Letters of Comfort Revisited

• Main Author: LEE, Pey Woan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2002
• Subjects: Contracts
• Online Access: https://ink.library.smu.edu.sg/sol_research/670; https://ink.library.smu.edu.sg/context/sol_research/article/1669/viewcontent/LETTERS_OF_COMFORT_REVISITED_LMCLQ_pv.pdf
• Institution: Singapore Management University

Since the English Court of Appeal’s decision in Kleinwort Benson Ltd v. Malaysia Mining Corp. Bhd, it would be understandable if the business community placed little or no reliance on letters of comfort save in the exceptional case where the terms evince an undeniably clear intention to create binding obligations. It might therefore seem somewhat surprising that an experienced and sophisticated institution should commence proceedings in the High Court of Singapore on the premise of a letter of awareness in Hongkong and Shanghai Banking Corporation Ltd v. Jurong Engineering Ltd. This could plausibly be explained as the bank’s last-ditch attempt to salvage an ill-fated transaction. Yet perhaps underlying this facile explanation there also exists a tangible and sanguine expectation that some legal consequences should attach to assurances given by a parent company in support of its subsidiary’s obligations. And such expectation did not seem to have been quelled by the weight of authorities to the contrary. The reasoning and result in this case reiterate the pivotal role played by the concept of contractual intent in the protection of parties’ expectations and provides us with a fresh opportunity to consider how such intent is to be ascertained.