Final answer:
A collateral contract is one in which one person agrees to answer for the debt of another, often involving a cosigner and the use of collateral. Therefore correct option is C
Step-by-step explanation:
A collateral contract is a secondary agreement that accompanies the primary contract, offering additional assurances or terms that are related to the main contract. In the context of your question, the correct answer is a contract where one answers for the debt of another, which is closely related to the concept of a cosigner.
A cosigner is someone who legally pledges to repay some or all of the money on a loan if the original borrower does not. This concept is important to understand, as collateral contracts often involve a promise to ensure the satisfaction of another's debt, sometimes backed by collateral, which is something valuable that a lender can seize if the loan is not repaid.