Hamer v. Sidway

New York Court of Appeals · 1891 · Contracts

Contractsconsiderationforbearancelegal detrimentbenefit-detriment testconsiderationforbearancelegal detriment

Facts

William E. Story promised his nephew that if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until age twenty-one, he would pay him $5,000, and the nephew fully performed. After the nephew turned twenty-one and demanded payment, the uncle wrote acknowledging that the nephew had earned the money, stating that he had the money in the bank for him, that he did not intend to interfere with it until the nephew was capable of taking care of it, and that the nephew could consider the money on interest. The nephew assented to leaving the money with the uncle under those terms. The nephew later assigned his interest, and the plaintiff sued to recover the fund from the uncle's estate.

Issue

Was the uncle's promise enforceable despite the claim that the nephew's forbearance benefited the nephew rather than the uncle? If enforceable, did the uncle's later letter and the nephew's assent create a trust, so that the action was not barred as a stale debt claim?

Rule

A waiver or forbearance of any legal right at the request of another is sufficient consideration for a promise, even if the forbearance may benefit the promisee and even if no benefit to the promisor is shown. A trust is created when language, read in light of the circumstances, clearly shows an intention to hold identified property for another, and the beneficiary assents.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Columbus, Ohio, Denise Rowan told her 19-year-old cousin Eli Mercer, "If you avoid all video gaming and all recreational gambling until your 21st birthday, I will pay you $8,000." Eli had every legal right to do both, stopped entirely for two years, and then demanded payment after turning 21.

Is Denise's promise supported by consideration?

Explanation. The majority rule is that forbearance of a legal right at the promisor's request is sufficient consideration. Courts do not ask whether the promisor benefited or whether the promisee was actually better off. Eli had a legal right to engage in the activities and gave up that freedom in reliance on Denise's promise, so consideration exists.