This post comes to us from Erin O'Hara, Professor of Law and FedEx Research Professor at Vanderbilt University Law School.  The post is a follow-up to our Roundtable on Teaching Contracts.  You can view all the posts in this Roundtable here.

In the Fall of 2007, I undertook to teach my Contracts course in a way that helps students to develop transactional skills. It seemed shameful that most students leave the first-year course without ever seeing an actual contract. I wanted to expose students early to the work of transactional attorneys, especially given that about one third of practicing lawyers earn their livelihood in this way.

Like the earlier contributors to this discussion, I began to think about changing the course on the margin. Maybe I could show the students some real contracts or add a negotiation or drafting exercise, but as mentioned already in this discussion, it was indeed difficult to add materials to an already crammed four-hour course. When I expressed frustration to my then dean Ed Rubin, he responded by suggesting that I needed to throw out the traditional contracts course and start over in order to make room for a modern approach to the subject. The suggestion seemed ludicrous to me at first, but once the message had time to sink in, I realized that Ed was right.

Contracts may be the only law school course that spends nearly all of the semester at the edge of the subject and almost no time at the subject’s center. Professors teach about distinctions: the difference between promise and contract, between contract and tort, between contract and property, and between enforceable and unenforceable promises. With all of these topics, the course attempts to define the boundaries of the subject matter of contract, and in the end students learn far more about what contract is not than they do about what contract is. Ed convinced me to start at the center of contract and move outward from there.

The center of contract is about negotiating and drafting an agreement and/or a change in anticipation of the fact that one day the parties (with or without the aid of a court or arbitrator) will have to determine what that contract means. The vast majority of contracts that lawyers draft do not result in formal disputes, and, when they do, the parties fight much more often about what the contract provides than they do about whether they have a contract. These are the issues that should dominate in Contracts.

These issues are difficult issues for first-year students to grapple with because most have no experience with the subject matter at hand. Stories about hairy hands and Harrier jets and promises to marry resonate with the students, but warranties and conditions and due diligence seem far more remote. Students needed context to begin to grapple with these issues, so I began to look for a simple story that could draw the students into the world of transactions and the role of the lawyer and the contract in that transaction.

Claire Hill provided me with the best possible story: a play that comprised the last chapter of James Freund’s book, Anatomy of a Merger. The play enabled the students to imagine the transactional setting and to begin to understand the role of the lawyer in that setting. The play enabled the students to better grapple with the concepts of risk assignment and conditions and warranties. It gave the students an appreciation for the importance of carefully crafting contractual language and of gently focusing the client on possible problems that can be avoided or minimized with contract language. This play, along with some supplemental materials, provided the basis for a short one-week unit introducing students to The Contracting Environment.

Unit II focused on Contract Interpretation, a subject we covered for 4-5 weeks. We focused on the distinction between promise and condition early and often in this course. I will confess that I left my first-year Contracts course not really understanding what a condition was. In contrast, my students truly understood their function by the end of the semester. We explored the difficulties that can arise with ambiguous contract language, and in the process covered the canons of construction and the use of evidence outside the writing. We then covered default rules and explored the difficulties and benefits of silence in contract drafting. Finally, we covered change and modification and the good faith obligations.

Unit III covered Breach and Remedies (including both damages and self-help provisions). Unit IV covered Contracts of Adhesion. The syllabus included a separate unit on these contracts because in the first several weeks of the course we had studied the negotiation and drafting of contracts by sophisticated commercial parties and their lawyers, and I wanted the students to focus on the important differences between the two contract settings. A final unit, about 3 weeks long, explored contracts/promises that are not enforced. We covered lack of agreement, lack of consideration, formalities, public policy, and impossibility, impracticability, and frustration of purpose in this last unit. In the end, the students were exposed to virtually all of the concepts that they need for their upper-level courses and for bar-exam study (we unfortunately did not cover third-party rights).

Throughout the course we looked at actual contract provisions. In addition, three exercises were used to force the students to apply the course concepts. In week 4 students critiqued a very basic band booking agreement (this is Nashville!), in week 7 students drafted a simple requirements agreement (after giving them a detailed factual scenario), and in week 10 they negotiated and drafted a provision covering the circumstances under which the tenant could withhold rent from the landlord in a commercial lease setting. In week 12 students were invited to attend a lunchtime panel with 5 transactional lawyers who described their practices and talked with students about the world of transactional lawyering. Some of the panelists have served as mentors to the students interested in a transactional practice. The final exam asked students to critique and propose changes to two different contracts. In one, the lawyer was representing the client who was one of the parties to a commercial transaction where the other party had produced the first draft. In the other, the student was placed in the role of new in-house counsel asked to explain to a corporate officer the significance of the provisions in her predecessor’s draft sales agreement and to comment on any provisions that might not be legally valid (many of the customers were ordinary consumers).

I expected the students to excoriate me in their evaluations at the end of the semester. Surely the students would conclude that they had been turned into guinea pigs for some strange pedagogical experiment that robbed them of the sense of comfort that accompanies their reliance on textbooks and study aids (not to mention my old Contracts exams). I was prepared for the beating because I believed in the worth of the course change. In fact, however, I received the highest teaching ratings I have ever received at Vanderbilt. Students completely understood that 21st century law practice was based much more closely on the materials to which they were exposed than they were on the cases studied in the other Contracts section. Student comments indicated that they believed that the innovation was valuable and that their professor was working extremely hard to deliver to them a better educational experience.

The students did not just appreciate the effort being made to reform the course. They actively engaged the materials in a manner that showed that they understood what could be exciting and rewarding and yet difficult about transactional legal practice. For example, a number of students raised practice-relevant ethical issues during the course of the semester, including the circumstances under which the client should be advised to disclose disadvantageous information to the other party. And several expressed interest in transactional practice because it seems like a positive sum game. Others have written about how law schools manage to turn student excitement into cynicism and depression in just one year of law school. The causes for dissatisfaction with the prospect of practicing law are many, but one surely is that litigation is at best a zero-sum game and often a negative sum game. A transactional course enables the students to envision a legal practice in which the parties that they represent can all benefit from the transaction and the lawyers’ efforts. For several of my students, this was both comforting and energizing. I didn’t intend to engage the students on ethical issues or career satisfaction, but the approach of the course did produce these consequences. Enrollment in our upper-level transactional courses has skyrocketed, and my students tell me that they feel much more comfortable in these courses than do the students who were not exposed to a transactional perspective in Contracts.

The materials assigned were terrible in the sense that they required both the students and the professor to work harder than necessary. I assigned the Farnsworth hornbook to give the students a sense of the black letter law that they would need to respond to with their contracts. Unfortunately, however, the extensive detail of the hornbook when used as primary material rather than as review material caused unnecessary stress for the students and countless hours of explanation back in my office. Those materials were supplemented with Restatement and UCC provisions as well as a few cases. (I left to the other first-year professors the task of learning to read a case to distill its legal principles and instead primarily used the cases in Contracts to show students some of the situations that can arise and the ways that courts can treat contract language in addressing those situations.) Nothing tied these materials together, so I wrote a series of unit memos to provide them with needed thematic direction.

At Vanderbilt I had the luxury of being granted a semester’s research leave as my reward for my investment in the course. Without that bargain I frankly would have continued to muddle along with the traditional casebooks because the cost to my research while revising the course was significant and I needed to know that I would get that research time back somehow. My goal in the next two years is to produce the course materials necessary for others to teach Contracts from a transactional perspective without giving up substantial research time. Currently available course materials make it possible to add transactional garnish to a litigation-based course, but we can and should provide out students with more than just a garnish in the first year.

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