Detrimental Reliance in Trusts Law

Detrimental reliance, also known as promissory estoppel, plays a significant role in trusts law. It occurs when a person reasonably relies on a promise or representation made by another, to their detriment, such that it would be unjust to allow the promisor to go back on their word. This principle is crucial in ensuring fairness and preventing injustice, particularly when dealing with trusts and equitable claims.

In the context of trusts law, detrimental reliance often arises when a settlor makes a promise or representation regarding the establishment or terms of a trust, and the beneficiary relies on this promise to their detriment. For example, if a settlor promises to create a trust for the benefit of a particular individual, and that individual, relying on this promise, takes certain actions or refrains from taking actions that they otherwise would have, detrimental reliance may be invoked to enforce the promise.

Courts apply the doctrine of detrimental reliance to prevent a promisor from denying their obligations if the promisee has reasonably relied on the promise and suffered a detriment as a result. In trust law, this principle can be used to compel the enforcement of informal trusts or promises that might not meet the strict formalities typically required for the creation of a trust. For instance, if a settlor orally promises to create a trust and the intended beneficiary acts on this promise, the court may enforce the trust despite the lack of formal documentation, provided the beneficiary's reliance was reasonable and detrimental.

Detrimental reliance is particularly relevant in cases involving constructive trusts and proprietary estoppel. A constructive trust may be imposed by a court to address situations where it would be unconscionable for the holder of property to deny the claimant an interest in it. Proprietary estoppel, closely related to detrimental reliance, arises when one party is led to believe they will acquire an interest in property and acts to their detriment based on this belief. In such cases, the court can enforce the promise or representation to prevent unjust enrichment.

The doctrine of detrimental reliance in trusts law serves as a safeguard for individuals who, in good faith, act based on promises or representations made by others, ensuring that such reliance is not unjustly ignored. By enforcing promises and representations where detrimental reliance is evident, courts maintain the integrity of trust relationships and promote equitable outcomes.