Also called a letter of support or comfort letter.

A statement or letter by a third party that it will stand behind the obligations of a party under a contract. It is typically given by the holding company of the company that is a party to the contract and often contains statements regarding the intentions and policies of the holding company with respect to its subsidiary.

Letters of comfort are often seen:

Letters of comfort are generally used when the holding company is unable or unwilling to give a guarantee, but wishes to give some comfort (to the recipient of the letter) as to its subsidiary's ability to satisfy its contractual obligations. They are not usually intended to be legally binding, but may give rise to legally binding obligations depending on the wording. Therefore, care is needed when drafting a comfort letter.