reliance

law

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Last updated

July 13, 2026

Quick Summary

In contract law, "reliance" refers to the damages a party may incur when another party fails to fulfill their contractual obligations. These damages aim to reimburse the injured party for losses suffered due to their trust in the contract being honored.1

This contrasts with "expectancy damages," which seek to place the party in the economic position they would have occupied had the contract been fully performed. Reliance damages can be substantial, as seen when a subcontractor's failure to deliver parts for an ocean liner leads to significant delays and potential damage to the vessel. Legal systems have mechanisms to limit damages when they become unreasonably large.1

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contract
Unenforceable transactions
…common-law countries, is one party’s reliance upon the promise of the other. The fact of reliance argues in favour of enforcement because it indicates that an underlying understanding existed between the parties and because the relying party may suffer as a consequence of its change of position. Some courts will…
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…common-law countries, is one party’s reliance upon the promise of the other. The fact of reliance argues in favour of enforcement because it indicates that an underlying understanding existed between the parties and because the relying party may suffer as a consequence of its change of position. Some courts will…
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damages
…on the contract), and (3) reliance, which gives him compensation for expenditures made or liabilities incurred “in reliance on” the contract’s being performed. Reliance damages are limited to consequences that are reasonably foreseeable by the parties at the time that they contracted. These remedies can be invoked in various combinations,…
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…on the contract), and (3) reliance, which gives him compensation for expenditures made or liabilities incurred “in reliance on” the contract’s being performed. Reliance damages are limited to consequences that are reasonably foreseeable by the parties at the time that they contracted. These remedies can be invoked in various combinations,…
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