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LSDefine
Simple English definitions for legal terms
collateral warranty
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A quick definition of collateral warranty:
A collateral warranty is a type of promise made by someone who is not the owner of a property, but who promises to make things right if there are any problems with the property. This promise only applies to the person who received the promise, not to anyone else. It is different from a general warranty, which promises to protect against any problems with the property for everyone. Collateral warranties can also apply to other things, like promises made when buying a product or getting insurance.A more thorough explanation:
A collateral warranty is a type of warranty that is made by a third party who is not the original seller or owner of a property or product. This warranty only applies to the person who receives it and does not transfer with the property or product.
For example, if a contractor builds a house for a homeowner, the contractor may provide a collateral warranty to the homeowner that guarantees the workmanship and materials used in the construction. This warranty would not transfer to any future owners of the house, but only applies to the original homeowner who received it.
Another example is when a manufacturer provides a collateral warranty to a retailer who sells their product. The warranty only applies to the retailer and not to any customers who purchase the product from the retailer.
Overall, a collateral warranty is a type of warranty that is limited in scope and only applies to the person who receives it, rather than transferring with the property or product.