Letter of comfort (contract law)

A letter of comfort, sometimes called a letter of intent, is a communication from one party to a contract to the other party that indicates an initial willingness to enter into a contractual obligation, without the elements of a legally enforceable contract. The objective is to create a morally binding but not legally binding assurance. Such letters are generally drafted in vague terms to avoid creating enforceable contract terms, and few nations regulate them by statute, so whether one creates enforceable terms is usually decided by courts on the wording of the document alone. In international contracts they are often used to assure a contracting party that a parent corporation will give its subsidiary the resources to perform, although under both international and European Union law such a letter does not oblige the parent to fulfil the subsidiary's obligations. Canada recognizes a weaker letter of awareness and a stronger letter of comfort, and in the United States there is a general presumption against enforceability.