A collateral contract is made in considering the party benefiting from the contract. There are agreed operations for entering within the main or principal contract. There is setting of additional terms with respect to similar subject matters as the principal contract. There is side-by-side co-existence of collateral contract with the principal contract. A collateral contract surely induces an individual for entering the principal contract.The common law classifies collateral contract being an exception to the rule of parol evidence. This depicts that admissible evidence can be used in collateral contract for excluding the operations conducted under the parol evidence rule. In practical terms, it is quite difficult for locating collateral contract with strict proof of an exception. There is no easy burden of proof with the unusual subject matter with the main deals of contract.
Any party in the current contract attempts to reflect the existence of collateral contract in claiming the failed breach of contract. This can be due to the key reliability of the contract terms on the statement provided. There can be awarding of remedies in case collateral contract is breached. The promisor should place implied or expressed request related to the contract. The traditionally used terminology for explaining the link between three different parties within the scenario of agency ends up causing confusion. The key concerning contracts take place between the customer and the employee or the agent.