Cross-Collateral Clause Law and Legal Definition
Cross-collateral clause is an installment-contract provision allowing the seller, if the buyer defaults, to repossess not only the particular item sold but also every other item. The other items should be bought from the seller on which a balance remained due when the last purchase was made. A cross-collateral clause is also termed as dragnet clause.
In terms of Banking, cross-collateral clause refers to a provision in a security agreement that one party signs when a bank lends money to buy some asset, such as a car. This clause provides the bank with a legal right to seize any or all assets pledged by a borrower even though only one loan is in default.
