Contract Law

Kedarnath Bhattacharji v. Gorie Mahomed

(1886) ILR 14 Cal 64

Facts

The Howrah municipality proposed constructing a town hall.
Public subscriptions were invited to finance the project.
Gorie Mahomed promised to contribute ₹100.
On the faith of subscriptions promised by members of the public, the municipal commissioners entered into contracts and incurred liabilities for constructing the hall.
The project proceeded, and expenditure was undertaken.
Gorie Mahomed later refused to pay the promised subscription.
Kedarnath Bhattacharji sued to recover the amount.
The defendant argued that his promise was gratuitous and unsupported by consideration.

Whether a charitable subscription becomes enforceable when the promisee incurs liability in reliance on it.
Whether reliance and expenditure undertaken at the promisor’s request amount to consideration.

A bare promise to make a donation is generally not enforceable.
However, where:
the promisor makes a subscription for a stated purpose;
the promisee acts on that promise;
the promisee incurs liability or undertakes obligations in reliance on it; the act or liability may constitute consideration.
Consideration may consist of the promisee doing something at the promisor’s desire, including undertaking financial responsibility.

The Court did not enforce the promise merely because it was charitable.
It focused on the legal effect of the commissioners’ reliance.
The subscription was made for the specific purpose of constructing a town hall.
It was understood that the promised funds would induce the commissioners to proceed with the project.
Acting on the subscriptions, the commissioners:
entered into contracts;
engaged contractors;
incurred legal and financial liabilities.
These were not voluntary acts unrelated to the promise.
They were undertaken because the subscribers, including Gorie Mahomed, had promised to provide funds.
The defendant’s promise therefore induced a change in the promisee’s legal position.
The consideration was not the completed town hall as such.
It was the assumption of liabilities and expenditure in reliance on the promised subscription.
The case is different from a simple unenforced charitable promise where the recipient has done nothing in reliance on it.
Once the promisee incurred obligations on the faith of the promise, the transaction acquired the character of a bargain.
The promisor could not withdraw after the promisee had exposed itself to liability for the very purpose contemplated.

The Calcutta High Court held that the promised subscription was enforceable.
The liabilities incurred by the commissioners in reliance on the promise constituted valid consideration.
Use this case for: a charitable subscription becomes enforceable when the promisee incurs liability on the faith of the promise.