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Jane T (LLC)
Jane T (LLC), Attorney
Category: Business Law
Satisfied Customers: 8435
Experience:  Worked in corporation's law department; business formations, formalities, and other business matters
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Why require a writing in the case of collateral contracts

Resolved Question:

Why require a writing in the case of collateral contracts? And why make an exception in cases where the "leading object" rule applies?
Submitted: 6 years ago.
Category: Business Law
Expert:  Jane T (LLC) replied 6 years ago.

Jane T (LLC) :

Hi, The Statute of Frauds requires collateral contracts, as well as those for the sale of real property or those which cannot be performed in less than one year's time, or those which are for something over a certain value, to be in writing to be enforceable. The reason is that such contracts need to be proven and a writing is the only clear method to absolutely prove their existence. Indeed, a collateral contract, one in which people engage in order to obtain another contract or to provide an assistance to another, and in which they may have no personal role, would be difficult to prove without a clear writing. This, however, is not needed where the leading object rule applies. The leading object rule indicates that a person who enters a collateral contract does, in fact, gain a personal benefit due to his or her collateral contract. The personal benefit, therefore, offers sufficient evidence of the contract and a writing, therefore, is not needed.

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