Also known as: reasonable expectations doctrine · reasonable expectations
Written by attorneys · grounded in primary & secondary sources — see below
An interpretive principle under which courts honor the objectively reasonable expectations of a party regarding the meaning or effect of a legal instrument even when a literal reading of its language would negate those expectations.
Dominic Drake executed a power of attorney naming his daughter as agent and told her he wanted funds used only for home health care if he became incapacitated. When the daughter instead used funds for a family vacation, the court held that the agent violated the doctrine by failing to follow the principal's known reasonable expectations.
Demetrius Douglas purchased waterfront land expecting to build a home within two years. The city imposed an eighteen-month development moratorium while it revised its comprehensive plan. A court applying the doctrine examined Douglas's reasonable expectations along with the moratorium's duration and the city's good-faith planning goals before deciding whether compensation was required.
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Danielle Dixon received an employee handbook stating that termination would occur only for cause after progressive discipline. When her employer fired her without warning or cause, the court invoked the doctrine to enforce her reasonable expectation of job security created by the handbook language.
Dylan Duffy signed an employment agreement containing an arbitration clause that he reasonably expected would apply only to routine disputes. When the employer sought to compel arbitration of statutory discrimination claims, the court used the doctrine to assess whether the clause's scope matched Duffy's reasonable expectations at signing.
Darius Dixon and Dorothy Daniels lived together for twelve years and pooled resources to purchase a home titled only in his name. When they separated, Daniels invoked the doctrine to argue that her reasonable expectation of shared ownership should be honored despite the absence of a written agreement.
Diamond Manufacturing's founder and his longtime companion accumulated substantial assets during their relationship under an understanding that the companion would receive support if they separated. After separation the companion relied on the doctrine to enforce her reasonable expectation of financial protection created by their course of conduct.
The doctrine originated in insurance law to protect policyholders from unexpected coverage denials, but courts have applied similar reasoning in contracts, agency, and property disputes when a party's reasonable expectations conflict with literal language.
The doctrine can permit consideration of extrinsic evidence about reasonable expectations even when a writing appears integrated, because the focus is on what a party would objectively expect rather than on the four corners of the document.
A party must demonstrate that its expectation was objectively reasonable under the circumstances and that the instrument's language or conduct created that expectation, rather than relying on purely subjective hopes.
Some jurisdictions refuse to apply the doctrine to unambiguous provisions because doing so would rewrite the contract, while others still examine whether the provision defeats the insured's or party's objectively reasonable expectations.
…of Appeal decisions. Both plaintiff and defendant stand in broad agreement that the law should be fashioned to carry out the reasonable expectations of the parties. Plaintiff, however, presents the following contentions: that the decisions prior to Cary rest upon implicit and erroneous notions of punishing a party for his or her guilt…