Comfort Letter (Drafting)

A comfort letter is a business document that is given to assure the recipient about a financial or contractual obligation with another party can be met and will be met. The sender is often an independent auditor or accountant. The comfort letter is not a legally enforceable commitment but specifies the ability of the other party to fulfill the terms of the agreement under process.A comfort letter is also called as a letter of intent or, in some cases, a solvency opinion.

A comfort letter is also called as a letter of intent or, in some cases, a solvency opinion. A comfort letter serves a purpose that is similar to that of a letter of reference or a letter of introduction. That is, a respectable individual or company is attesting to the legitimacy of the party that the recipient is considering doing business with. The letter doesn't go much farther than that, but it is often attached to more detailed information about the agreement or contract that is under consideration.

 

Features of Comfort Letter:

1. Risks and Formalities: A comfort letter should be shown in a manner that no legal formalities and unimportant risks are joined and that all those statements created by the bank or organization should not be invalid. The letter shall bear all the relevant opinions and facts.

2. Tax Liabilities:It should not generate an unplanned tax liabilities, thereby, it should always consist of a disclaimer and a full-detailed credit service user along with a credit service outline.

3. Statement of Awareness: the comfort letter should consist of a statement of awareness from that bank which issues the credit to testify their understanding of all the listed obligations.

4. Credit facility:The comfort letter should indicate the services they intend to achieve. With that, the person issuing should not show that the letter is given as a condition precedent, but it should be given as a credit facility to be issued.

5. No Expiry Date:The comfort letter does not consist of an expiry date though it expires after the provision of the stated services. In continuation or where a new service is to be rendered, an original comfort letter is given out.

6. Holding Statement:A holding statement is another important item to be considered in a comfort letter. The holding statement should be as at the period of issuance of the letter.

Documents


Passport Photo

Passport photo of all parties.


PAN Card

PAN card of all parties.


Aadhar Card

Aadhar card of all parties.


Utility Bill

Utility bill of Electricity or Telephone.


Address Proof

Valid Address Proof of all the parties.


Licence

Valid Driving Licence of all the parties.


Terms and Conditions

Terms and Conditions between the parties.


Other Documents

Other documents will be intimated through e-mail.

FAQ

A letter of comfort is also known as a letter of intent or a solvency opinion. A comfort letter is a written document that provides a level of assurance that obligations letter under the letter will ultimately be met.

The comfort letter can be issued by an accountant or similar professionals declaring no indication of false or misleading information in the financial statements and that the company's prospectus follows the prevailing accounting standards.

A comfort letter is a business document that is required to assure the recipient that a financial or contractual obligation with another party can be met and will be met. The sender is often an independent auditor or accountant. A comfort letter is also known as a letter of intent or, in some cases, a solvency opinion.

A Bank Comfort Letter is a document issued by a bank on behalf of its client (buyer) to a supplier, to assure the supplier of the financial ability and legality of the buyer in maintaining consistent trade.

Letter of comfort is letter of moral commitments given along with obligations, to support certain obligations. Unlike guarantees, these are merely commitments are not legally binding.

Although courts generally viewed comfort letters as unenforceable, a court could, depending on the facts, find the comfort letter to be part of an implied contract and could find that the comfort letter provider assumed legal obligations.