4.2 Collateral Contracts4.2.1 DefinitionOccasionally, statements that were intended to be contractually significant are not formallyincluded into the contract as terms, usually because of some technicality. Where thathappens, any party aggrieved by the non-inclusion can argue that the statement formed itsown quite separate‘collateral contract’. If the promise is not honoured, there will be abreach of the collateral contract and the innocent party will be able to take action — notunder the main contract (because the promise was not a term of that contract) but underthe collateral contract. 4.2.2 Rules governing collateral contractsCollateral contracts are difficult to prove and the ‘promisee’ must show:that the collateral statement was promissory in nature;that legal consequences were intended;that the main contract was entered into because of the statement and in reliance on it;andthat the collateral promise is not inconsistent with any term of the main contract.
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