Also known as:collateral agreement · collateral contract
Written by attorneys · grounded in primary & secondary sources — see below
A separate agreement between parties that addresses matters outside the scope of the main integrated contract or deed. The agreement survives merger or the parol evidence rule when the parties did not intend it to be absorbed into the primary writing. Courts determine survival by examining the promise's independence from the conveyance and the parties' manifested intent.
Sources & Authorities
How it applies
Common Examples
4
Post-Closing Fiber Installation Promise
Canyon Construction sold an office building to Continental Bank under a purchase agreement that contained a merger clause and mentioned only a pre-closing cooling upgrade. After closing the deed was silent on all additional promises. During negotiations Canyon Construction's CEO had separately assured Continental Bank that the seller would install a high-speed fiber network after transfer. Continental Bank later sued to enforce the fiber promise as an independent undertaking.
Competing Mortgagee Receivership Agreement
Creek Power held the senior mortgage on Alpha Oil's wind farm while National Oil held the junior mortgage. Both lenders sought appointment of a receiver after default. National Oil and Alpha Oil had previously executed a separate written understanding that allocated rental income and defined the receiver's duties if National Oil obtained the appointment. The court applied that separate understanding to resolve the competing requests.
Put it into practice
Test Yourself
10
Practice Questions5
· 3 primary sources
Select any source to read its text and confirm it supports the definition.
Common Law
Restatements
Study Supplements
Sham Marriage Support Disclaimer
Trevor and Isaiah executed a marriage license and participated in a ceremony. They also signed a separate handwritten document stating they would never share a residence or finances and would treat the relationship solely as employer and employee. When Trevor later challenged the marriage, the court examined whether the separate document contradicted core marital obligations.
Independent Fence Construction Covenant
Cassandra Cooper conveyed land to Curtis Cannon by warranty deed that contained no reference to any post-closing obligations. The purchase contract had included a written promise that Cooper would build a boundary fence on adjacent property she retained. After closing Cannon sought to enforce the fence promise. The court considered whether the promise was independent of the conveyance itself.
Common questions
Frequently Asked
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When does a collateral agreement survive merger into the deed?+
A collateral agreement survives when the promise is independent of the conveyance and the parties did not intend it to merge. Courts examine the nature of the promise and the parties' intent to decide whether the agreement remains enforceable after closing.
Supporting sources
How does a merger clause affect enforcement of a collateral agreement?+
A merger clause states that the written contract is the complete agreement. It limits enforcement of prior promises unless the collateral agreement addresses matters outside the scope of the integrated writing or falls within an exception such as fraud or mutual mistake.
Supporting sources
Can a collateral agreement contradict core marital obligations?+
A collateral agreement that disclaims essential marital duties such as support or cohabitation is invalid as contrary to public policy even if the marriage itself satisfies formal requirements.
Supporting sources
What role do collateral agreements play when multiple mortgagees seek a receiver?+
When mortgagees agree in advance on the disposition of rental income and the receiver's duties, that agreement controls the receivership. Absent such consensus, priority rules determine which mortgagee prevails.
Supporting sources
ContractsDefenses to enforceability · Statute of fraudsNEXTGENFoundational