Collateral - Definition - Law Dictionary Home Dictionary Definition collateral

Definition :

Collateral, indirect, sideways, that which hangs by the side; applied in several ways, thus:--collateral assurance, that which is made over and above the deed itself; collateral consanguinity or kindred, which descend from the same stock or ancestor as the lineal relation, but do not descend one from the other, as the issue of two sons; collateral issue, where a criminal convict pleads any matter allowed by law, in bar of execution, as pregnancy, pardon, an act of grace, or diversity of person, viz., that he or she is not the same that was attained, etc., the issue upon which when taken is tried by a jury instanter; collateral security, where a deed is made of other property, besides that already mortgaged, for the better safety of the mortgagee (see Re Athill, (1880) 16 Ch D 211) or a bill of exchange given, or pledge deposited to secure a pre-existing debt; and collateral contract, where a contract by word of mouth co-exists [see e.g., Morgan v. Griffiths, (1871) LR 6 Ex 70; De Lassalle v. Guildford, 1901 (2) KB 215] with a contract in writing made at the same time, notwithstanding the general rule that an oral merges in a written contract. See WARRANTY.

A collateral or incidental issue is one that is ancillary to a direct and substantive issue, the former is an auxiliary issue and the latter the principal issue, Sajjadanashin Sayad M.D.B.E. EDR v. Musa Dadabhai Ummer, (2000) 3 SCC 350.

A security described as collateral may, nevertheless, in view of its covenants and other provisions and the surrounding circumstances of the case, be held to be complete, perfect and independent security, although, where the words used by the parties, together with the facts of the case, indicate an intention to regard a particular security as 'collateral', Marquis of Bute v. Cumenghame, (1826) 2 Russ 275 (UK).