StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Collateral Contracts - Essay Example

Cite this document
Summary
Thus, the two contracts are connected and it may be enforced even though it forms no constructive part of the original contract” (Law Teacher,…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.3% of users find it useful
Collateral Contracts
Read Text Preview

Extract of sample "Collateral Contracts"

Collateral Contracts Collateral Contracts Why require writing in the case of collateral contracts? And why make anexception in cases where the "leading object" rule applies?A collateral contract is defined as “one where the parties to one contract enter into or promise to enter into another contract. Thus, the two contracts are connected and it may be enforced even though it forms no constructive part of the original contract” (Law Teacher, 2012, par. 5). As the definition clearly indicates, the entry to another contract was based on a promise indicated in the first contract.

To ensure that it would therefore be binding and executory, a formal writing would be the most conclusive proof that the promise existed.An exception in cases where the “leading object” rule applies is made because, by virtue of defintion, a leading object rule means that “if a promise to guarantee anothers debt is made primarily for the promisors own benefit, then the statute of frauds does not apply and the promise does not have to be in writing” (US Legal, 2012, par. 1). As expressly deduced, the leading object rule is clearly indicative that a person who entered into a collateral contract actually gains a personal benefit from forging the collateral contract.

Therefore, this particular personal benefit provides sufficient proof of the collateral contract; and as such, no writing is required.ReferencesLaw Teacher. (2012). Collateral Contracts | Contract Law. Retrieved August 19, 2012, from lawteacher.net: http://www.lawteacher.net/contract-law/collateral-contracts.phpUS Legal. (2012). Leading Object Rule Law and Legal Definition. Retrieved August 19, 2012, from definitions.uslegal.com: http://definitions.uslegal.com/l/leading-object-rule/

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Collateral Contracts Essay Example | Topics and Well Written Essays - 250 words”, n.d.)
Retrieved from https://studentshare.org/business/1601816-collateral-contracts
(Collateral Contracts Essay Example | Topics and Well Written Essays - 250 Words)
https://studentshare.org/business/1601816-collateral-contracts.
“Collateral Contracts Essay Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/business/1601816-collateral-contracts.
  • Cited: 0 times

CHECK THESE SAMPLES OF Collateral Contracts

Audit and Internal Control Issues at Sucre Delights

Report To: Jean-Pierre Christophe CEO, SUCRE DELIGHTS LTD From: Manager Date: 23 May 2012 Subject: Audit and Internal Control Issues - Sucre Delights Limited Keeping in view the weaknesses in the internal control and management practices in relation to maintaining effective internal control, different areas of concerns are discussed in this report....
6 Pages (1500 words) Coursework

Common Law and the Doctrine of Privity

However, with implementation of the contracts (Rights of Third Parties) Act 1999 (hereafter “the Act”) many transformations have been witnessed, consequently enabling third parties to enforce terms in contracts.... As such, the Privity Act 1982 relates to all contracts.... Moving on the same, the Act addresses the concerns of variations of contracts advancing a benefit on a non-contracting party....
7 Pages (1750 words) Essay

Law of Contract - Vanessas Situation

Given the contractual relationship between the parties, a breach of contract would have been committed by Arnold if it can be shown that he violated an expressed or implied term in their transaction, or a collateral contract resulting from their transaction.... In the case between Vanessa and Arnold, Vanessa entered into a contract of sale with Arnold to buy “Fitness Fortress” (hereinafter ‘FF'), a leisure centre, which Arnold described in an advertisement as “Probably the best fitness emporium in London”....
6 Pages (1500 words) Essay

Privity of Contract

rdquo; For example, one of the exceptions that exist in the provision for Collateral Contracts, where one of the parties to the original contract may have a collateral contract with a third party that relates to the same subject matter of the original contract.... Collateral Contracts also provided the means for a third party to circumvent the doctrine of Privity in the case of Andrews v Hopkinson.... When it lasted for only three months, the plaintiffs sued and the Court held that despite the existing contract with the Contractors, plaintiffs could sue defendants under the collateral contract arrangement which existed, thereby allowing for action against a third party....
7 Pages (1750 words) Essay

Complex Construction Agreements

The general legal principle involved in the formulation of Collateral Contracts is that while the contractor and client enter into the main agreement, a subsidiary agreement is also formulated between the client and sub-contractor.... Collateral Contracts are required in construction contracts, where subcontractors perform services for the main contractor rather than the customers themselves and their rights need incorporation into construction agreements.... Collateral Contracts in effect, establish a connection between parties such as the client and the subcontractors who would not otherwise enter into a direct contractual relationship....
4 Pages (1000 words) Essay

Law and ethics

Overall, the defining rules should equally have Collateral Contracts besides the main contract to assist in case the other fails.... It should be an initiative advanced by the management to enable them comprehends the terms and conditions that define labor laws or civil laws that protect contracts.... Another important idea is to formulate a workable collateral contract that can assist in case the main one fails....
2 Pages (500 words) Research Paper

Foundations of Business Law

Unlike torts, contracts involve taking obligations voluntarily.... They are formed based on the Based on the promise to be made between the parties, contracts can be divided into bilateral and unilateral contracts.... Bilateral contracts revolve around both parties ensuring that they fulfill their promises while in unilateral contracts the offeror still has to perform their part of the agreement (it is a promise for and act) (Barker 2005)....
6 Pages (1500 words) Case Study

Importance and Effects of Privity of Contract

This safeguards the third party a little too broadly, and it has been applied differently where the chain of sub-contracts is long.... The paper "Importance and Effects of Privity of Contract" highlights that the doctrine of privity of a contract according to the rules of common law does not allow a third party, no matter how many benefits the contract may confer on him, to sue on it principally for two reasons....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us