[Solved] BUS 012A: Hamer v. Sidway (Ch. 13) Case Brief

Facts: William Story II was promised by his uncle that if he withheld from drinking, smoking, swearing, and gambling, until the age of twenty-one, his uncle would give him $5000. They reached an agreement, and when William turned twenty-one, he wrote to his uncle, telling him that he had carried out the promise. His uncle told him that he could have the $5000 dollars or keep it in the uncle’s possession on interest. The uncle kept the money in the bank as it grew on interest, and twelve years later, the uncle died without having paid William any part of the promised money. The executor of the uncle’s estate, Sidway (the defendant), claimed that there had been no valid consideration for the promise. Sidway refused to pay the $500 plus interest to Hamer( the third party to whom William had transferred his rights).

Issue: Did William give valid consideration for the promise?

Rules: The court ruled that the sacrifice of legal rights is due consideration and does not question whether the consideration is valuable or not. They decided that William and Hamer were entitled to the $5000 plus interest.

Application: Courts 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. Now apply this rule to the facts before us, the promise used tobacco and occasionally drank liquor, and he had a legal right to do so. That right he abandoned for a period of years upon the strength of the promise of the testator [that is, the uncle] that for such forbearance, he would give him $5,000. We need not speculate on the effort that may have been required to give up using those stimulants. 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.

Conclusion: The Supreme Court of New York reversed that judgment and granted a new trial, finding that what occurred between the parties was not intended as a legal and binding contract. The court reasoned that the testator merely promised to “give” his nephew the money to abstain from bad habits and that the record did not show that the nephew provided sufficient consideration to allow the claimant to enforce that promise. The court also held that the correspondence between the testator and the nephew showed that the testator did not consider the promise to have created a legal liability and that the failure to deliver that gift invalidated it. The court also found that no trust existed because none was ever declared.