Honour Clause definition
Honour Clause. A statement declares that an agreement is not to be legally binding, with the result that the agreement is 'binding in honour only'. - Such clauses are not often encountered. - They might be used where the parties are prepared to rely on non-legal sanctions, for example, their ongoing commercial dealings with each other, as an inducement for performance. - The arrangement was not a legally binding contract. - The “honourable pledge” clause showed that it was intended to be binding in honour only and not intended to create legal obligations. - Accordingly, the English company was not bound to give the notice and their termination was valid and effective. - “This arrangement is not entered into, nor is it memorandum written, as a formal or legal agreement, and shall not be subject to legal jurisdictions in the Law Courts… but it is only a definite expression and record of the intention of the parties concerned to their honourable pledge…” and disputes solved through “mutual loyalty and friendly co-operation” • Letters of comfort - In commercial contexts, 'letters of comfort' are often used where a parent company does not want to attract a contingent liability (i.e. ostensibly does not have intention to create legal relations) but nevertheless wishes to demonstrate the existence of a policy of guaranteeing the liabilities of a subsidiary company. - Letters of comfort are NOT guarantees (which are legally binding to pay someone else’s debt)