Legal Definitions - Reliance damages

Reliance damages are a type of compensation awarded to a party who has suffered losses due to reasonable reliance on a promise. This means that if someone makes a promise to another person and the other person relies on that promise, but the promise is broken, the injured party may be entitled to reliance damages.

For example, if a company promises to deliver a product to a customer by a certain date, and the customer relies on that promise by making plans around the delivery date, but the company fails to deliver on time, the customer may be entitled to reliance damages. These damages would be calculated based on what it would take to restore the customer to the economic position they were in before they relied on the promise.

Another example of reliance damages could be in a situation where an employer promises an employee a certain salary or benefits package, and the employee relies on that promise by accepting the job and making financial decisions based on the promised salary or benefits. If the employer later reneges on the promise, the employee may be entitled to reliance damages.

Overall, reliance damages are meant to compensate a party for losses suffered as a result of reasonable reliance on a promise that was ultimately broken.