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Hamer v. Sidway

A. Facts

Hamer, (Plaintiff), brought suit against Franklin Sidway, the executor of the estate of William E. Story, Sr, (Defendant), for the sum of $5,000, William E. Story, Sr. had promised his nephew, William E. Story, 2d, if his nephew would abstain from drinking, using tobacco, swearing, and playing cards or billiards for money until the nephew reached 21 years of age. His nephew accepted the promise of his uncle and did refrain from the prohibited acts until he turned the agreed-upon age of 21. On his 21st birthday, he wrote to his uncle and requested the promised $5,000. The uncle responded to his nephew and told his nephew that he would fulfill his promise. At the same time, William E. Story, Sr, stated that he would prefer to hand over extremely large sum of money until his nephew was capable of taking care of it. The William E. Story, 2d, consented to his uncle's wishes and agreed that the money would remain with his uncle until he became older. While William E. Story, Sr, died without having paid to his nephew any portion of the said $5,000 and interest. William E. Story, 2d, transferred his entitlement to Hamer, who has presented the claim for the money to Sidway.

The trial court upheld the promise, but the appellate court reversed. Hamer appealed to the Court of Appeals of New York.

B. Issues

Is there a valid consideration for promise?

Does one’s refraining from legal rights and benefit himself constitute a valuable consideration to form a contract?

C. Holding

Yes, there is a valid consideration. Promisee's forbearance of legal rights on the promises of future benefit made by promisor could constitute valid consideration.

D. Reasoning

1.The Exchequer Chamber, in 1875, defined consideration as follows: “a valuable consideration in the sense of the law may consist either in some right, interest, profit,

or benefit accruing to one of the parties or some forbearance, detriment, loss, or responsibility given, suffered, o r undertaken by the other.”

2.Court “will not ask whether the thing which forms the consideration does in fact benefit the promise or a third party, or is of any substantial value to anyone. It is enough that something is promised, done, forborne or suffered by the party to whom the promise is made as consideration for the promise made to him.” (Anson’s Prin. of Con. 6

3.)

3.In general, a waiver of any legal right at the request of another party is a sufficient consideration for a promise.”（Parsons on Constracts, 44

4.）

4.Any damage, or suspension or forbearance of a right, will be, sufficient to sustain a promise.”(Kent, vol. 2,465, 12th ed.)

In this case, the nephew had a legal right to use tobacco and drink alcohol. He gave up this right for a period of years to comply with the promise It is sufficient that he restricted his lawful freedom of action within certain prescribed limits upon the faith of his uncle's agreement, and now, having fully performed the conditions imposed, it is of no moment whether such performance actually proved a benefit to the promisor, and the court will not inquire into it; but, were it a proper subject of inquiry, we see nothing in this record that would permit a determination that the uncle was not benefited in a legal sense."

Lots of other cases have decided the same thing.

E. Policy

Admitting the consideration is to promote the transaction, protect the safety of transaction and make sure people obey the contract. There is another important reason that it keeps our society steady dealing oder. Everybody must be responsible for their behavior,

Here, the court found that it is sufficient that P restricted his lawful freedom of action within certain prescribed limits upon the faith of D’s agreement. Furthermore, the court found nothing in the record that would permit a determination that D was not benefited in the legal sense.