A Practical Guide to Letters of Comfort

This practical guide to Letters of Comfort deals with the sorts of questions that can arise when deciding to issue a letter of comfort or when drafting it. The briefing note aims to provide comprehensive coverage including details of relevant case law and a checklist of processes to work through at inception and during the life of a letter of comfort.

It is assumed that letters of comfort of the kind considered here are not usually intended to impose on the issuer any enforceable contractual obligations to the recipient banks, their subsidiaries or anyone.

The receiving bank treats them as:

• confirming that the subsidiary is indeed a group member and that the issuer knows of the provision of the service
• and possibly as confirming one or two simple facts

Care is needed to ensure that drafted letters satisfy the intention without giving rise to enforceable obligations or possible claims in contract.

Representations or statements made can give rise to legal liability, for example for negligent mis-statement. Care is therefore needed to check that facts are stated accurately. Liability for mis-statement may be contractual or tortious.