Legal Detriment: Definition & Example

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  • 0:05 How Is Legal Detriment…
  • 1:47 Hamer v. Sidway (1891)
  • 3:45 Lesson Summary
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Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

In contract law, a party to a contract experiences legal detriment when they perform an act the party is not obligated to perform or refrain from doing something the party has a right to do.

So Just How Is Legal Detriment Determined?

The Peppercorn Theory states that even a tiny peppercorn can be exchanged for a promise in contract law. However, even if that tiny peppercorn is made in exchange for performing an act that a promisee is legally bound to perform, the puny peppercorn does not represent consideration, or the exchange of something of value for something else of value, like money or a product. The exchange of consideration for a promisee to act creates legal detriment when they perform an act the party is not obligated to perform or refrain from doing something the party has a right to do.

To demonstrate, a local police officer cannot contract with a community to make additional rounds during his shift for a fee of $10 per visit, and that is because he has a legal obligation during the course of his shift to patrol anyway. In other words, the police officer is not suffering a detriment as a result of the additional neighborhood patrols. He has a pre-existing duty, or an obligation to perform the acts of the contract.

There are a couple of things the law will recognize when evaluating whether a pre-existing duty to perform exists:

  • Is either party doing something that they are not legally obligated to do either statutorily or contractually?
  • Is either party refraining from doing something that they have a legal right to do?

If the answer is yes, then legal detriment is present and means that the promisee will lose something in order to gain some other thing he desires. In contract law, consideration is a detriment to the promisee and a benefit to the promisor. In order to make for a valid contract and for legal detriment to have been suffered, consideration must be exchanged.

Hamer V. Sidway (1891)

Remember the Peppercorn Theory?

In Hamer v. Sidway, we are reminded that even the smallest exchange is still an exchange, but nothing exchanged does not constitute consideration or detriment. Many years ago, William E. Story, the uncle of William E. Story II, made a promise to his young nephew to provide $5,000 to him in exchange for abstaining from negative behaviors like smoking, drinking and gambling.

Story II quickly accepted the agreement and for the next few years followed through on his promise to live a clean life. When Story II reached age 21, he had one thing on his mind. Ka-ching! 'Five grand in my hand', he said. Well, he did not actually say that, but let's assume he said something like that.

Unfortunately, old man Story had died a few years into the agreement, leaving his estate to be handled by an executor, Franklin Sidway. Story II approached Sidway requesting the money he believed was rightly his. Sidway reminded Story II that Story had intentions of giving the money to him, but also requested that the money remain with an assignee, Louisa Hamer, until Story II was older and more responsible.

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