What Is Detrimental Reliance?

Detrimental reliance occurs when one party (the relying party) reasonably relies on the promise or representation of another party (the promisor) to his detriment. In other words, the relying party changes his position, takes some action, or refrains from taking action based on the belief that the promise or representation made by the promisor will be fulfilled.

Promise or representation: Detrimental reliance typically involves a promise, representation, or assurance made by one party to another. This promise could be verbal, written, or implied by conduct.

Reasonable reliance: The relying party must have had a reasonable and justifiable belief in the truth and fulfilment of the promise or representation. In other words, his reliance must be objectively reasonable.

Detrimental action: The relying party must have taken some action or changed his position to his detriment based on his reliance on the promise. This action could involve incurring expenses, giving up opportunities, or making decisions that he would not have otherwise made.

Equitable remedy: If the promisor reneges on his promise, it would be unjust for the relying party. In this case, the court may require the promisor to fulfil the promise or provide compensation to the relying party so that an unjust result could be prevented.

Detrimental reliance is a way to protect individuals or parties who have reasonably relied on promises or representations to their detriment, even in the absence of a formal contract. It is based on principles of fairness and equity, aiming to prevent unjust or inequitable outcomes.