What is the test for establishing a collateral agreement where the collateral agreement is inconsistent with or contradicts the written agreement?

British Columbia, Canada


The following excerpt is from Nili Holdings Ltd. v. Rose, 1981 CanLII 274 (BC SC):

See also the case of Hawrish v. Bank of Montreal (1969), 1969 CanLII 2 (SCC), 2 D.L.R. (3d) 600 at p. 605, [1969] S.C.R. 515 at p. 520: My opinion is that the appellant’s argument fails on the ground that the collateral agreement allowing for the discharge of the appellant cannot stand as it clearly contradicts the terms of the guarantee bond which state that it is a continuing guarantee. … a collateral agreement cannot be established where it is inconsistent with or contradicts the written agreement.

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