Accounting Dictionary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Covenant

Definition: A covenant is a contractual requirement that one party to a contract either specifically complete a task or to refrain from doing something. The term is frequently used in lending agreements, where a borrower is not allowed to do certain things, such as pay dividends, while the loan is still unpaid. A covenant is postitive when it requires a party to take action, and is negative when it restricts a party from taking action.