Schloo offered to purchase Baker's snowmobile if he could arrange a loan with the bank for the funds.Schloo and Baker signed a written purchase agreement that did not mention the fact that Schloo did not have the necessary funds in his possession.
-If Baker claimed against Schloo for breach of the contract,Schloo could raise the agreement concerning the need for a bank loan as a collateral agreement,allowing him to avoid the contract.

Question

Quizplus · Accepted Answer

A collateral agreement must be separate and independent from the main contract. Since the written purchase agreement did not mention the bank loan, Schloo cannot use it as a collateral agreement to avoid the contract.

Schloo Offered to Purchase Baker's Snowmobile If He Could Arrange