Kleinwort Benson Ltd v Malaysia Mining Corp [1989] 1 All ER 78

Defendant’s subsidiary company had business dealings with Plaintiff who undertook to give the subsidiary company a cash facility after receiving two comfort letters from Defendant stating that their policy was that the subsidiary would always be able to meet its liabilities.

When the company went bust, Defendants refused to pay sums outstanding cash facility payments, stating that the comfort letter was not intended to create any legal obligations.

CA accepted this, saying that a statement of current policy is a statement of present fact and NOT a promise of future conduct and therefore the letter had no effect.