Following is the case brief for Hamer v. Sidway, New York Court of Appeals,(1891)
Case summary for Hamer v. Sidway:
- Uncle and Nephew entered into a contract in which uncle promised nephew $5,000 if nephew promised to refrain from drinking, smoking and gambling until he reached the age of 21
- Nephew lived up to his promise and uncle said he would give his nephew the money when the nephew was “capable of taking care of it.”
- Hamer, a party to whom nephew owed money, brought suit against the deceased uncle’s estate through Sidway, the executor.
- The New York Court of Appeals held that the forbearance of a legal right constitutes adequate consideration, valid to form an enforceable contract.
Hamer v. Sidway Case Brief
Statement of the facts:
William E. Story Sr. (Uncle) promised to give his Nephew, William E. Story II, (Story) $5,000 if he promised to refrain from “drinking, using tobaccos, swearing, and playing cards or billiards for money” until he turned twenty-one. Once Story turned twenty-one, he wrote his uncle stating that he had refrained from drinking and gambling. In response, Story’s uncle wrote that Story was entitled to the $5,000, but it would remain in a bank account until the uncle felt Story was mature enough and “capable of taking care” of the money. Story assigned Hamer $5,000 to be paid out of the funds due to Story. The money remained in the bank. Before withdrawing the money, Story’s uncle died. Louisa Hamer brought a claim against Sidway, the executor of the uncle’s estate, to recover the 5,000 promised to her by Story.
The trial court found for Hamer. In response, Sidway appealed to the appellate court, which reversed the trial court’s decision. Hamer then appealed to the New York Court of Appeals.
Rule of Law or Legal Principle Applied:
Adequate consideration may consist of a right, interest, profit, benefit accrued to one party, forbearance of a legally enforceable right, detriment, loss or responsibility given, suffered or undertaken by the other
Issue and Holding:
Does consideration sufficient to form an enforceable contract require a promisor to receive a benefit and the promisee to sustain a detriment? No.
The New York Court of Appeals affirmed the trial court’s (special term) decision.
Story refrained from gambling, drinking, swearing and smoking, which at the time he was legally able to do. He incurred this limitation on his legal right, which was sufficient to constitute adequate consideration. As a result, a valid and enforceable contract was formed between uncle and nephew.
The Court held that adequate consideration sufficient to form a valid and enforceable contract may consist of a “right, interest, profit, benefit accrued to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.”
Valid consideration does not require that one party actually receives a benefit. It also does not require the thing which forms consideration to be of any substantial value to either the promise or promisor.
Consideration is not dependent on the promisor’s benefit from the contract as it does the promisee’s voluntary limitation of a legal right in exchange for a promise.
In exchange for his uncle’s promise of $5,000, Here, Story voluntarily promised to restrict his legal freedom to engage in drinking, smoking, swearing, in exchange for his uncle’s promise of $5,000. Whether or not his uncle received any benefit does not matter because Story’s voluntary promise to refrain from the outlined conduct constitutes adequate consideration to form a valid and enforceable contract.
Hamer v. Sidway established that the forbearance of a legal right constitutes adequate consideration, valid to form an enforceable contract. Whether or not the promise made confers a benefit on the other party is not a legal requirement for valid consideration.