The PDF from the French bank is rarely labelled as a guarantee. It arrives after the Kbis (the official extract from the RCS, the registre du commerce et des sociétés, France’s companies register) has been issued, or while the credit committee still holds the IBAN. The title is lettre de patronage, lettre de confort or “comfort letter”. The addressee is the foreign parent, not the président or gérant personally. Sign this, the bank says, and the account can proceed.

Article 2287-1 of the Civil Code lists the personal securities governed by Title I: “Les sûretés personnelles régies par le présent titre sont le cautionnement, la garantie autonome et la lettre d’intention.” The label does not decide whether the parent must pay if the French SAS (société par actions simplifiée) or SARL (société à responsabilité limitée) defaults. The wording does. That is a different risk from the director’s personal cautionnement and from a parent loan.

The Cour de cassation treated “faire en sorte qu’aucun créancier n’encoure de perte” as an obligation of result in 2019. The Court of Appeal of Versailles dismissed a €145,940.54 claim in 2025 where the parent had only undertaken to “watch over” the subsidiary. A foreign owner who treats the letter as a formality discovers the difference when the bank calls. This article sits next to the path for setting up a French company as a foreign founder.

I. When a French bank asks the foreign parent for a letter of patronage, is it a comfort letter or a hidden guarantee?

A. What French banks mean by a lettre de patronage, a lettre d’intention and a lettre de confort

French relationship managers use three labels for the same family of documents. Lettre de patronage is the banking phrase. Lettre de confort is the older commercial phrase. Lettre d’intention is the statutory phrase. Article 2322 of the Civil Code defines it in one sentence: “La lettre d’intention est l’engagement de faire ou de ne pas faire ayant pour objet le soutien apporté à un débiteur dans l’exécution de son obligation envers son créancier.” The parent undertakes to do something, or to refrain from doing something, in order to support the subsidiary in performing its obligation to the bank. The parent does not, by that definition alone, undertake to pay the debt.

That statutory object is why the letter exists in the onboarding file. The French company is a separate legal person. Its share capital may be €1,000 or €10,000. Its Kbis shows a foreign président living abroad. The bank’s credit committee wants a group signal: the parent knows the facility, the parent will keep the subsidiary in a position to pay, the parent will not walk away on the first difficult quarter. English-speaking treasurers know the same document as a letter of comfort. In London or New York the letter is often intended to be morally binding and legally thin. In France it is a named personal security. Treating it as a non-binding group policy note is the first mistake.

The second mistake is to confuse this letter with the M&A “letter of intent” that records a plan to buy shares. That document belongs to pre-contractual negotiations. Article 2322 belongs to the law of securities. The same French words cover two different acts. A parent that already signed a term sheet for an acquisition has not, by that term sheet, supported the target’s overdraft. A parent that signs the bank’s patronage template has not bought anything. It has given a security.

The bank asks for the letter at predictable moments. The first is account opening, when compliance has the Kbis but still wants a group undertaking before it releases payments. The second is the first overdraft, the first equipment lease, or the first facility that exceeds the cash on the blocked capital account. The third is a later review, including after an AML review that has already frozen or closed the account, when the bank will only restore the relationship against a parent letter. The fourth is a landlord or a supplier who copies the bank’s method and asks the parent to “confirm its support”. Each of those addressees will later argue that it relied on the letter. The parent should assume that the letter will be produced in court.

The legal starting point remains the separation of patrimony. The subsidiary’s debts are the subsidiary’s debts. The parent is not a surety merely because it owns 100% of the shares, appoints the président, and consolidates the accounts. Captain Contrat’s public guidance on parent and subsidiary restates that principle and then adds the letter of intent as the instrument through which a parent may choose to stand beside the subsidiary. Service-public’s business page on cautionnement, “Garantir une dette avec un cautionnement”, describes the neighbouring instrument: a promise to pay the debt if the debtor does not. The patronage letter sits between those two ideas. It can stay on the support side of article 2322. It can slide onto the payment side of article 2288 of the Civil Code, which defines suretyship: “Le cautionnement est le contrat par lequel une caution s’oblige envers le créancier à payer la dette du débiteur en cas de défaillance de celui-ci.”

