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Click here for Wookieepedia's article on the Canon version of this subject.  This article covers the Legends version of this subject. 

A letter of marque and reprisal, often known simply as a letter of marque, was a the contract under which a privateer captain operated on behalf of a government. It would define the rules, requirements and restrictions of the relationship, as well as the rights and privileges of the privateer and the employer.

During the Galactic Civil War, the Alliance to Restore the Republic hired significant numbers of privateers by this means. Letters of marque could be issued by a number of senior personnel, including the Alliance Chief of State Mon Mothma and her Chief of Staff, or the Supreme Commanders of Fleet Commanders-in-Chief, Ordnance and Supply, and Sector Command. A typical such document was that issued to Chaeloe Dantin by OaS Supreme Commander Ral'Rai Muvunc:

Be it known that Chaeloe Dantin, owner of the private vessel Dantin's Folly, is now recognized by the Alliance to Restore the Republic as license to conduct raids upon the Imperial government, subsidiaries, and supporters, to capture such cargo, properties and vessels as they may own, and to deliver them unto the Alliance. Further, to capture officers of the Imperial military, government, and supporters. She is also authorized and expected to pursue the war against the Empire as she is able, while in no case endangering the innocent civilian public and without causing undue damage to property.
The owner shall surrender all proceeds of such activities to the review of the Alliance, and in return shall be awarded 50 percent of their value. The Alliance shall also award fixed bounties for the confirmed destruction of Imperial properties.
In return, the Alliance shall render such aid as it can, subject to availability and discretion, including shelter, intelligence, repair, stocking, and fueling. Those members of the crew, formerly criminals, are hereby granted amnesty, so long as they serve our cause, or until the Empire is destroyed, and do not commit further crimes. Should they do so, they shall be subject to all charges, and summarily imprisoned.
All slaves found in the course of duty shall be free, all illicit substances destroyed. The Alliance may choose to buy an entire cargo, as needed.
This letter shall hold in effect for one year from its date, when it shall be reviewed. If either party is dissatisfied, the contract may be dissolved. The Alliance reserves the right to assign observers to the ship, for the purpose of this review.
Ral'Rai Muvunc
Supreme Allied Commander
Ordnance and Supply

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