A letter of comfort, sometimes called a "letter of intent", is a communication from a party to a contract to the other party that indicates an initial willingness to enter into a contractual obligation absent the elements of a legally enforceable contract.
[1] Despite their nonbinding status, letters of comfort nonetheless provide risk mitigation because the parent company is putting its own reputation in jeopardy.
[2] However, under both international and European Union law, a letter of comfort does not require the parent corporation to fulfill the obligations incurred by its subsidiary.
The weaker version, in which a parent organization acknowledges that a subsidiary has entered into a contract but which provides no assurance of intention, is called a letter of awareness.
The stronger version, the letter of comfort, indicates the parent organization's intention to support the subsidiary.