Qualification is a matter of interpretation, not of the heading. Article 1188 of the Civil Code states: “Le contrat s’interprète d’après la commune intention des parties plutôt qu’en s’arrêtant au sens littéral de ses termes.” Article 1192 then stops the court from rewriting a clear clause: “On ne peut interpréter les clauses claires et précises à peine de dénaturation.” If the letter clearly says the parent will pay on first demand, the parent will not be heard to say that it only meant to be helpful. If the letter only says the parent will watch over the subsidiary’s finances, the bank will not turn that sentence into a cheque by calling the document a guarantee in later correspondence. The Cour de cassation and the courts of appeal have spent twenty years drawing that line, one formula at a time.

A foreign parent should therefore read the French template as a security document, have it translated by someone who understands securities rather than marketing, and compare it with the three statutory boxes in article 2287-1. Comfort, patronage and letter of intent are banking vocabulary. Cautionnement, autonomous guarantee and letter of intent are the legal vocabulary. Only the second list decides the claim.

B. When the wording turns the letter into a cautionnement or a first-demand guarantee

The commercial chamber of the Cour de cassation has already shown how little the title protects the parent. In Cass. com., 18 December 2019, no. 18-12.287, the company Ban rouge, which held the entire capital of its subsidiary TLU, had signed a letter of intent in favour of Société Générale. TLU went into liquidation. The bank sued the parent for the unpaid credit. The Court of Appeal of Chambéry held that the parent’s obligation to act was only an obligation of means. The Cour de cassation quashed that holding. After recording that Ban rouge had undertaken “à faire en sorte qu’aucun créancier n’encoure de perte du fait des engagements avec ses filiales” and had assured the bank that it would do “de toute manière, le nécessaire afin que sa filiale respecte ses engagements et dispose d’une trésorerie suffisante à cet effet”, the Court held that “l’obligation contractée s’analysait en une obligation de résultat”. The appeal court had not drawn the legal consequences of its own findings. The parent’s words, not the label “letter of intent”, produced an obligation of result.

The opposite wording produced the opposite result in CA Versailles, 24 June 2025, no. 23/08513. Design Vision had signed, on 1 October 2020, a letter of intent for a €150,000 loan granted by CIC to its subsidiary Nécessaire. After the subsidiary’s liquidation the bank claimed €145,940.54 from the parent, arguing that the letter was an obligation of result and a guarantee. The court quoted article 2322 and then the letter: the parent confirmed that its policy had always been to see that subsidiaries were financially sound, and that “nous veillerons à ce que notre filiale soit en mesure de respecter ses engagements financiers”. The court held: “L’obligation souscrite par la société Design Vision est ainsi de « veiller » à la solidité de la situation financière de ses filiales, et de « veiller » à ce que sa filiale soit en mesure de respecter ses engagements financiers.” There was no assurance of a result, no promise to be substituted for the subsidiary, no guarantee. Emails from the bank itself had described the template as a “modèle obligation de moyens”. The court of appeal reversed the commercial court, dismissed the payment claim, and ordered the bank to pay costs. It added, in terms that matter for every later demand: “Il a été démontré que la lettre d’intention souscrite par la société Design Vision exprimait seulement son intention de mettre en œuvre certains moyens pour permettre au bénéficiaire de faire face à ses obligations, sans que cela ne constitue une quelconque obligation de garantie équivalente à un cautionnement.” The bank had pleaded a guarantee. It had not even alleged a breach of the obligation of means. The claim failed.

