A more limited role for reliance  If it is clear that reliance theory cannot explain the whole of contract law, then it may yet have a more limited role in explaining liability in certain types of exceptional case. For instance, it is clear that in many jurisdictions wasted expenditure undertaken in preparation for performing a concluded contract (and therefore undertaken in reliance on the validity of such a contract) is claimable in some circumstances.135 Reliance may also be one element in the availability of remedies designed to compensate for wasted expenditure incurred in the legitimate expectation of concluding a valid contract,136 as well (in jurisdictions with a doctrine of mutual consideration) for founding liability in promissory estoppel.137

that every obligation requires a lawful cause. Article 1967 is in the following terms:

Cause is the reason why a party obligates himself.

A party may be obligated by a promise when he knew or should have known that the promise would induce the other party to rely on it to his detriment and the other party was reasonable in so relying. Recovery may be limited to the expenses incurred or the damages suffered as a result of the promisee’s reliance on the promise. Reliance on a gratuitous promise made without required formalities is not reasonable.

Conceiving of reliance-based liability in this way is profoundly problematic. It suggests that reliance is a type of cause, that is, a ‘reason why’ a party contracts. But people do not enter contracts in order to create reliance in others; on the contrary, where reliance arises, it is as a result of a valid contract. The context of this reliance-based liability thus muddles up the reasons for making contracts with the results contracts produce. The purpose of such liability is also unclear. It looks like a version of promissory estoppel, but if it is, then it has been introduced without much thought as to the existing codal provisions, especially the legality of gratuitous contracts. As Gordley has commented, it is ‘not wise … to take a remedy for a disease you do not have’.138 Gratuitous loans, loans for consumption, deposit and irrevocable offers, are all valid under other provisions of the Louisiana Code, and thus not in need of reliance-based liability or promissory estoppel to explain them. Article 1967 thus seems to ignore existing flexible civilian solutions to problems, and has introduced largely unnecessary reliance-based liability into the law. If Louisiana law lacks a solution in one area, it is perhaps to the problem of wasted expenditure undertaken in the legitimate expectation of a ­contract being concluded. The provision of a solution to that problem, however, does not need the very broad-based liability provided by Article 1967.139 Despite these criticisms, it has been remarked that ‘[i]t can no longer be denied that reliance has conquered a place for itself in the Louisiana jurisprudence.’140

What may be concluded about the proper role for reliance in contractual liability? Principally two things: that the need for general reliancebased liability is absent in systems without the problems caused by the doctrine of consideration or overly strict formality requirements; and

138Gordley, ‘Louisiana and the Common Law’, p. 199.

139Pre-contractual liability is discussed further in Ch. 4.

140Litvinoff and Scalise, The Law of Obligations in the Louisiana Jurisprudence, p. 173.