Hamer v. Sidway

124 N.Y. 538, 27 N.E. 256 (1891)

New York Court of Appeals · 1891

Rule

Forbearance from the exercise of a legal right is sufficient consideration, even if the promisor receives no economic benefit. Consideration looks to the promisee's detriment as much as to the promisor's gain.

Learning outcomes

By the end of working with this case, you can:

Facts

At a family gathering, William E. Story Sr. promised his nephew, William E. Story II, five thousand dollars if the nephew would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he turned twenty-one. The nephew performed. When he came of age he wrote to his uncle asking for the money; the uncle replied that the funds were held for him with interest. The uncle died without paying, and the executor of the estate (Sidway) refused to honor the promise on the ground that no consideration had been given. The nephew’s assignee (Hamer) brought suit.

Holding

The New York Court of Appeals held the promise enforceable. The nephew’s forbearance from activities he otherwise had a legal right to undertake was sufficient consideration, regardless of whether the uncle received any tangible benefit from the abstention.

Reasoning

Judge Parker rejected the argument that consideration must consist of a benefit to the promisor. Consideration may equally consist of a legal detriment to the promisee: the giving up of a right, or the doing of an act, that the promisee was not otherwise required to give up or do. The nephew abandoned legal liberties at the uncle’s request and in exchange for the uncle’s promise. That bargain produced consideration sufficient to make the promise binding. The court declined to weigh whether the abstention was, on balance, a good thing for the nephew; that was no business of the law of contract.

Why it matters

Hamer is the standard American statement that consideration may be a detriment as well as a benefit, and that the law does not inquire into the adequacy of the exchange. The case is a teaching staple because the bargain is unmistakable, the consideration is unconventional, and the result has held for more than a century. The decision is taught alongside Restatement (Second) § 71 to anchor the modern bargained-for-exchange definition.

The trap

Locating consideration in benefit to the uncle (moral satisfaction, family pride) or in the nephew's improvement. The court does not inquire into benefit and does not weigh whether abstention was good for the nephew. The work is done by the promisee's surrender of a legal liberty at the promisor's request.

The operational intuition the case is designed to break. Naming the trap is what the Socratic exchange is for.

Socratic ladder

The professor's scaffold for the in-class exchange. Each rung is a stage; the questions are scripted prompts, not the punchline.

Surfacing · 60 sec

Q. Your uncle, at Thanksgiving in front of the family, tells you that if you do not drink, smoke, swear, or gamble until you turn twenty-one, he will pay you five thousand dollars. You do it. He dies. Should the estate pay?

Look for: The operational split. Some students say the uncle got nothing, so there is no real deal. Others say a promise is a promise. Both are bait.

Holding · 60 sec

Q. What did the New York Court of Appeals do with the executor's refusal to pay?

Look for: Reversed for the nephew's assignee. Forbearance from a legal right is consideration.

Reasoning · 120 sec

Q. The uncle gained nothing measurable. Where is the consideration?

Trap: Students locate consideration in benefit to the uncle (moral satisfaction, family pride) or in the nephew's improvement. Both miss. The court does not inquire into benefit and does not weigh whether abstention was good for the nephew.

Board: R2d § 71: performance sought by promisor + given by promisee in exchange = bargain

Push back: The court tells us it does not care whether the uncle benefited or whether the nephew was better off. So what is left?

Push to: R2d § 71. Legal detriment on the promisee side, sought by the promisor in exchange for the promise. The nephew surrendered legal liberties at the uncle's request. That is consideration.

Hypothetical · 90 sec

Vary. Same uncle, same nephew, same five thousand dollars. But the nephew decides on his own initiative, two years in, to quit drinking and gambling for health reasons. The uncle's promise was still on the table. He turns twenty-one and asks for the money. Same result?

Point: The fact doing the work is the inducement link. R2d § 71(2) requires the performance be sought by the promisor in exchange. When the promisee abstains for her own reasons, the bargain frays. R2d § 81 softens the test (the promise need not be the sole inducement), but the inducement element is what consideration polices.

Integration · 60 sec

Q. Think of a promise someone has made to you conditioned on your behavior: a parent, a coach, an employer. When does it feel like a deal, and when does it feel like encouragement? What fact tips it?

Land: R2d § 71 turns on whether the performance was sought in exchange: inducement, not just sequence. Hamer is the anchor case for promisee-side detriment. Pennsy Supply next adds promisor-side cost-avoidance, completing the bidirectional bargain inquiry.

Hamer v. Sidway, 124 N.Y. 538, 27 N.E. 256 (1891).