What Is a Confirmation Letter?

A confirmation letter is a formal document that summarizes the verbal agreement made between two parties. This type of letter is commonly used by businesses to record and acknowledge specific tasks. There are many variations of confirmation letters. Each variation corresponds to specific agreements, such as confirming receipt of an order, confirming reservations, confirming a schedule of an appointment and confirming travel arrangements.

A letter of confirmation is also sent out by an employer to appoint a new employee.

The main objective of a confirmation letter is to ensure the concerned parties are on the same page to avoid possible confusion with respect to time, location or venue, dates and any other relevant details of the agreement, explains aSampleLetter.org

A confirmation letter typically contains the date the letter was written, a salutation, the name and address of the recipient, the terms and conditions of the agreement and the name, address and signature of the person confirming the agreement. This type of letter is normally printed on company letterhead.

Confirmation letters are widely used by businesses so they have a formal record when conflicts regarding agreements and transactions arise. In these cases, the confirmation letter serves as a vital piece of documentary evidence to determine who is at fault.

Potential home buyers are often required to provide bank confirmation letters to sellers to ensure that they have access to the funds needed to finance or purchase the home. A confirmed letter of credit is a letter between two banks in which the second bank agrees to honor a credit line that was issued to a party by the original bank. The confirmed letter guarantees coverage by the second bank of any payments that are missed by the original party or issuing bank, in turn, minimizing financial risk for all parties.