Cross-collateral clause

Cross-collateral clause,

Definition of Cross-collateral clause:

  1. Contracting: Agreement between joint contractors to pool their guaranties in handling a large project. Its objective is that (in case one of them fails to perform the contract) others will have recourse to that contractors guaranty(s) to ensure the continuity of the project.

  2. Banking: Common stipulation in loan agreements under which a bank has a legal right to seize any or all assets pledged by a borrower (for different loans with the same bank) even if only one loan goes into default. Bankers justify this clause on the logic that a default sours the bank-client relationship, not a just a loan agreement. See also cross default clause.

Meaning of Cross-collateral clause & Cross-collateral clause Definition