Letter of Guarantee versus Letter of Comfort

Abstract

The Civil Code regulates for the first time the letter of guarantee among autonomous guarantees, alongside the letter of comfort. The creation of commercial practice and autonomous guarantees appeared and developed in the banking environment, from the need to secure credit but also for flexibility. From articles 2321-2322 of the Civil Code dedicated to these new guarantee instruments, we extract, to identify and distinguish them, at the same time, particularities embodied in legal characters and specific effects. After analyzing the common features of the two types of regulated autonomous guarantees, we note that the essence is the assumption by the issuer of their obligation, distinct from the pre-existing obligation relationship (guaranteed obligation relationship) between the officer and the beneficiary, in the case of the letter of guarantee, or between the debtor and creditor, in the case of the comfort letter. The independence and autonomy of the guarantee obligations are also confirmed by the fact that the issuer is expressly forbidden to oppose the creditor any defense or exception deriving from the pre-existing (guaranteed) obligation relationship. To recover what he paid, the issuer of the autonomous guarantee benefits from a personal appeal, which, as a rule, does not have a subrogative nature.