A letter of guarantee is a written document that provides a level of assurance that a commitment will eventually be honored.
The letter of guarantee is often worded in vague terms to prevent the issuer from being saddled with a legally enforceable obligation.
A letter of guarantee may contain many provisions, including non-competition, confidentiality, or compensation to one party if the other party withdraws from the transaction.
A parent company may write a letter of recommendation on behalf of its subsidiary to assist the subsidiary in obtaining a loan or financing.