August 09, 2008
Towards a New Transactional Curriculum: The Contracts Course in a New Century
Posted by Tina Stark

Over the last year, the blogs have devoted considerable space and time to discussing the contours of the contracts course of the future. Opinions vary considerably. The pedagogical challenge is how to enrich the existing curriculum without losing what is important.

For the record, I do not advocate dismantling the first-year contracts course. Students need to learn about the evolution of the common law, doctrinal subtleties, policy arguments, and theory. But I do advocate substantial and substantive changes.

In deciding what changes to make, I think that we must take a step back and think about the course globally. I have concluded that we must address four issues:

· First, that most students learn about contracts without context.

· Second, what they learn and the way they learn it is disjointed.

· Third, students have little understanding of business.

· Fourth, most contract courses teach few, if any, deal skills.

The students’ unfamiliarity with the deal world exacerbates all of these issues. When they enter law school, they have in their mind a picture of what it means to be a litigator. They have all watched Law & Order, Boston Legal, and maybe even some Perry Mason reruns. But students have no picture in their mind of what a transaction is or what a deal lawyer does. We must begin by creating that picture.

In my perfect world, I would create a mini-movie that was a series of vignettes showing parties and their lawyers working their way through a hypothetical transaction. These vignettes would be a tool to demonstrate the contract concepts in context. As students studied a particular concept, they would see it play out in the movie in the parties’ relationship. We would create for them an actual picture of a deal. These vignettes would also show lawyers working collaboratively while concurrently protecting and advancing their clients’ interests. This would help set the stage for later courses in drafting and negotiation.

To give students further context, we need to broaden our concept of what a contract is. While the Restatement defines a contract in terms of promises, clients and their lawyers see a contract more broadly. There are representations and warranties, conditions, discretionary authority, and general policies governing the relationship. It is all of these together that state the business deal.

Students need to see all of these contract concepts in a dynamic context – that is, in a contract. By seeing how these contract concepts work together from both a business and legal perspective, students will learn their way around a contract and make connections between the contract concepts they are learning. In addition, the course will become less disjointed; theory will be linked to practice; and ultimately, students will gain a greater appreciation for the case law that they are learning.

By broadening the nature of what a contract is, we can also begin to teach students the translation skill – that is the analytical skill that deal lawyers use. It differs from the one litigators use. That is the skill we typically think of as “thinking like a lawyer.” Litigators apply the law to the facts to create a persuasive argument. Deal lawyers do it differently. They start with the business deal (their facts – which are always changing) and then figure out which contract concept will best express it. Having this skill is essential in learning to draft or negotiate a contract.

Knowing the translation skill is also essential to learning contract and risk analysis, two other skills essential for negotiating and drafting a contract. We can begin to teach both of these skills in the contracts course.

Contract analysis is not the same as contract interpretation. Interpretation assumes an ambiguity. Contract analysis precedes interpretation. In contract analysis, the lawyer looks at a provision and asks a series of questions, among them: What is its business purpose? Does the provision address it? Does it use the right contract concept?  (Here is where the translation skill comes in.) Is risk allocated properly? What legal issues affect this provision? How can I better protect the client or advance its cause? What is missing from the provision? Only by answering these questions can a lawyer decide what a provision should say.

As to risk analysis, this is a skill we can only introduce to our students. It requires recognizing the risk, assessing it, and knowing how to protect against it. In a contracts course, we can address this skill at a basic level, for example, by demonstrating how representations and warranties are a risk allocation mechanism and how that allocation can be changed, sometimes by a single word. As an aside, this example shows how deal skills build on each other.  By teaching students about risk allocation, we are also teaching them about negotiation and drafting.

Finally, we return to the students’ lack of knowledge about the business world. Because of that lack, students often fail to appreciate the context of a case and the underlying business issues that affected the drafting of a provision. To remedy this, we must discuss these business issues as part of case analysis.

So how do fit all of this into a four-credit course? Much of what I have described is providing context which can be given through out-of-class assignments or discussed when covering cases.

But the course would change. Less time would be devoted to some concepts, such as offer, acceptance, consideration, the parol evidence rule, and unconscionability. It becomes a question of emphasis.

With the extra time, new cases could be added so that students could better understand how contracts use different contract concepts. For example, typically, students learn about representations as misrepresentations and warranties in the context of the UCC. But deal lawyers regularly see these concepts in a different context: joined together for risk allocation purposes in sophisticated contracts such as acquisition agreements, loan agreements, and licensing agreements. Using cases that deal with these concepts would not only teach doctrine, but also give students a look at these concepts in a dynamic context – that is, in use by the parties to memorialize the business deal.

Other cases could be added to provide an opportunity to teach skills. For example, in teaching assignment and delegation, some textbooks use cases where the issue is whether particular contract language acted as both an assignment and delegation. As both the Restatement and UCC have interpretive provisions resolving this issue, it might be more fruitful to assign cases dealing with anti-assignment provisions. After reading the cases, students could try their hands at drafting an enforceable anti-assignment provision – not an easy task.

I do not believe, however, that the contracts course should morph into a drafting course. There is too much else to learn in contracts. Instead, a separate contracts drafting course would be the better way to teach this skill. Pedagogically, teaching contract drafting as soon as possible after the contracts course makes sense. It would solidify students’ understanding of the material in the contracts course, and it would provide students with an essential building block for the material that follows.

All of these changes cannot be made at once. The process will be evolutionary, but changing the contracts course is a must.

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