In Hughes v. The Union Insurance Company, the Supreme Court of the United States held that a contract between two parties must be interpreted according to its plain meaning and not by any extrinsic evidence or parol testimony. This case involved an insurance policy issued by The Union Insurance Company to William Hughes for his ship, which was lost at sea during a voyage from Philadelphia to Liverpool. After filing a claim with the company, he received only half of what he expected due to an exclusion in the policy regarding losses caused by “perils of navigation” on voyages over certain distances. When Hughes sued for full payment under his policy, The Union Insurance Company argued that they had orally agreed with him prior to issuing it that this exclusion would not apply if there were no other causes contributing to loss than those specified in the exclusion clause itself. However, since this agreement was never written into their contract and could not be proven through extrinsic evidence or parol testimony (oral statements made outside of court), it did not hold up in court and therefore did not affect how their contract should have been interpreted according to its plain language alone.

In Hughes v. The Union Insurance Company, the Supreme Court was tasked with determining whether a contract between two parties could be enforced if it had been made without consideration of any kind. Justice Story delivered the dissenting opinion in this case, arguing that contracts should not be held void for lack of consideration when there is no evidence to suggest fraud or mistake on either side. He argued that such contracts are binding and enforceable as long as both parties have entered into them freely and voluntarily, regardless of whether they provided something in return for their agreement or not. Furthermore, he noted that allowing these types of agreements would encourage people to enter into more beneficial arrangements than those which require mutual considerations from each party involved. In conclusion, Justice Story believed that courts should recognize and uphold all valid contracts even if one party did not provide anything in return for its promise under the agreement.