Just how worthless is that letter of comfort?

There is a general reluctance for parties to accept or deal on the back of Letters of Comfort. This reluctance is fueled by the presumption that, unlike an indemnity or guaranty, Letters of Comfort are usually regarded as nothing more than a “… mere gentleman’s agreement’ which is unenforceable in law.

Often times, holders of Letters of Comfort who have “gotten their fingers burnt” by contracting on the back of such letters, usually resign their fate on the belief that they have no recourse in law against the issuing party. But is this really the case?

This article examines the credibility of this conventional notion and more importantly considers the growing judicial attitude of the courts to enforcing Letters of Comfort.

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