Define: Commitment Letter

Commitment Letter
Commitment Letter
Full Definition Of Commitment Letter

A commitment letter is a legal document that outlines the terms and conditions of a financial agreement between a lender and a borrower. It serves as a binding agreement between the parties involved and specifies the loan amount, interest rate, repayment terms, and any other relevant details. The commitment letter is typically issued by the lender after a thorough evaluation of the borrower’s creditworthiness and serves as a guarantee that the lender will provide the agreed-upon funds.

Commitment Letter FAQ'S

A commitment letter is a legal document issued by a lender to a borrower, outlining the terms and conditions of a loan or credit facility that the lender is willing to provide.

A commitment letter usually includes details such as the loan amount, interest rate, repayment terms, collateral requirements, and any other conditions or covenants that the borrower must meet.

Yes, a commitment letter is a legally binding agreement between the lender and the borrower. Both parties are obligated to fulfil the terms and conditions outlined in the letter.

In certain circumstances, a commitment letter can be revoked or cancelled. However, this usually requires a valid reason, such as a material change in the borrower’s financial condition or a breach of the terms outlined in the letter.

Yes, a commitment letter can be modified or amended if both parties agree to the changes. However, any modifications should be documented in writing and signed by both the lender and the borrower.

In some cases, a commitment letter can be transferred to another party with the consent of the lender. However, this usually requires the new party to meet the lender’s eligibility criteria and undergo a credit evaluation.

Yes, a commitment letter can be used as evidence in a legal dispute to prove the terms and conditions agreed upon by both parties. It is important to retain a copy of the commitment letter for reference in case of any disputes.

In most cases, a commitment letter cannot be canceled by the borrower without the consent of the lender. However, it is advisable to review the specific terms and conditions outlined in the commitment letter to understand any provisions related to cancellation or termination.

No, a commitment letter is not the same as a loan agreement. A commitment letter outlines the terms and conditions of a loan that the lender is willing to provide, while a loan agreement is a more comprehensive document that includes additional legal provisions and obligations for both parties.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 17th April 2024.

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