Contracts I, Pages 25–

Hamer v. Sidway (2)

New York Court of Appeals, 1891

Facts:

W. E. Story made a promise to his nephew William Story 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. Overturned on appeal and given new 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 in exchange for limiting the plaintiff's behavior, forming a contract for that he violated.

Defendant's Arguments:

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

  • The plaintiff was not harmed, nor the defendant benefited, removing consideration.

Rule:

Page 27Consideration means that one abandons some legal right for the promise of another.

Reasoning:

William Story refrained from gambling and smoking when it was his legal right to do such things. He did this for the purposes of the promise and therefore this gives the promise consideration and makes it a contract.

Holding:

Yes, the appeal should be reversed, and the judgment should be paid out of the estate.

Takeaway:

A monetary gain or loss is not needed for consideration, only an impediment of a legal right.