Drafting Contracts: How and Why Lawyers Do What They Do

by Tina L. Stark

Introduction

Drafting Contracts is a textbook designed to teach students how to draft business contracts. It is intended for use in an upper-level drafting course, for which it would be the required text. In addition, many aspects of the textbook can be integrated into other courses—for example, a first-year contracts course, a mergers and acquisitions course, or a transactional clinic. In these courses, the book could be either a required main text, a supplemental text, or a recommended text.

Integral to the textbook is a detailed teacher's manual and the book's website. The website includes Word slides that can be used while teaching and sample answers to the drafting exercises that can be distributed to students upon the completion of assignments.

Drafting Contracts was published in 2007 and can be obtained through the publisher’s website.

Distinctive Features

Pedagogic Approach

A good drafter is always aware of the nexus between drafting and the business deal. Drafting Contracts emphasizes this nexus throughout, both in the material taught and in the exercises students work on.

The course's organization reflects its pedagogy. Chapter 1 provides the framework for the course. It introduces students to the building blocks of contracts: representations and warranties, covenants, and conditions precedent. The Chapter, however, does more than define the terms. It shows how and why a drafter chooses a specific contract concept. It does this by teaching the analytic skill of “translating the business deal into contract concepts.”

The translation skill is the analytic skill that deal lawyers use when drafting. This skill differs from that used in writing a persuasive document — whether a memo or a brief. Rather than applying the law to the facts, a deal lawyer translates the client's business concerns (a deal lawyer's facts) into contract concepts and then into contract provisions. By teaching this skill in the beginning of the course, students can layer knowledge of how to draft on top of a framework that has taught them what they are drafting.

To teach students the translation skill, the textbook describes the negotiation of a relatively simple transaction: the purchase of a house. By analyzing which contract concepts best provide the purchaser with the business assurances that he seeks, students learn the legal and business ramifications of representations and warranties, covenants, and conditions precedent. This material emphasizes that contract concepts are not academic concepts entombed in treatises, but rather the legal means for effecting a business transaction.

The second chapter that deals directly with the nexus between drafting and the business deal is Chapter 15. That Chapter focuses on the lawyer's role as business counselor. It teaches students how to look at a deal from the client's business perspective and how to add value to a transaction by identifying business issues that are buried in the principals' deal. These skills are problem-solving skills and are an integral component of a deal lawyer's professional expertise.

Drafting Contracts teaches these skills by using a five-prong framework of business issues: money, risk, control, standards, and endgame. A careful analysis of a cross-section of agreements reveals that these business issues recur in most agreements, although in different ways. With an understanding of these issues, the student (or lawyer) is better able to analyze a transaction and to recognize how each of the issues manifests itself in a particular agreement. The textbook describes each of the prongs of the framework in detail and then provides a series of exercises in which students apply the framework.

The other chapters of the textbook, while concentrating on other drafting issues, nonetheless remain sensitive to how the business deal affects drafting in subtle ways.

I have used this pedagogic approach for over fifteen years. Students complete the course not only with drafting skills, but also with a sophisticated understanding of the dynamics of a transaction.

Organization

As noted, the textbook begins by teaching students about the building blocks of contracts and the translation skill. The textbook then sets out the framework of an agreement and works through it from the preamble to the signature lines, in each instance discussing the business, legal, and drafting issues that occur in each part of a contract. Only after these chapters does the textbook turn to drafting rules for good writing and to techniques to enhance clarity and to avoid ambiguity. I have found that students are better able to grasp this material when they understand what it is that they are drafting. For similar reasons, the chapter on the drafting process comes at the end of the book. When students understand what the end product will be, they have an easier time understanding the rules on how to build it.

Although I teach the course in the order of the book's chapters, many users of the book do not and instead assign chapters in their preferred order.

Good Writing; Clarity and Ambiguity Materials

Drafting well requires that the drafter memorialize the business deal in a clear and unambiguous manner. Drafting Contracts treats these issues in depth through narrative, examples, and exercises. It also integrates them into a five-step process that students can follow to help them pull apart complex provisions and then put them back together. Having a process to follow can be very helpful to students who often become stymied when asked to redraft a provision. They do not know where to begin. With the five-step process, they have guidelines to follow.

