A collateral agreement is one which is entered into two parties for the purpose of obtaining additional security for a contractual relationship between the two parties. Collateral is provided in the form of immovable property, cash, and jewelry by one party for obtaining a financial benefit from the other party.

The collateral asset that is provided as security should be capable of being converted into cash and fulfill the financial debt obtained by the party providing the collateral.

The collateral agreement has details of the property or asset being provided as security along with its market value and ownership details. The collateral security being provided should be free from any other encumbrances so that it is available freely and fully for the other party to sell when need arises.

The collateral agreement should be dated and signed by both the parties to the agreement along with the signatures of two witnesses on a government stamp document to be valid legally.

Collateral Agreement

Collateral Agreement

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