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detrimental reliance

   Also found in: Medical, Legal, Wikipedia, Hutchinson 0.01 sec.
detrimental reliance

Taking an action or failing to take an action because of a representation made by another person that turned out to be untrue.

Example: Jake called his mortgage company to find out the remaining balance due on his home loan. The lender sent Jake a letter advising him the payoff was $28,312. The sum was small enough that Jake decided to sell his car to pay off the home loan, quit his job, and take a year off to write a novel. After he sent the money in, the mortgage company advised him that it had made a mistake and the payoff was really $48,312, so he needed to pay an additional $20,000 to satisfy the mortgage. A court may apply the theory of estoppel against the mortgage company and force it to satisfy the loan without any additional money, because Jake had detrimental reliance on the mortgage company's representations.



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Detrimental reliance by the IRS on the (mis)representation; and
The court added in a footnote that when the conclusive presumption in Section 622 applies, a party does not need to demonstrate detrimental reliance.
The Brock court found no detrimental reliance on the employer's representations, and did not hold the employer responsible for continued coverage.
 
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