In order to argue the existence of collateral contract, there are four elements necessary to establish collateral contract as follow: 1> the statement is promissory in nature; 2> the promise is followed by statement; 3> consistency between main contract and alleged contract; 4> the collateral contract must contain all ...
Suppose you agree to rent an apartment. The lease agreement you sign with the landlord is the main contract. However, your landlord promises to fix the toilet drainage. Therefore, this is the collateral contract.
This is a form of collateral assignment of a material agreement wherein a borrower (the assignor) grants to a lender (the assignee) a collateral security interest in a material contract used in the borrower's business as security for the obligations owing to the lender from the borrower under a credit facility.
Suppose you agree to rent an apartment. The lease agreement you sign with the landlord is the main contract. However, your landlord promises to fix the toilet drainage. Therefore, this is the collateral contract.