In these chapters, Drafting Contracts also addresses some of the more sophisticated ways that some of the basic drafting rules are applied. For example, one of the cardinal rules of good drafting is to say the same thing the same way. This rule pertains, however, to more than using the same knowledge qualifier throughout the representations and warranties. It also requires the drafter to compare the representations and warranties that a party gives with the covenants that it makes to ensure that it uses the same standards in each. Indeed, a lawyer representing a buyer will review the representations and warranties the seller makes to the buyer to the representations and warranties that the buyer, as borrower, makes to the bank. If they are different, the buyer/borrower has to decide whether it has sufficient knowledge to make the representations and warranties to the bank. (Making a representation and warranty when uncertain whether the facts are true is fraudulent.)

Topics Covered in Drafting Contracts

Drafting Contracts includes topics that most other textbooks do not cover or do not cover in depth: translating the business deal into contract concepts, adding value to the deal, ethics, the “boilerplate” provisions, and the drafting of closing documents, amendments, restatements, side letters, consents, and complex financial provisions. (Although other textbooks discuss the “boilerplate” provisions, much of the discussion is elementary. Many of these provisions can be quite sophisticated. Drafting Contracts will draw on the material in Negotiating and Drafting Contract Boilerplate and detail the business and legal issues that a drafter should consider when drafting these provisions. I am the editor-in-chief and a co-author of that book.)

Examples

Students learn to draft in different ways. Actually drafting is only one of them. Some students find it a great benefit to be able to analyze well-drafted provisions. It permits them to see how the pieces of the puzzle fit together and gives them a standard against which they can measure their own drafting. To accommodate this learning style, each chapter of Drafting Contracts includes multiple examples of well-drafted provisions. The examples are often based on sophisticated provisions from real world commercial contracts to give students a feel for the types of provisions they will see when they begin practicing. In addition, included on the website are model answers to the longer exercises so that professors can distribute them if they wish to do so. Some students find it particularly helpful to have the “answer” to something they have worked on.

Exercises

Drafting Contracts integrates extensive exercises into each chapter. The exercises are of three types: mark-ups, new drafting, and exercises that require both mark-ups and new drafting. When possible, exercises cover new material and reinforce material previously covered.

Mark-up exercises serve multiple functions. First, of course, they reinforce what has been taught by ensuring that each student works with specific drafting issues. Second, they give students practice in reviewing and commenting on contract provisions – a real world skill. Third, they are easy to review with the students in class by using the accompanying PowerPoint slides, and fourth, they are effective in a larger class setting.

The character of the exercises that require new drafting varies depending upon the subject matter. In the early part of the course, students draft discrete contract sections: preambles, recitals, statements of consideration, definitions, etc. Towards the end of the course, students draft longer provisions, as well as a short lease agreement, in each case, without a precedent.

The exercises that require both a mark-up and new drafting reflect the real world. Most of the time, drafters begin with a precedent, mark it up, and add new provisions. With these exercises, students do what lawyers do. They analyze a draft, correct errors of substance and style, and draft appropriate new provisions.

Many of the exercises relate to a single, but evolving, fact pattern: the purchase of a jet by a ne'er-do-well with significant financial problems. The exercises are varied. In one exercise, students mark up the introductory provisions of the aircraft purchase agreement. In another, they draft the consideration section, while in a third they revise an aircraft purchase agreement precedent, marking up various sections and adding new provisions as required in the exercise's instructions.

There are multiple benefits to this approach. The fact pattern is fun and engages the students. The students see how what they have been learning applies in a real world context of a common transaction – a purchase and sale. In addition, by working through a transaction and incrementally adding new provisions and concepts, they gain a better understanding of how the pieces of the puzzle fit together. Finally, because the transaction is a purchase and sale, students learn the substance of many provisions that appear in other agreements. For example, the representations and warranties on organization, good standing, authorization, and enforceability appear in everything from a power purchase agreement to a trademark license agreement.

In addition to drafting exercises, Drafting Contracts includes exercises on ethical issues that drafters confront. These issues go beyond issues of confidentiality and client conflicts. The exercises use hypotheticals that explore some of the issues that are unique to transactions – both in the context of drafting and negotiation. The topics addressed in the exercises include the following:

A final point with respect to the exercises and examples in Drafting Contracts: they will take into account the diversified student body that will be using the textbook. Where contract parties are natural persons, their names will reflect our multicultural heritage.

Teacher's Manual

The Teacher's Manual provides

A copy of Drafting Contracts can be obtained through the publisher’s website.