hamer v sidway

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

Facts: William E. Story and his nephew, William E. Story II, agreed that the uncle would pay his nephew $5000 if the nephew would refrain from drinking, using tobacco, swearing, and playing cards and billiards for money until he turned 21. When the nephew turned 21 his uncle sent him a letter that indicated that the nephew had earned the $5000 and that he would hold the money with interest until the nephew became capable of taking care of it responsibly. The nephew accepted the terms. The uncle died twelve years later without having transferred the funds to his nephew.

The nephew assigned the funds to Louisa Hamer (P) who brought suit against the executor of the uncle’s estate, Franklin Sidway (D). At trial judgment was entered in Hamer’s favor which was reversed on appeal in Sidway’s favor. Hamer appealed.

Issue: Is forbearance from permissible legal conduct sufficient consideration to create a valid and enforceable contract?

Holding and Rule: Yes. The mere abstention from a permissible legal conduct is sufficient consideration to make a promise based on that forbearance a valid contract. Consideration is not measured as a benefit to the promisor. When an offer is ambiguous regarding whether acceptance shall be in the form of performance or an exchange of promises, determining if the offeror was indifferent to whether acceptance be by performance or promise is accomplished by interpreting the language of the offer under the circumstances in which it was made. The court held that in this case, the language of the offer made it clear that the uncle sought acceptance by performance and not by a promise to perform.

D contended that the contract was invalid because it lacked consideration and that there is no consideration unless the promisor is benefited. The court stated that consideration may consist in either a some right, interest, profit, or benefit to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. It is immaterial whether the consideration does in fact benefit the promisee or a third party or is of substantial value to anyone. Refraining from something that one is entitled to do is a sufficient detriment to create an enforceable contract.

Disposition: Reversed in favor of Hamer (P).

Note: Under Restatement 2nd 32 if an offer is ambiguous it can be accepted by a promise or actual performance. If acceptance is through performance the contract is unilateral, if through promise the contract is bilateral.

This case is often cited incorrectly as Hammer v. Sidway.