landlord A's actions would likely be considered a breach of this inherent covenant, as they interfere with Sarah's peaceful enjoyment of her rented home.

• Employment Contract: Most employment contracts, even if not explicitly stating it, include an inherent covenant of good faith and fair dealing between the employer and the employee.

  • Example: Mark is hired as a sales manager under a contract that promises him a significant bonus if his team meets certain sales targets. His employer, Company B, then deliberately withholds crucial marketing resources and leads from Mark's team, making it impossible for them to achieve the targets, solely to avoid paying the bonus.

    Explanation: While the contract might not explicitly forbid the employer from sabotaging bonus opportunities, the inherent covenant of good faith and fair dealing implies that both parties will act honestly and reasonably in fulfilling the contract's terms. Company B's actions would likely be a breach of this inherent covenant, as they acted in bad faith to prevent Mark from earning his agreed-upon compensation.

• Sale of Goods: When a consumer purchases a product from a merchant, there is often an inherent covenant (or implied warranty) that the product is fit for its ordinary purpose.

  • Example: David buys a brand new coffee maker from an electronics store. The sales receipt does not explicitly state that the coffee maker will actually make coffee. However, when David plugs it in and tries to use it for the first time, it immediately short-circuits and emits smoke without ever brewing a cup.

    Explanation: The law implies an inherent covenant, often called an "implied warranty of merchantability," that goods sold by a merchant are fit for the ordinary purposes for which such goods are used. The coffee maker's failure to function as a coffee maker breaches this inherent covenant, as it was not fit for its ordinary purpose, regardless of whether it was explicitly promised in writing.