Table Of ContentInternational Banking and Finance Law Series
VOLUME 15
Series Editors
Joseph J. Norton
SMU Dedman School of Law, Dallas
Ross P. Buckley
Professor of Law, University of New South Wales, Sydney
Douglas W. Arner
Asian Institute of International Financial Law, University of Hong
Kong
Advisory Board
P. Wood (Chair), CCLS and Allen & Overy, London
W. Blair, QC, CCLS and 3 Verulam Buildings, Gray’s Inn, London
L. Buchheit, Cleary Gottlieb Steen & Hamilton, New York
M. Dassesse, McKenna & Cuneo, Brussels
S. Gannon, Hong Kong Monetary Authority
B. Geva, Osgoode Hall, York University, Toronto
A. Halkyard, University of Hong Kong
N. Horn, University of Cologne
A. Itzikowitz, Edward Nathan Sonnerbergs and University of the
Witwatersrand,
Johannesburg
H. Kanda, University of Tokyo
R. Lastra, CCLS, London
S. Seigel, NYU Law School, New York
M. Steinberg, SMU Dedman School of Law, Dallas
Z. Zhou, Shanghai University of Finance and Economics
Editorial Review Board
Executive Editors
G.A. Walker, CCLS, London
C. Hadjiemmanuil, London School of Economics and Political
Science
J. Winn, Microsoft Center, University of Washington, Seattle
B. Hsu, Asian Institute of International Financial Law, University
of Hong Kong
Associate Editors C. Olive, SMU Institute of International Banking
& Finance and Bracewell &
Guiliani, Dallas
W. Wang, Fudan University, Shanghai
M. Yokoi-Arai, CCLS, London
The titles published in this series are listed at the end of this
volume.
Letters of Comfort
A Trans-Systemic Analysis
Anton P. Trichardt
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An earthworm expects to find a law, a printed law, for every
circumstance. Even have laws for private matters such as contracts.
Really, if a man’s word isn’t any good, who would contract with
him? Doesn’t he have a reputation?1
The law of contract exercises a particularly powerful grip on the
imaginations of lawyers. What Voltaire said about God could
equally be said of contract law: if it did not exist, then it would
certainly be necessary for us to invent it!2
Like comfort food, a letter of comfort is intended to make you feel
better.
1. Argues Manuel in Robert Heinlein’s science fiction novel, The Moon is a
Harsh Mistress (1966), which describes a legal culture on the moon
different from the one we are accustomed to ‘downside’.
2. A Cockrell, ‘The Hegemony of Contract’ (1998) 115 South African Law
Journal 286 at 316.
The Author
Anton P. Trichardt, BIur LLB (Pretoria) MALS (Chicago-Kent)
MLM (UNSW) PhD (UWA) PhD (UNSW), is a barrister at the
Victorian Bar, Melbourne, Australia, and a Fellow of the Chartered
Institute of Arbitrators and of the Institute of Arbitrators and
Mediators, Australia. He is also admitted to practise in England and
Wales, New Zealand, and South Africa.
Table of Contents
The Author
Preface
Chapter 1
Introduction
1.1 Raison d’être for this Book
1.2 A Preliminary General Delineation of Letters of Comfort
1.3 Origin and International Dimension of Letters of Comfort
1.4 Scope of Investigation
1.5 Limitation of Topic
1.6 Roadmap
Chapter 2
The Concept of the Letter of Comfort and its Delineation
2.1 Introduction
2.2 Definitions
2.3 Terminology
2.4 The Typology of Letters of Comfort
2.4.1 Classification
of Letters of Comfort in Belgian Law
2.4.2 Classification of Letters of Comfort in French Law
2.4.3 Classification of Letters of Comfort in Dutch Law
2.4.4 Classification of Letters of Comfort in German Law
2.4.5 Classification of Letters of Comfort in Anglo-
Common Law
2.5 Delineation
2.5.1 Letter of Comfort Properly So Called or ‘Weak’ or
‘Soft’ Letter of Comfort
2.5.2 Letter of Responsibility or ‘Strong’ or ‘Hard’ Letter of
Comfort
2.5.3 Medium Strength Letter of Comfort or Letter of
Comfort in Ordinary Vernacular
2.6 The Legal Nature of Letters of Comfort
2.6.1 Contract as Basis for the Letter of Comfort
2.6.2 Binding Unilateral Promise as Basis For The Letter Of
Comfort
2.6.3 Credit Mandate as Basis for the Letter of Comfort
2.7 Letters of Comfort and Traditional Securities
Chapter 3
The Use of Letters of Comfort in Corporate Group and
Banking Practice
3.1 Introduction
3.2 Reasons for the Use of Letters of Comfort
3.2.1 Reasons for Their Acceptance by Banks
3.2.2 Reasons for Their Provision by Parent Companies
3.2.3 An Economic Explanation for the Use Of Letters of
Comfort
3.2.4 Remarks
3.3 The Banking Practice of Grading Letters of Comfort
Chapter 4
The Contractual Effect of Letters of Comfort in the Anglo-
Common Law
4.1 Introduction
4.2 Consideration
4.3 Certainty
4.4 Intention to Create Legal Relations
4.4.1 ‘Deliberate No-Law’: Honour or No Agreement
Clauses
4.4.2 ‘Contextual No-Law’: Gentleman’s Agreements and
Letters of Comfort
4.5 Early Encounters with Letters of Comfort
4.5.1 Chemco Leasing Spa v. Rediffusion plc: Preparing the
Foundations for the Contractual Intention Approach
4.5.1.1 The Facts
4.5.1.2 The Issues
4.5.1.3 The Decision
4.5.1.4 On Appeal
4.5.2 Re Augustus Barnett and Son Ltd
4.5.2.1 The Facts
4.5.2.2 The Issues
4.5.2.3 The Decision
4.6 Determining the Contractual Effect of Letters of Comfort
Chapter 5
The Contractual Effect of Letters of Comfort: The Contractual
Intention Approach
5.1 Introduction
5.2 Intention to Create Legal Relations and Letters of Comfort
5.3 Kleinwort Benson Ltd v. Malaysia Mining Corporation
Berhad at First Instance: The Judicial Beacon for the
Contractual Intention Approach
5.3.1 The Facts
5.3.2 The Issues
