What is meant by ‘detrimental reliance’?

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What is meant by ‘detrimental reliance’?

Asked on August 5, 2017 under Business Law, Alaska

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Detrimental reliance (or "promissory estoppel") is a legal concept whereby one party has an obligation to fulfill its obligations under the terms of a contract in order to prevent the other party from experiencing unjust losses. In other words, this principle can be used to enforce a contract whether or not the contracted party wants to fulfill its responsibilities. It applies when the following elements are proven: a promise was made; relying on the promise was reasonable or foreseeable; there was actual reliance on the promise; the reliance was detrimental (i.e. a harm was suffered); and injustice can only be prevented by enforcing the promise.


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