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right to enforce those obligations - would interfere with the ability of the contract parties to enter into contracts for their mutual benefit.
It should not be surprising, then, that leading casebooks treat Lawrence v. Fox and H.R. Moch Co., Inc. as bookends, between them illustrating the existence, and the limits, of third-party beneficiary theory. 2. Reliance as a Basis for Contract Enforcement Another pair of Court of Appeals decisions, Hamer v. Sidway, 124 NY 538 (1891) and De Cicco v. Schweizer, 221 NY 431 (1917), serve as precursors of the more recent recognition that detrimental reliance on a promise often is, and should be, a sufficient basis for enforcement of the promise. Both cases involved contracts made not in a commercial context, but within the confines of the family. In both cases, the Court of Appeals enforced contracts, rejecting the argument that consideration was inadequate. First, consider Hamer v. Sidway. On March 20, 1869, William E. Story promised his 15-year old nephew and namesake, William E. Story, 2d, that he would pay the nephew $5,000 if the nephew would "refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he should become 21 years of age." Six years later, the uncle acknowledged that the nephew had performed, and wrote the nephew indicating that the uncle was holding the money for the nephew’s benefit. The uncle later died, and his executor refused to pay the nephew’s assignee, contending that the agreement was invalid for want of consideration. |
Judge Alton B. Parker
COURT OF APPEALS COLLECTION |
The executor’s argument was this: the nephew’s abstinence was of no particular benefit to the uncle, and, at the same time, was not a detriment to the nephew; indeed, the executor argued, the abstinence was beneficial to the nephew. Hence, the executor argued, the nephew’s abstinence could not constitute consideration for enforcement of the contract. |
In an opinion by Judge Alton B. Parker - the only Court of Appeals Judge to run for President of the United States - the court rejected the executor’s argument, holding that courts should not evaluate whether the consideration furnished actually benefited or harmed the parties to the transaction:
“It is sufficient that [the nephew] 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, but were it a proper subject of inquiry, we see nothing in this record that would permit a determination that the uncle was not benefited in a legal sense.” 124 N.Y. at 546. Although the court decided the case by concluding that the agreement was supported by consideration, this critical sentence in the opinion could have been written 100 years later by a court invoking promissory estoppel as a basis for enforcing the uncle’s agreement. Judge Parker’s opinion makes his underlying premise clear: the nephew’s detrimental reliance bound the uncle to perform on his promise. Twenty-six years later, in De Cicco v. Schweizer, the Court of Appeals again highlighted the importance of reliance as a basis for contract enforcement. Blanche Schweizer was engaged to be married to Count Oberto Giacomo Giovanni Francesco Maria Gulinelli, whose name was apparently larger than his checkbook balance. Before the wedding, Blanche's father
Excerpt from the Minutes (1848)
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The Historical Society of the Courts of the State of New York
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