What is the collateral contract?

Although viewed with suspicion by the law, there may be a contract the consideration for which is the making of some other contract. While both contracts would exist independently, the first mentioned contract is said to be collateral to the main contract as it has the effect of varying or adding to the terms of the main contract. Collateral contracts must be proven strictly as must the intention of each party to enter into them. Were it otherwise, written contracts would lose their authority because they could be varied by the simple suggestion that there existed an oral collateral agreement binding the parties to a contract over the same subject matter contracted to in the main contract. Matheson J. discusses the various authorities for these principles in Crawford v. Cashin, [1999] P.E.I.J. No. 91 (Q.L.) (P.E.I.S.C.T.D.) at paras. 15 and 16. The trial judge also cited authority for these principles at paras. 44 and 45 of his reasons. He correctly applied these principles to the alleged collateral contract here.