Those two decisions give the foreign parent a working test. Language of result — “faire en sorte qu’aucun créancier n’encoure de perte”, “de toute manière, le nécessaire”, “nous nous substituons”, “nous réglons à première demande”, “nous garantissons le paiement” — pulls the letter toward an obligation of result, toward suretyship, or toward an autonomous guarantee. Language of means — “nous veillerons”, “nous nous efforcerons”, “nous maintiendrons une politique de soutien”, without a promise that no creditor will lose money — can stay inside article 2322 as a duty to support. The bank’s own covering email is part of the file. If the bank sold the document as a means template and later sues as if it were a guarantee, Versailles shows that the mismatch is usable.

Two neighbouring statutes complete the map. If the letter obliges the parent to pay the subsidiary’s debt in the event of default, the court may treat it as a cautionnement under article 2288, even if the heading still says patronage. A corporate surety does not benefit from the handwritten-mention rules that protect a natural person under article 2297 of the Civil Code: “A peine de nullité de son engagement, la caution personne physique appose elle-même la mention qu’elle s’engage en qualité de caution à payer au créancier ce que lui doit le débiteur en cas de défaillance de celui-ci, dans la limite d’un montant en principal et accessoires exprimé en toutes lettres et en chiffres.” That sentence is why the director’s personal guarantee is a separate negotiation, with its own nullities. It does not rescue a parent company that signed a payment undertaking. If the letter obliges the parent to pay a sum on first demand, without raising defences drawn from the underlying loan, article 2321 of the Civil Code describes an autonomous guarantee: “La garantie autonome est l’engagement par lequel le garant s’oblige, en considération d’une obligation souscrite par un tiers, à verser une somme soit à première demande, soit suivant des modalités convenues.” The parent then pays first and argues later, and only abuse, fraud or collusion stops the call.

A parent that wanted a comfort letter and finds, on a second reading, a first-demand clause or a substitution clause is not looking at a drafting inconvenience. It is looking at a different security. The right response is to refuse that template, or to strike the payment language, before anyone signs. After signature, the fight is qualification and performance, not vocabulary.

II. How should a foreign parent draft, authorize and contest a letter of patronage from abroad?

A. How to draft and authorize the letter so the parent is not over-committed

The safest letter is the one the parent can perform without writing a cheque on day one of a default. That usually means an obligation of means, limited in amount, limited in time, limited to a named facility, and silent on first demand. The parent confirms that it owns the subsidiary, that it intends to keep that ownership for the stated period, that it will not take steps to strip the subsidiary of the means needed to perform the named facility, and that it will consider, in good faith, recapitalisation or a current-account advance if the subsidiary is short. It does not undertake that “no creditor will incur a loss”. It does not undertake to pay “in any event”. It does not undertake to be substituted for the subsidiary. It does not give the bank a right to call a sum “on first demand, without the parent being entitled to raise any defence”. Those four refusals are the difference between article 2322 and articles 2288 or 2321.

The letter should identify the French company by its name, RCS number and registered office, identify the bank and the facility, and state the cap in figures and in words. An unlimited letter that also covers “all present and future credits in any form whatsoever”, which is the formula Versailles had to read, is how a €150,000 loan becomes an open-ended group exposure. If the parent is willing to cover one overdraft of €200,000 until 31 December 2027, the letter should say so. If the bank wants a wider net, that is a pricing discussion, not a recitals discussion. Governing law and jurisdiction should be written, not left to later argument. A French bank will push for French law and the commercial court of the French company’s registered office. A foreign parent that accepts French law should still keep the obligation inside article 2322.

Language must be consistent across the pack. The covering email, the term sheet, the board minutes and the letter should tell the same story. Versailles used the bank’s own “modèle obligation de moyens” email against the later claim. A parent can use the same method in reverse: its board minutes should record that the directors authorised a letter of intent under article 2322, an obligation of means, and not a cautionnement or an autonomous guarantee. If the bank later recharacterises the document, those minutes are not decisive, but they are part of the common intention under article 1188.

