"Detrimental reliance" is an essential ingredient of estoppel.
Lets get that on the table first;
"estopel" - a legal principal that when an individual represents a material fact to another, and that third party alters his position on reasonable reliance on the representation; the first party may not deny that the fact or condition exists."
A "promissory estoppel" is a good example of the detrimental reliance model. If you are not obligated to make a promise, but you do, and there is - foreseeable or reasonable - detrimental reliance on your promise by another person, you must carry through with the promise to avoid causing an injustice.
A material detrimental reliance in realty law means - that a recipient of a jurisdictional determination (eg. favorable by law or zoning change) who has acted on and proceeds with plans in relation to a project, or expended significant sums of money or otherwise has taken significant action in furtherance of the project, based upon that jurisdictional determination; and who would experience a substantial adverse economic effect if the jurisdictional determination was reversed.
The concept surfaces often in family law. In the stereotypical palimony setting, usually a man will promise to provide for a woman if she agrees to cohabitate with him and take care of him and she alters her financial position (to her detriment) in reliance on those promises. Based on that, "detrimental reliance", courts have found the foundation to impose financial obligations upon that man.
The concept surfaces often in contract law, where the reliance is often established outside the actual contract wording. A "detrimental reliance" may be proven when a person relies upon a verbal promise of performance or upon a written summary or outline of a specific contract to decide whether to enter into that contract, and then to his detriment finds that the contract language conflicts with the verbal promises or written summary or outline that was previously provided and relied upon. This detrimental reliance may have been triggered by the ambiguity in the contract in comparison to verbal or summary representations, or alternatively by the misleading or vague statements made in the verbal or written representations.
Specifically with general insurance, there is an interesting 1995 Mississippi case, that deals quite clearly with the issue.
http://www.home.olemiss.edu/~libcoll/ndms/jan95/950005p.html
It concerned a store owner versus USF&G Insurance Company. In 1987, the store owner (plaintiff) was having coffee in his store with his insurance agent, and had a very typical conversation - "am I fully covered" under the insurance that is in force at the time. The agent informed him that if he purchased a personal umbrella, "that would guarantee you coverage for everything". The plaintiff replied, "write it up".
Of course, a claim ensued where coverage was denied and the plaintiff sued relying on the statements made.
I think in most jurisdictions today, that the outcome would be reversed from that as found in this reported decision.
Hope this helps.
Chuck, you are a 'minimalist' with your questions. Can you give us the scenario that gave rise to your generic questions? |
Detrimental Reliance
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Posted - 05/03/2003 : 08:51:24
