A
letter of
comfort is a
commercial device used in the
negotiation of
contracts. The letter is sent by the
parent company, another
client of the company on whose behalf the letter is sent, or the
government, to persuade the other party that
transacting business is a
Good Idea™. Typically, the letter will try to indicate that because the
sender is
on board, the
risk is
low.
The legal effect of such letters depends entirely upon the drafting, rather than upon any preconceived legal notion of a Letter of Comfort. With careful drafting, they may seem to promise the world, while having no legal validity whatsoever.