collateral contract

USAGE SUMMARY

The phrase 'collateral contract' is correct and usable in written English.
Collateral contracts are agreements that are related to, but not part of, the primary contract between two parties. For example, two parties might enter into a primary contract to purchase a piece of real estate and a collateral contract to repair the roof of the property being purchased.

✓ Grammatically correct

Wiki

News & Media

Science

Human-verified examples from authoritative sources

Exact Expressions

4 human-written examples

In certain commercial contracts, such as goods sold to consumers by a dealer, there is automatically a collateral contract between the consumer and the manufacturer of the goods.

Wikipedia

Shanklin had no contractual relationship with Detel Products, but the Court of Appeal found like there was a collateral contract they could use to sue.

Wikipedia

A collateral contract is a contract where the consideration is the entry into another subordinate contract, which co-exists side by side with the main contract.

Wikipedia

As a loophole the use of collateral contracts are limited, because the courts must first find evidence to imply some kind of collateral contract, as well as consideration.

Wikipedia

Human-verified similar examples from authoritative sources

Similar Expressions

49 human-written examples

These were at times both complex and extremely artificial, and used the law relating to trusts and agencies, along with other areas and ideas such as collateral contracts.

Wikipedia

The habit of the courts finding collateral contracts to allow an injured third party to sue has been criticised, however, as "exceedingly artificial", and in light of the Contracts (Rights of Third Parties) Act 1999 the use of this has been predicted to decrease.

Wikipedia

Attempts by the courts to do this have added to the perception of this as an artificial device - the decision in Charnock v Liverpool Corporation [1968] 1 WLR 1498, which used collateral contracts, has been described by Guenter Treitel as "invented" consideration, and by Patrick Atiyah as "fictitious".

Wikipedia

Only the specific events that threatened the collateral or contracts would be expected to indicate concerns on the part of creditors.

The New York Times

If one of the major credit rating agencies were to downgrade A.I.G.'s debt, the company could be forced to post additional collateral on contracts, the company said.

The New York Times

The varied resolutions of these debates over collateral and contracts thus have important economic implications for borrowers of all kinds, including businesses, governments and families, and for the overall economy.

The New York Times

Only in the unlikely event that Berkshire is found to be a threat to the system, the company would have to retroactively post collateral on contracts, which would require it to tie up capital.

Huffington Post

Expert writing Tips

Best practice

When drafting contracts, clearly define the scope and relationship of the "collateral contract" to the main agreement to avoid ambiguity and ensure enforceability. Specify which conditions of the main contract apply to the collateral one.

Common error

Avoid drafting a "collateral contract" that duplicates or contradicts terms in the main agreement. Ensure it addresses distinct, related matters to maintain its separate legal standing.

Linguistic Context

The phrase "collateral contract" functions as a noun phrase identifying a specific type of agreement related to a primary contract. Ludwig AI confirms its usability in legal and commercial contexts. It's used to denote a secondary agreement with its own consideration, as showcased in the Ludwig examples.

Expression frequency: Rare

Frequent in

Wiki

33%

News & Media

33%

Science

33%

Less common in

Encyclopedias

0%

Reference

0%

Formal & Business

0%

Ludwig's WRAP-UP

The term "collateral contract" refers to a secondary agreement that is related to, but distinct from, a primary contract. According to Ludwig, this noun phrase is grammatically correct and usable in written English, although its occurrence is rare. It is primarily found in Wiki, News & Media and Science sources. When drafting contracts, it's important to clearly define the scope and relationship of the "collateral contract" to the main agreement. It should address distinct matters to maintain its separate legal standing. Be aware of the difference between the main contract and the "collateral contract", a "side agreement" can be considered a valid alternative.

More alternative expressions

Phrases that express similar concepts, ordered by semantic similarity:

Subordinate contract

Stresses that the contract is lower in rank or importance to the main contract.

Secondary contract

Indicates that the contract's validity and enforceability is derived from a main agreement.

Side agreement

Emphasizes the informal or less prominent aspect of the agreement.

Ancillary contract

Highlights the supporting or secondary nature of the contract.

Accessory contract

Highlights the dependency of the contract on another primary contract.

Supplementary agreement

Focuses on the addition of a separate agreement to an existing one.

Additional agreement

Highlights that the agreement adds to or supplements an existing one.

Related agreement

This is a more general term indicating a connection to another agreement.

Linked contract

Emphasizes the connection or dependence between contracts.

Independent contract

Focuses on the separateness of the contract from another agreement, though related.

FAQs

How does a "collateral contract" differ from the main contract?

A "collateral contract" is a separate agreement linked to a main contract. It typically contains terms related to, but independent from, the main contract's primary obligations.

When is it appropriate to use a "collateral contract"?

Use a "collateral contract" when additional agreements or guarantees are needed that don't fit directly into the main contract, such as specific warranties or undertakings.

What happens if there's a breach in either the main or the "collateral contract"?

A breach in either contract allows the injured party to seek remedies specifically related to that contract. The consequences are usually distinct unless expressly linked.

What are some alternatives to using a "collateral contract"?

Instead of a separate "collateral contract", you could amend the main contract directly, use an addendum, or rely on implied terms and warranties, depending on the legal and business context. Consider using a "side agreement" as a similar alternative.