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Last edited 24 Jan 2018
Typically, a comfort letter is provided by an account to give assurance about the financial soundness of an organisation and its assets. The receiving party is typically a lender who is sent a comfort letter in relation to credit being granted by them to organisation.
A comfort letter is not a guarantee but 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 of the comfort letter will need to be interpreted.
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