Definition of collateral contract in English:

collateral contract

noun

Law
  • A subsidiary contract which induces a person to enter into a main contract or which depends upon the main contract for its existence.

    • ‘Side letters can constitute a variation of the main agreement or a collateral contract with terms distinct from those in the main agreement.’
    • ‘It was considered that there was mischief in collateral contracts of that kind, which deprived creditors of the remedies which they would expect to have against persons whose names they saw registered on the list of shareholders.’
    • ‘The collateral contract was not in itself a contract for the sale of an estate or interest in land and thus was not subject to s. 2 and could be concluded orally.’
    • ‘For all the reasons which I have already discussed, the relationship created by the letters of credit is separate from and independent of the underlying contracts, including the collateral contract pursuant to which they were opened.’
    • ‘It is not incorporated by a mere reference to the terms and conditions of the contract to which the arbitration clause constitute a collateral contract.’