When parties to a contract make promises to perform their obligations, and one party reasonably relies on the other party’s promise—but the party making the promise fails to perform, causing harm or loss to the party who relied on the promise—the party who relied on the promise to perform is said to have relied to its detriment.

This legal concept is called detrimental reliance. Detrimental reliance may serve as a substitute for consideration, and make an otherwise unenforceable contract enforceable.

Thus, detrimental reliance is a legal concept based on fairness (known as equity or equitable), and is equivalent to contractual promissory estoppel (due to the other party’s reliance, the party who did not keep its promise is prohibited from challenging the enforceability of its promise).

Detrimental reliance is not a separate tort cause of action.

In New Jersey, the legal concept of detrimental reliance is recognized and is often referred to as promissory estoppel. Under this doctrine, if one party makes a promise to another, and the second party reasonably relies on that promise to their detriment, the first party may be prevented from arguing that there was no enforceable contract. This principle is particularly relevant when there is a lack of consideration, which is typically required to form a binding contract. Detrimental reliance can serve as a substitute for consideration, thereby making an agreement enforceable even when the traditional elements of a contract are not all present. New Jersey courts will look at the fairness of the situation—applying equitable principles—to determine if promissory estoppel should be applied to enforce the promise made. It is important to note that detrimental reliance itself is not a separate cause of action in tort; rather, it is a legal theory that can affect the enforceability of contractual promises.