Reliance Damages

In one sentence

Compensation for losses suffered by relying on a promise, even if no formal contract exists.

Plain English

Reliance damages compensate you for money or resources you spent because you trusted someone's promise, even if that promise wasn't technically a binding contract. If you quit your job based on a job offer that falls through, or you buy materials because a supplier promised to deliver them, you can recover the costs you incurred in relying on that promise. This remedy protects people from unfair losses when they reasonably depend on someone's word. It's often used in situations where a formal contract never formed but one party made a clear promise.

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Example

A company promises you a job starting in two months. You quit your current job and turn down other offers. The company then withdraws the job offer. You can sue for reliance damages to recover your lost wages during the gap period and other costs of relying on their promise.

Used in a sentence

“The plaintiff recovered reliance damages for the money she spent preparing to move based on the defendant's broken promise.”

Related terms

Expectation Damages

Money awarded to put a party in the position they would have been in if the contract had been fully performed.

Damages Calculation

The process of determining how much money a harmed party should receive for a breach.

Bargained-for Exchange

A mutual agreement where each party gives something of value in return for something from the other.

Fraud

Intentional deception or misrepresentation made to trick someone into entering a contract or deal.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

Consideration

Something of value exchanged by each party to make a contract binding.

Offeror

The person who makes an offer to enter into a contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.