Collateral Legal Meaning and Definition

Here is a simplified definition of the legal term Collateral.

Collateral (noun)

  1. Property or other assets that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses.
  2. In legal context, it refers to the matters or facts which are indirectly related to a case under consideration but may influence the final decision making. While they may not directly influence the case's outcome, they provide additional context or information that may be relevant to the overall situation.