Thursday, December 17, 2009

Teaching Contracts

Posted by Jeff Lipshaw

I've been asked to teach our six credit contracts course here next year, and have been puzzling (far ahead of time) about book adoption and teaching philosophy.  Contracts is the often the bane of the first year experience, and I am thinking about hitting the reasons head on.

Images-1 I spent 26 years in practice, as a law firm litigator and then transactional partner, and then as the general counsel of two different companies.  I have written fairly extensively on contract theory (perhaps teaching the course will be impetus to combining my various pontifications into a book), but I am generally disdainful of contract doctrine as a means of explaining what is actually going on in the business world.  (See my article Models & Games, for example.)  Although there are some admirable contracts casebooks out there that attempt to do so, if I don't use one, it will be a result of my concern that pushing traditional contract doctrine into a real business setting is a square peg in a round hole (the metaphor is apt for all sorts of reasons).   You don't really teach the business world, and you don't really teach traditional doctrine.

No, were it not for the bar exam and inertia (i.e., Langdell was a contracts teacher), we probably wouldn't bother with most of contract law as we presently teach it.  Or, as I have often said, practice is 5% doctrine and 95% interpretation; the course is usually 95% doctrine and 5% interpretation.

I've concluded instead that the way to approach the subject (and relieve some student angst at the same time) is to reject at the outset the idea that what they are learning maps on the real world.  It is more helpful to think of contract law as most casebooks begin - with the idea of the objective law of contracts, or, as we say more explicitly in areas like partnership, the default rules upon which the legal consequences of a binding promise will be imposed on parties after the fact when indeed there is no subjective evidence of an intent to be bound at all, or legally, or on what specific terms.  (As I have made clear in the past, I'm a skeptic on subjective intent altogether when even the interpretation of the contract is the subject of colorable litigation positions.)  Hence, teaching the subject, by my way of thinking, requires a jurisprudential approach, one that says "what you are about to learn is a particular way of modeling human interaction."  Said with more jargon, contract law may or may not map well onto the reality of private ordering, and the mistake most students make is to try to make the map work.  No - an integrated law of contracts, if one exists, is a figment of the Langdellian or Willistonian or even the Corbinian or Llewellynian imagination, a way of trying to make unified sense of the whole of private ordering, whether that sense-making is by way of formalism or contextualism (or efficiency or the promise principle, to bring the debate forward in time).

Put otherwise, if the reality of private ordering is metropolitan Boston, contract doctrine is a map, based on the mapmaker's view of what is important.  But you could have a road map of major highways, a topographic map, a detailed street map, a map of population densities, etc.  This is merely one map, or several competing maps.  (Think about the classical view of offer and acceptance, for example, versus the UCC's view.  Does either one really map onto a singular underlying reality of the making of an agreement?  Even "the meeting of the minds" is a metaphor (and, in my view, an unfortunate one)). (I think the Macaulay/Macneil relational contract school falters on this point, by the way.  It gives up on the map altogether and tries to go straight to the reality of the relationship.  That may explain the relationship, but it may not make for the best way to explain the law.  I have a similar reaction to Omri Ben-Shahar's longstanding proposals (now with Lucian Bebchuk) on liability arising out of preliminary negotiations - we're trying to fine tune the map (or model) beyond its usefulness as a model.)

Finally, the difficulty with putting aside whatever sense of reality we might have, and reconstructing the rules of the model (or game?) on their own is a little like trying to master the rules of cricket without making analogies to baseball, or the rules of rugby without making analogies to American or international football.  Let's say you are playing cricket, and you do something that cause the other team to cry "foul!"  You have to make your argument why what you did was legal in cricket terms, not baseball terms.  That doesn't mean there couldn't have been other ways to play cricket, or that the world would be better off if we interpreted the rules of cricket differently, but to win the argument we have to fashion it in a way that appears to be consistent with cricket.  Contract law is the set of rules making up the objective contract litigation game, and some arguments based on those rules are cricket, and some are not.

Anyway, that's my current thinking.  Responsible opposing (or helpful) views are always welcome.

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Why teach Contracts at all, in that case? Why not teach the rules for some complicated, but entertaining, board game? My advice: (1) use the Macaulay book which is not at all an introduction to business practice, but precisely an exploration of the complex relationship between legal norm and social behavior. The legal norm may function as ideology, for example. (2) concentrate, if you like, on the many issues of contract law that do arise in practice: do we have a deal or don't we; interpretation of written documents; measuring loss. Just don't waste time on silly problems of consideration.

Posted by: Alan Hyde | Dec 17, 2009 11:54:08 AM

Alan, that's an interesting comment. As much as I'd like to teach contracts (or any other subject) as theoretical inquiry, I'm pretty sure the fact of the bar exam means that I have to teach the contract litigation game versus others. I would have the students in revolt (at least here) otherwise. And, all things being equal, that particular game isn't a bad place to start. What it's not is "transactions" or even "transactional law."

Nor, actually, do I think Macaulay's analysis, as perspicacious as it is about the realities of social norms of agreement, is one of law per se. I suppose, even if it's "Dick and Jane" in a way, there's something to be said for a set of default rules (statutory or case law) as long as we allow recourse to the courts to resolve private disputes about whether we had an agreement. The "Dick and Jane" cases just don't come up very much. (FWIW, I tend to be "you pays your money and takes your chances" formalist.)

For that matter, if one wants to talk theoretically about legal norm and social behavior on the subject of promising (I used to start off my contracts class with a hypothetical that hinged on the difference between stiffing the restaurant owner for the price of a meal, and stiffing the waiter for the tip), consideration and reliance are actually pretty interesting. But, as you note, nobody actually litigates consideration (as far as I know).

Posted by: Jeff Lipshaw | Dec 17, 2009 1:57:15 PM

Dear Jeff,

You might remember me from a transaction some years ago. Don't see the contradiction between contracts practice and contracts the same way as you, since the systematic approach and the practical approach are both valid and although you are of course right that the legal issues don't come up every minute (or day), your students might have a blind spot unless you take them through these issues, which your law school class may be better suited to do than hands-on practice at a law firm or in-house. I tell young lawyers that the law is just one part of their "tool kit" to build a contract and get a deal done. The law is certainly not an "ass" in every respect and sometimes it is a perfectly sensible decision to not regulate a particular matter and rely on the law. Likewise, U.S. contract law is less liberal than civil law systems in some areas, such as e.g. contractual penalties, and it is important for the young lawyers to appreaciate the contstraints on what they can write and still be enforceable.


Chris King

Posted by: Chris King | Feb 6, 2010 1:01:48 PM

Chris, how could I forget either you or the Einsbrungenvertrag, or whatever the hell that thing was? Actually, our transaction was a prime example of the complete irrelevance of the contract to many of the key underlying understandings (whether or not shared) of the parties, as well as a paradigm of negotiating to an event that never occurs, and indeed, circumstances invent one wholly unanticipated. But because of my obligations of confidentiality I can only talk about these with highly masked hypotheticals. (Send me an email address).


Posted by: Jeff Lipshaw | Feb 11, 2010 8:48:09 AM

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