What is a principal and accessory contract?

A principal and accessory contract refers to a relationship where one contract is reliant on the existence or validity of another, often with the accessory contract serving as a means of securing performance of the principal contract. The correct answer highlights the nature of such contracts that may include performance security measures, such as collateral or guarantees, designed to ensure that the obligations of the principal contract are met.

In this context, the accessory contract enhances the overall arrangement by providing the necessary security and understanding that the main contract's terms will be fulfilled. This framework allows parties to protect their interests and commitments, thus reinforcing the overall agreement.

Understanding the principal and its accessory also involves recognizing that these contracts typically work together to provide mutual security and benefit within legal agreements, differentiating them from contracts that may lack such provisions or those that offer unilateral benefits.