Collateral Agreement

In one sentence

A separate side agreement made alongside the main contract, often oral or informal.

Plain English

A collateral agreement is a side deal or separate promise made in addition to the main written contract. It might be oral (spoken) or written, and it typically covers something not included in the primary agreement. Courts treat collateral agreements carefully: if the main contract is integrated (meaning it's supposed to be the complete deal), a collateral agreement may not be enforceable.

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Example

You sign a lease for an apartment, but the landlord separately promises to repaint the bedroom before you move in. That verbal promise is a collateral agreement, and whether it's enforceable depends on whether the lease is integrated.

Used in a sentence

“The seller made a collateral agreement to deliver the furniture within two weeks, even though the purchase contract said nothing about delivery timing.”

Related terms

Integrated Agreement

A written contract that the parties intend as the complete and final statement of their deal.

Oral Contract

A binding agreement made by spoken words only, with no written documentation.

Written Contract

An agreement between parties that is documented in writing and signed by the parties involved.

Parol Evidence Rule

A rule preventing outside evidence from changing the meaning of a written contract.

Implied-in-Fact Contract

A contract inferred from the parties' conduct and the circumstances of their dealings.

Assent

A party's agreement to the terms of a contract.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.