Contracts I, Pages 19–25

Hamer v. Sidway (1)

Supreme Court of New York, 1890

Facts:

W. E. Story made a promise to his 8–10-year-old nephew William Story at an anniversary that he would give him $5,000 if he would not drink, smoke, or play card or billiards until his 21st birthday. W. E. Story frequently made claims to the family that he was planning to give William Story $5,000 when he came of age, without mentioning a contract. W.E. Story had mentioned that this would be enough to give him a good start if he was industrious, and enough to squander if he was not. When William Story turned twenty-one, he requested the money, to which W.E. Story said that he was prepared to give it to him and would someday, but did not think William Story was ready yet. W. E. Story then died, leaving Sidway as the executor of his estate. William Story's claim had transferred to him mother-in-law, Hamer by this time.

Procedural History:

Verdict for plaintiff in trial.

Issue:

Does promising a gift for not partaking in certain vices form a contract to pay the gift?

Plaintiff's Argument:

Defendant promised the money, forming a contract that he violated.

Defendant's Argument:

The promise was for an ordinary gift to encourage good behavior. It was not an official contract to do as much.

Rule:

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Only a valuable consideration will uphold an executory contract. The consideration must be something of value, something either beneficial to one party or [cost money] to the other.

Reasoning:

The nephew did not cost himself anything to refrain from the requested activities and doing so was of no benefit to the uncle. There was therefore no consideration and thus no valid contract.

Holding:

No, such a gift is a gift and promising one does not make one contractually obligated to fulfill it. Judgment reversed and a new trial granted.

Takeaway:

Consideration requires a benefit or monetary loss.

Note:

A gratuitous promise means one to give something without getting something back.

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