Have you ever promised your child a reward if they would do something good?
Have you ever promised your child a reward if they would do something good? Something like, “If you are good, then I will buy you an ice cream!” or “If you get good grades, then I will take you to Disneyland!”. Or maybe you did it in the negative, “If you’re not good, then no dessert”. Most parents have said something along these lines. I know I have.
But how many parents would think that making a promise for good behavior was an enforceable contract? And if you did not keep up your end of the bargain, the child has a legal right to sue you? Probably, not many parents think this could be enforced against them. But they would be wrong. Of course they would not be the only ones to think this, as most children would not think that this was nothing more than a gift. And even those children who protest when their parents don’t deliver on their promise, never think to sue to get their reward.
Well, almost all children never sue…
“If you do not drink, smoke or gamble before you turn age 21, I will give you $5,000.”
This is the promise that William E. Story made to his nephew, William E. Story II. Back in 1869, William E. Story promised to give his then-13 year old nephew $5,000 if the nephew abstained from, “drinking alcohol, using tobacco, gambling, and swearing until he turned 21. According to the U.S. Bureau of Labor Statistics, the sum of $5,000 in 1869 is about the same as $92,365.07 in 2019. Suffice it to say that $5,000 was quite a large sum of money then and even today $5,000 would be a pretty good sum, let alone just over $92,000. I don’t know of many people who would turn down such a gift, only as the estate of William E. Story was soon to find out, it was not a gift- It was a legally binding contract.
After the boy William II turned 21, on January 31, 1875 , he wrote to his uncle and informed him that he had kept up his end of the bargain and therefore he asked his uncle for the $5,000 that was promised to him. Uncle William probably started regretting the idea of giving such a large sum of money to a 21 year old. So on February 6, 1875, Uncle William wrote back to the nephew, saying that the uncle did in-fact owe the young lad the money, but that the Uncle should “hold onto” the money until the nephew got a little older. And in the meantime, the money would earn “interest” while the uncle held it. The nephew agreed to this arrangement.
Twelve years passed and the Uncle had still not given his nephew the money. Then on January 28, 1887, the uncle died. This was quite a long time to wait and its amazing to think that the younger William continued to let his uncle hold onto “his money.” The younger William did not exactly keep waiting for the money from his uncle. Young William transferred his “claim” to his wife. The wife then transferred the “claim” to Louisa Hamer on “assignment”. Louisa was not as patient to get paid as was young William and so she sued the Uncle’s estate. The estate was being administered by a Mr. Franklin Sidway.
The estate believe that it did not owe young William the money. Mr. Sidway argued this was not a binding contract because one of the things a contract requires is “consideration” from both sides. The consideration from the Uncle was the money. But the nephew did not give anything in return and therefore the nephew did not provide any “consideration” in return. This situation was more like a “promise of a gift”. The estate also argued it was in the young nephew’s best interest not to do these activities in the first place. On the other side, Hamer argued that even if it was in young William’s best interest to not swear, drink, smoke or gamble, young William had “given up his rights to do something that he had the legal right to do.”
The court ultimately agreed that William was owed the money. It decided that regardless of whether it was in young William’s best interest, young William did not have to give up his rights, but he did. This was his “consideration” he provided and therefore a contract did, in fact, exist. Therefore, the estate owed the money.
And so, the next time you promise your child, “a reward for being good” remember young William and the case of in Hamer v. Sideway. You just might have to go through with the reward, even if it is in the best interest of the child.
Hamer v. Sidway 124 N.Y. 538, 27 N.E. 256 (N.Y. 1891), is a New York case that is taught in most American Law Schools as part of the history on the law of Contracts. If you would like to read this case, click here. The law of contracts has evolved since that time, but this case is still cited in courts throughout the United States and Hamilton Bancshares, Inc. v. Leroy, 131 Ill. App. 3d 907, 912-13 (Ill. App. Ct. 1985). If you would like to read this case, click here.