Can Relying On a Promise of the Worse Now Lead To Recovery of Damages?

What is Detrimental Dependence, what defense is Detrimental Dependence a part of, and how can you use it?

When discussing detrimental reliance in law, it’s helpful to begin with an example that shows how it could arise in real life. Imagine you are the franchisee of a large national fast-food chain. While working as a franchise manager, your corporate manager promises a raise at the end the year. You thank your corporate manager and mention that the raise will allow you to buy a car for your family. After leaving the office, you head home and, after a long discussion with your family, you visit the local car dealer to purchase a new car, based on the fact you will be able pay it off faster with the new raise. When the end-of-year meeting comes around, you find out that your manager is not giving you the promised raise due to a corporate choice. You are stuck with a car you may not be able pay off because of decisions and situations out of your hands. What is detrimental reliance? What legal defense falls under it, and how can this help you protect yourself in a similar situation?

Detrimental Reliance: The Legal Definition of Relying on an Failed Promise

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Detrimental Reliance, also known as “reliance on a failed promise”, is a legal concept that is used in contract law when one party suffers damage or losses due to relying upon the promises made by another. In the example we gave in the introduction, a franchisee relied detrimentally on the promise of a pay raise at the end of the year made by the corporate manager. Although detrimental reliance is an important legal concept, it can’t be used to fight a bad offer, like the one in our example. To protect yourself from a bad offer, you must explain your detrimental reliance on the promise in the claim for promissory esoppel. What is a promise estoppel claim, and how does detrimental dependence play into it? The legal defense of promissory esoppel is used to protect oneself from a bad promise.

To have a case under the doctrine of promissory esoppel, you must satisfy the following five-pronged tests

“a promise which induced the promisee’s action or forbearance; the promisee’s reliance must To have a case for promissory Estoppel, you need to satisfy five criteria:

“a promise that induced the promisee to act or to forbear;

the reliance of the promisee must have been reasonable;

1. the action or the forbearance of the promisee must have amounted a substantial change in the position;

2. the promisor’s

3. Promissory Estoppel Can Be Used to Recover Damages That Arise From Detrimentally Relying On a Promise

5. Promissory Estoppel can be used to recover damages that arise from relying on a promise in a detrimental manner

In our situation, our franchisee is the promise. The promise was made by the corporate manager. In this case, the franchisee would be able to successfully raise a promissory-estoppel claim because 1) the promise made to the franchisee caused him to make the decision to purchase the car; 2) his reliance was reasonable since the manager promised to provide the raise; 3) he put himself in a significantly different position as a result of the promise; 4) the manager may have foreseen your buying the new vehicle Our franchisee could most likely use the legal concept of damaging reliance to defend promissory esoppel and get a court uphold the promise made by their manager. If you have any more questions about detrimental reliance or promissory estoppel, please contact your local business attorney or take a look at our other blog posts at https://www.l4sb.com/blog/. Law 4 Small Business (L4SB). A Slingshot Company. A little law can save you a lot of money later.
Author:
Chad Alvis

Chad, a legal intern at the firm, is pursuing his dream of becoming a lawyer. Chad has a Bachelor’s degree in History and Politics from New Mexico State University. He is now entering his third year of Law School at the University of New Mexico School of Law. Chad will receive his Juris Doctorate by the spring of 2025, and will take the New Mexico State Bar Exam in August.
Chad is interested in pursuing a career as a lawyer, specifically in the areas of Intellectual Property, Wills and Trusts or Business Law. Chad worked at New Mexico Legal Aid as well as the New Mexico State Fair Office before joining Law 4 Small Business. He helps the firm with research projects and assists the attorneys in any way he can.

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