Practical considerations relating to comfort letters

Comfort letters may be used as a guarantee alternative, but it is generally accepted that they do not provide the same certainty as a guarantee. This is because it may be arguable as to the nature of any rights that they create, and whether those rights are enforceable.

There is no one rule that determines whether a comfort letter is binding and can create legal obligations. It is therefore very important that legal practitioners draft, review and negotiate any comfort letter with care. This guidance note outlines the relevant matters that a legal practitioner should consider in practice when advising clients on comfort letters.

See Practical considerations relating to comfort letters.