A collateral contract is
A) a separate agreement between the parties included in a written contract.
B) a void agreement that is related to another written agreement.
C) a separate agreement between the parties made at the same time as a main agreement between the parties, but not included in the written document.
D) an agreement between parties to a contract that precedes another written agreement.
E) an unenforceable agreement that is related to another written agreement.

Question

Quizplus · Accepted Answer

A collateral contract is a separate agreement between the parties made at the same time as a main agreement between the parties but not included in the written document. It is considered to be a separate contract that supports the main contract and can be enforced separately. Choice A is incorrect because a collateral contract is not included in the written contract, even though it is made at the same time. Choice B is incorrect because a void agreement is not enforceable from the beginning, so it cannot be a collateral contract. Choice D is incorrect because a collateral contract is made at the same time as the main agreement, not before it. Choice E is incorrect because a collateral contract, if valid, is enforceable even if it is related to another written agreement.

A Collateral Contract Is