We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
Reasonable reliance refers to a legal principle in contract law where a person acts based on the belief that a statement or promise made by another party is true. This belief must be reasonable, meaning that an average person in a similar situation would have acted in the same way. If the person suffers a loss due to this reliance on incorrect or exaggerated statements, they may be entitled to recover damages or seek performance based on that reliance.
Table of content
Legal Use & context
This term is commonly used in contract law, particularly in cases involving misrepresentation or breach of contract. Reasonable reliance can come into play in various legal contexts, including civil law disputes and business transactions. Individuals may use legal forms to document agreements or claims related to reasonable reliance, especially when seeking damages or enforcing promises.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner decides to renovate their house after a contractor promises that the renovations will significantly increase the property value. If the renovations do not increase the value as promised and the homeowner incurs costs, they may claim damages based on reasonable reliance.
Example 2: A business owner applies for a loan based on a bank's assurance that their financial statements are sufficient for approval. If the bank later denies the loan due to discrepancies in the statements, the business owner may argue they reasonably relied on the bank's assurances. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Emphasizes the need for evidence of verification in reliance claims.
New York
Allows for punitive damages in cases of egregious misrepresentation.
Texas
Requires proof of intent to deceive for certain claims of reliance.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Promissory Estoppel
A legal principle that enforces a promise when one party relies on it to their detriment.
Focuses on promises rather than statements and does not require a formal contract.
Misrepresentation
A false statement that induces another party to enter a contract.
Involves intentional or negligent falsehoods, whereas reasonable reliance can involve true but misleading statements.
Common misunderstandings
What to do if this term applies to you
If you believe you have acted in reasonable reliance on a statement or promise, consider the following steps:
Document any statements or promises made to you.
Keep records of any actions you took based on that reliance.
Assess any losses you incurred as a result.
Consult legal professionals for advice tailored to your situation.
Explore US Legal Forms for templates that may help you document your claim or agreement.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.