Reasonable Reliance Law and Legal Definition

Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to leaarn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance.

Reasonable reliance connotes the use of the standard of ordinary and average person. For example, in extending a loan, a creditor may not be found to reasonably rely on the statements of worth of the debtor unless there are also some actions taken to verify the assets of the debtor.

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