The ________ states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.
A) merger clause
B) leading object exception
C) collateral contract rule
D) parol evidence rule

Question

Quizplus · Accepted Answer

The leading object exception is a rule that allows an oral collateral contract to be enforced if the main purpose of the underlying transaction is to provide pecuniary benefit to the guarantor. It is an exception to the general rule that collateral contracts must be in writing to be enforceable (collateral contract rule). The parol evidence rule governs the admissibility of evidence in court to interpret a written contract, and a merger clause is a provision in a contract that states that the written agreement contains the entire understanding of the parties and supersedes any prior agreements or understandings.

The ________ States That If the Main Purpose of a Transaction