Written or oral agreement associated as a second, or side contract made between the original parties, or between a third party and an original party. This typically occurs before or at the same time of the first or main contract is made. This collateral contract is independent and separate from the primary contract. A collateral contract is often done because (1). Its terms conflict with those of the main contract, (2). Its rules of evidence supersede its incorporation in the main contract, (3). The main contract is wrongly drawn or (4). There is a difference in the contracting parties, needing to involve a third party. It may also be used to avoid overstepping the privity of the main contract. A collateral contract is active along with the main contract and it may override or replace one or more of the main contract’s provisions, if triggered. For example, if ‘A’ enters into a construction contract with ‘B’ giving reason for ‘B’ to enter into a contract with ‘C’ for a material used in the construction, ‘A’ may have the right to sue ‘C’ for compensation if the material turns out to be defective. A collateral contract with three or more parties obligates each of the contracting parties to meet their individual accountability to each other party. Called also collateral warranty.
What is COLLATERAL CONTRACT?
Featuring Black’s Law Dictionary
Nothing implied or stated on this page should be construed to be legal, tax, or professional advice. The Law Dictionary is not a law firm and this page should not be interpreted as creating an attorney-client or legal adviser relationship. For questions regarding your specific situation, please consult a qualified attorney.
- How To Take Someone To Small Claims Court
- What is Jury Nullification?
- Guide to Court Ordered Mediation
- Workplace Retaliation – What It Is And How To Handle It
- A Guide on Lemon Law for New & Used Cars
- The Exclusionary Rule
- Illegal Eviction – The Consequences & How to Avoid It
- California Landlord-Tenant Laws
- What is Duress?
- Conservatorship vs Guardianship
- Best Way to Find Someone in Jail for Free
- What Is A Police Welfare Check?
- How Do You Look up License Plate Numbers?
- Best Way To Run A Free Arrest Warrant Check
- Signing a Letter on Someone Else’s Behalf
- Best Way to Write a Professional Letter to a Judge
- How To Find A Name & Address Using A License Plate Number
- How To Find An Inmate’s Release Date
- How to Transfer a Car Title When The Owner Is Deceased
- What Rights Do Convicted Felons Lose?