Legal Memorandum: Claim of Detrimental Reliance in VI

Issue: Under the law of the Virgin Islands, what must a plaintiff establish to prevail on a claim of detrimental reliance?

Area of Law: Business Organizations & Contracts
Keywords: Detrimental reliance; Preparation for performance
Jurisdiction: Federal, Virgin Islands
Cited Cases: None
Cited Statutes: Restatement (Second) of Contracts § 349, § 90
Date: 04/01/2015

A party may seek damages, including expenditures made in preparation for performance (or in performance), less any loss the party in breach can prove the injured party would have suffered had the contract been performed.  Restatement (Second) of Contracts § 349.  The Restatement provides an illustration similar to the current issue:

A gives B a “dealer franchise” to sell A’s products in a stated area for one year. In preparation for performance, B spends money on advertising, hiring sales personnel, and acquiring premises that cannot be used for other purposes. A then repudiates before performance begins. If neither party proves with reasonable certainty what profit or loss B would have made if the contract had been performed, B can recover as damages his expenditures in preparation for performance.

Id. cmt. a., Illus. 1.  Similarly, the Restatement provides:

(1)  A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

Restatement (Second) of Contracts § 90. 

Even in the absence of consideration, courts can enforce express promises of a note showing detrimental reliance.  Wheatley v. Magras, No. ST-05-CV-548, 2012 V.I. LEXIS 3, 15 13-16, (V.I. Super. Ct. Jan. 11, 2012) (Dunston, J.) (citing Trianco, LLC v. […]

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