Authorisation is a second, separate question. If the parent is a French société anonyme (SA, a public limited company), article L. 225-35 of the Commercial Code is explicit: “Les cautions, avals et garanties donnés par des sociétés autres que celles exploitant des établissements bancaires ou financiers font l’objet d’une autorisation du conseil, qui en limite le montant, dans les conditions déterminées par décret en Conseil d’Etat.” The board authorises a ceiling. Article R. 225-28 of the Commercial Code adds that the authorisation given to the managing director cannot run for more than one year, “quelle que soit la durée des engagements cautionnés, avalisés ou garantis”. A patronage letter that a court treats as a “garantie” falls inside that corporate filter. A letter that stays a pure obligation of means is more debatable. The practical answer for an SA parent is to obtain a board authorisation anyway, with a ceiling and a one-year review, rather than argue the characterisation after a call.

If the parent is a French SAS, article L. 225-35 does not apply as such. Article L. 227-6 of the Commercial Code gives the président the widest powers to act in the company’s name within the corporate purpose, and then states: “Les dispositions statutaires limitant les pouvoirs du président sont inopposables aux tiers.” A statutory clause that required a shareholder vote before any “guarantee” will not, by itself, defeat a bank that received a letter signed by the président, unless the bank knew of the excess. The same logic appears for a SARL in article L. 223-18 of the Commercial Code: in relations with third parties the gérant has the widest powers, and clauses that limit those powers cannot be set up against third parties. Internally, the parent should still follow its own articles. Externally, the bank will argue apparent authority.

If the parent is not French — a Delaware corporation, a GmbH, a Ltd, a Luxembourg company — French articles L. 225-35 and L. 227-6 do not govern its internal power. The law of the parent does. The French court that later hears the bank’s claim will still characterise the instrument under the law chosen in the letter, often French law. The parent therefore needs both things: a valid corporate authorisation under its own law (board resolution, secretary’s certificate, whatever its articles require), and a French-law text that does not overspill into payment. Banks that already ran an AML file on the foreign shareholder will ask for that corporate paper. Sending it is cheaper than arguing, three years later, that the signatory had no power.

A bilingual execution is useful when the parent’s board reads English and the bank’s template is French. The French version will usually prevail in a French court. The English version is for the board, not for a later claim that the parent “did not understand”. Do not sign a scanned signature block on which the bank has already typed “caution solidaire” in small print under a patronage heading. Read the last line. If the bank also wants the director’s personal suretyship, that is the other article, the other statute, and the other negotiation.

B. What to do when the bank calls the letter, freezes the account or sues the parent

The call does not always look like a writ. It may be a formal notice (mise en demeure) sent to the parent’s registered office abroad, a hold on the French company’s account, a refusal to renew the facility unless the parent “honours its patronage”, or an assignment before the commercial court of the French company’s registered office. The first task is to recover the entire file: the signed letter, every draft, the covering emails, the board minutes, the facility agreement, the Kbis, and any later correspondence in which the bank described the letter as a means undertaking or as a guarantee. Qualification will be fought on that bundle, not on a single paragraph isolated by the bank’s counsel.

The second task is to state, in writing, what the parent accepted. If the letter is a means undertaking in the Versailles sense, the parent does not pay the subsidiary’s unpaid balance merely because the subsidiary has defaulted. Default is the moment at which the bank must show that the parent failed to implement the support it promised: a recapitalisation that was announced and then withheld, a current-account drain, a decision to let the subsidiary fail while the parent extracted cash. Article 1231-1 of the Civil Code then supplies the remedy for a proven breach of that obligation: “Le débiteur est condamné, s’il y a lieu, au paiement de dommages et intérêts soit à raison de l’inexécution de l’obligation, soit à raison du retard dans l’exécution, s’il ne justifie pas que l’exécution a été empêchée par la force majeure.” Damages are not automatically equal to the unpaid loan. They depend on the breach. A bank that, like CIC in the Versailles case, pleads a guarantee and says nothing about a failure of means, invites the same dismissal.

If the letter used Ban rouge language — no creditor will incur a loss; the parent will in any event do what is necessary — the parent should expect an obligation of result and a claim for the unpaid facility. The defence then moves to other grounds: the facility was amended without the parent, the cap was exceeded, the letter expired, the signatory had no power and the bank knew it, the bank sold a means template and cannot now denature a clear “veiller” clause under article 1192. None of those defences should be invented. They have to sit in the documents.

