Comfort letter

A comfort letter, also known as a 'letter of comfort' or sometimes a 'solvency opinion', is a written document intended to give assurance that an obligation will be met.

Typically, a comfort letter is provided by an accountant to give assurance about the financial soundness of an organisation and its assets. The receiving party is typically a lender who is sent the comfort letter in relation to credit being granted by them to organisation.

A comfort letter is not a guarantee, only an opinion, and will sometimes specifically state that it is not intended to be legally binding. In the absence of such a provision however, comfort letters are generally viewed as an intention to create legal relations.

In the event of a subsequent breach of contract, the precise meaning and consequences of the comfort letter may need to be carefully interpreted.

[edit] Related articles on Designing Buildings Wiki

• Bonds.
• Breach of contract.
• Guarantees.
• Insurance.
• Parent company guarantee.
• Performance bond.
• Surety.