Contracts and Sales Multistate Bar Practice Exam

Which of the following is an exception to the past-consideration rule?

1. A newly promised benefit without prior actions

2. A promise that was given as a gift

3. Previously conferred material benefit leading to a new written promise

4. A promise made during negotiations but not followed through

The correct answer is: Previously conferred material benefit leading to a new written promise

The past-consideration rule states that a promise based on a consideration that has already been received is generally not enforceable. However, one notable exception to this rule occurs when a material benefit has previously been conferred on a promisor, after which the promisor makes a new promise in writing to pay for that benefit. This situation recognizes the principle of unjust enrichment, meaning that it is unfair for someone to benefit from a service or good provided by another party without providing compensation. In such cases, the new written promise serves as valid consideration for the promise, thus making it enforceable despite the past consideration. In contrast, the other scenarios do not meet the qualifications for an exception to the past-consideration rule. A promise that was given as a gift lacks consideration altogether, as there is no exchange involved. A newly promised benefit without prior actions does not involve any consideration from the past, and a promise made during negotiations that isn't followed through does not constitute an enforceable agreement since it lacks essential elements of contract formation. Therefore, the situation that involves a previously conferred material benefit leading to a new written promise is the correct example of an exception to the past-consideration rule.