Collateral Contract in United Kingdom

Definition of Collateral Contract

In accordance with the work A Dictionary of Law, this is a description of Collateral Contract : A subsidiary contract that induces a person to enter into a main contract. For example, if X agrees to buy from Y goods made by Z, and does so on the strength of Z’s assurance as to the high quality of the goods, X and Z may be held to have made a collateral contract consisting of Z’s promise as to quality given in consideration of X’s promise to enter into the main contract with y.

Definition of Collateral Contract

A collateral contract can be between one of the two parties to the original contract and a third party.