If the letter is in substance a cautionnement, the parent-company surety does not have the natural-person protections of article 2297 or of article 2300 of the Civil Code on disproportionate suretyships. It may still raise the debtor’s exceptions under article 2298: “La caution peut opposer au créancier toutes les exceptions, personnelles ou inhérentes à la dette, qui appartiennent au débiteur, sous réserve des dispositions du deuxième alinéa de l’article 2293.” A corporate surety can argue that the underlying obligation is not due, or that it has been extinguished, in a way that a first-demand guarantor under article 2321 generally cannot. That is one reason to resist first-demand wording at the drafting stage. After a call, it is a reason to identify which of the three boxes in article 2287-1 actually fits.

Account freezes sit in a different register. The bank may freeze the French company’s account because of a default, an AML hold, or a third-party attachment. A patronage letter does not give the bank a right to freeze the parent’s foreign accounts by itself. It may give the bank a contractual claim against the parent. Mixing the two, and treating a freeze as self-help enforcement of the letter, should be challenged in correspondence and, where the French account is concerned, before the court that has jurisdiction over the bank-customer relationship. If the French company’s registered office is in Paris or elsewhere in Île-de-France, that fight is usually in the Paris commercial court specified by the account agreement, with the Kbis, the general terms and the letter in the same bundle. A foreign parent served abroad should not ignore the summons on the ground that it never set foot in France. Article 1103 of the Civil Code is blunt: “Les contrats légalement formés tiennent lieu de loi à ceux qui les ont faits.” A letter validly formed under French law binds the parent that signed it.

Evidence of actual support is the parent’s friend when the obligation is one of means. Current-account advances, documented capital increases, delayed intra-group charges, and a refusal to upstream cash while the facility was alive are the facts Versailles recorded when it described the parent’s conduct. A parent that emptied the subsidiary through management fees and then pleaded a comfort letter will look like a parent that did not even perform a duty of means. Keep the intra-group cash trail. It is the same trail a tax inspector reads; it is also the trail a commercial court reads when the bank says the parent did nothing.

Settlement is often available before judgment. A bank that overplayed a means letter may accept a capped contribution, a new limited letter, or a timetable for recapitalisation. A parent that signed result language may still negotiate a discount against a prompt payment and a release. Do not sign a new “acknowledgement of guarantee” in the heat of a freeze; that document will be exhibit 1 in the next hearing. Any new instrument should be as carefully limited as the first one should have been.

Conclusion

A letter of patronage is not a polite group email. In French law it is a lettre d’intention, a personal security listed next to suretyship and the autonomous guarantee. The bank asks for it because the Kbis of a thinly capitalised foreign-owned SAS or SARL does not, by itself, comfort a credit committee. The parent can give that comfort without promising to pay. It can also, by a handful of English or French verbs, promise exactly that.

The working distinction is in the wording. “Nous veillerons” was an obligation of means in Versailles in 2025, and the bank that sued as if it held a guarantee lost. “Faire en sorte qu’aucun créancier n’encoure de perte” and “de toute manière, le nécessaire” were an obligation of result for the Cour de cassation in 2019. First-demand language is an autonomous guarantee. A promise to pay on default is a cautionnement. The heading will not save the parent from the sentence it signed.

From abroad, the practical sequence is narrow. Recover the template before anyone signs. Strip payment, substitution and first-demand clauses. Cap the amount and the duration. Authorise the letter under the parent’s own law, and, if the parent is a French SA, under article L. 225-35. Keep the emails that describe the letter as a means undertaking. If a call comes, answer the qualification first, then the performance, and do not treat a freeze as a substitute for a judgment. The director’s personal cautionnement, if the bank wants that as well, is another document and another risk. The patronage letter is the parent’s document. It should be written as if a commercial court will read it, because one will.

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