corresponding benefit to the
covenantee; and, second, because it
As noted above, covenants are a traditional property mechanism that restrict the use of neighbouring land for the benefit of the
covenantee's own land.
Moxhay was probably confident of victory as before this case covenants were not enforced when there was no privity of contract between the
covenantee and a new owner of the burdened property.
On appeal, the Second District Court of Appeal noted that "a
covenantee may recover attorney's fees incurred in a suit to maintain or defend title against a third party occasioned by the covenantor's breach of covenant." (18) Upon examining other cases in Florida, the court acknowledged that "a
covenantee can recover attorney's fees for a quiet-title action against a third party even where that claim is joined in a lawsuit against the covenantor." (19) Therefore, at least in the context of breach of warranty cases, Florida courts have held that a party may recover attorneys' fees under the wrongful act doctrine even though the breaching party and third party are joined in the same lawsuit.
However, Macnaghten's framework must be qualified by the statements of the other Law Lords, especially the claim--best articulated by Herschell LC--that the validity of a restraint of trade was "determined by the consideration whether it exceeds what is necessary for the protection of the
covenantee".
Unless the
covenantee has a legitimate interest to be protected by the agreement, the law will not enforce such a contract, since this would merely prohibit ordinary competition.
A covenant is a contract in which the covenanter makes a promise to a
covenantee to do or not do some action.
Or, alternatively, its importance may be too great for the
covenantee to agree to its release.
LEGAL COMMENTARY: A covenant by a physician not to compete is not against public policy if it is intended to protect a legitimate interest of the
covenantee and is not so broad as to be oppressive to the covenanter or the public.
For example, easements can be encumbrances, despite the property value not being diminished in any way.(64) As stated earlier, the covenant against encumbrances is a part of general warranty deeds.(65) If an encumbrance exists when the conveyance of the property is effectuated, then the covenant has been broken.(66) "[T]he covenant against encumbrances protects the
covenantee, its successors and assigns, against rights or interests in the property conveyed which subsist in third persons and diminish the value of the estate even though they are consistent with the passage of the fee in the estate."(67) Just as determining whether an encumbrance exists is difficult, it follows that discovering whether there has been a breach of the covenant against encumbrances is also a difficult task.