Contracts and Sales Multistate Bar Practice Exam

What happens if one party agrees to continue performance after the SOL has run?

1. They create a new contract requiring new consideration

2. They both waive their right to the statute of limitations

3. No new consideration is required

4. The original agreement is canceled and a new one starts

The correct answer is: No new consideration is required

When one party agrees to continue performance after the statute of limitations (SOL) has run, this scenario generally leads to a situation where no new consideration is required for the continued performance. The original agreement is still enforceable in this context because the party's agreement to continue performance effectively acknowledges the existing contract, despite the expiration of the statute of limitations. This operates under the premise that once the statute of limitations has run, a party may choose to reaffirm their obligations and continue to perform. In most jurisdictions, this reaffirmation is sufficient to validate the ongoing obligations without necessitating new consideration. Essentially, by continuing performance, the parties are engaging with the original terms of the contract rather than starting afresh. While other options may seem plausible, such as the concepts of waiving the right to the SOL or canceling and starting a new agreement, they do not accurately reflect the legal implications of continuing performance after the SOL has run. Waiving the statute of limitations typically occurs through behavior that acknowledges the validity of the original contract, rather than through a full cancellation and redrafting of terms. Therefore, the focus on continued performance, which requires no new terms to be agreed upon, underscores why no new consideration is necessary in this context.