collateral promise

Definition of "collateral promise"
  1. A secondary assurance, usually made for paying someone else's debt that is not for the maker's benefit. It is attached but secondary to a primary agreement and must be documented in writing to be legally binding
How to use "collateral promise" in a sentence
  1. The bank required a collateral promise from the company's CEO to secure the loan.
  2. In case John defaults on the loan, his uncle has given a collateral promise to the bank.
  3. For the property purchase, the financier demanded a collateral promise instead of physical collateral.

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