A collateral arrangement is a legally binding agreement where the signatory assumes responsibility for another person`s contractual obligations, usually the payment of a loan if the primary borrower defaults or defaults. The person who signs this type of contract is more often called a co-signer. While the common law has historically distinguished co-signatories (those who sign collateral contracts) from guarantors, U.S. law makes the two terms virtually identical. Let us assume that the customer`s obligation to the creditor has been fully fulfilled and that the guarantor has contributed to this satisfaction. Then the guarantor has the right to transfer to the creditor`s rights against the principal. .