Commercial Law and the Law School Curriculum
posted by Nate Oman
The Uniform Commercial Code contains some articles whose reach into the law is so ubiquitous that virtually any lawyer likely needs at least some passing familiarity with their rules (e.g. Article 2′s rules regarding sales and warranties). Other articles, like Article 9 dealing with secured transactions, are fundamental to extremely broad categories of practice such as commercial transactions and bankruptcy. On the other hand, other portions of the Code deal with subjects so technical that even those specializing in the area don’t study the rules. For example, my office-suite mate is an expert in corporate and securities law. On the other hand, she recently confessed to me that she had never even dealt with (let alone studied) the rules contained in Article 8 regarding the sale of investment securities.
Which leads me to wonder how much U.C.C. coverage a decent law school curriculum needs to provide. For example, both payment systems (essentially Article 4) and negotiable instruments (Article 3) are included on most bar exams. On the other hand, an afternoon’s worth of study with a hornbook is sufficient to learn enough negotiable instruments law to pass the bar. It strikes me that payment systems is really only of practical use in this day and age if you are going to be in-house counsel at a bank. Negotiable instruments has a much broader appeal, but I still wonder how useful it is outside of a fairly narrow commercial practice.
Which leads to my questions. Should law schools offer U.C.C. courses in esoteric subjects simply because they are on the bar? How many schools offer payment systems courses? (As far as I know the course was not offered at Harvard while I was there; is this standard or an anomaly?)
March 15, 2007 at 9:00 am
Posted in: Contract Law & Beyond, Law School (Teaching)
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Responses (9)
Rick Garnett - March 15, 2007 at 11:27 am
Nate, at ND, “Contracts” was (until recently) a required five-credit course, which, of course, included lots of UCC. On top of that, there were courses in “Sales”, “Payment Systems”, “Secured Transactions”, “Bankruptcy”, and “Negotiable Instruments.” Some of these courses were also 3 credits. I’m no expert, but it seems to me that this is hard to justify. You know more than I do about this: Is there a downside to, say, (a) the Contracts course; (b) a “Commercial Law” course; and (c) “Bankruptcy”, and leaving it at that?
Keith Sharfman - March 15, 2007 at 11:57 am
Alan Schwartz suggested in a talk at a recent conference that there’s a distinction b/w those aspects of the UCC that are mandatory and non-waivable, such as Article 9, and those aspects that are waivable, such as Article 2. The waivable aspects are becoming increasingly irrelevant to legal practice, because contracts nearly always opt out of the UCC and replace it with something more to the parties’ liking. That can’t be done w/Article 9, b/c it concerns the rights of noncontracting third parties.
tim zinnecker - March 15, 2007 at 7:40 pm
At South Texas we offer a 3-credit Sadistic Transactions course and a 3-credit Payment Systems course. We don’t offer a “Sales” course (at least since I’ve been on the faculty for over 12 years), perhaps because our Contracts course is six credits. (We also offer a 3-credit Consumer Bankruptcy course, and a 3-credit Business Bankruptcy course.)
I don’t spend the entire 14 weeks in Payment Systems on “commercial paper” (checks and notes under UCC 3 and 4). I spend a week on letters of credit (UCC 5), a week on credit cards (federal law), a week on consumer EFTs (federal law), and a week on wire transfers (UCC 4A). We all continue to write checks and sign notes. We use ATMs and engage in POS transactions. Most of us could play solitaire with our credit cards (plastic surgery, anyone?). We utilize direct deposit and automatic bill pay, and participate in other ACH transactions. Online banking becomes more popular every day. Some folks even print their own money. Esoteric? No. Important for reasons beyond merely the bar exam? Yes indeed. (Shameless plug: the second edition of my co-authored Payment Systems casebook should be available for Fall 2007.)
My criticism of a generic “commercial law” course (the goal of which, I’m guessing, is to expose students to the basics of sales, leases, commercial paper, and secured transactions) is that a professor is forced to cut too many corners when trying to compress eight credits of material into four credits of time.
Most schools offer numerous “con law” courses (was that a sacred cow I just heard moo?). Given that students are probably more likely to confront commercial law issues in their practice and daily lives, why not offer just as many, if not more, commercial law courses? (But please don’t hire any more UCC profs. That adversely affects lateral possibilities.)
Robert Rhee - March 15, 2007 at 9:16 pm
The issue raises a larger issue of whether an ad hoc approach of requiring this course and that course is the best way. I think law schools should think about providing more structure to a three year program. This is the approach taken at US business schools: first year is a core of finance, economics, marketing, management, operations, etc.; the second year is a concentration in a major discipline. At the end of two years, a graduate is well trained in the basics and the recruiters seem satisfied. In law school, we have three years and I’m not convinced that taking an ad hoc approach based on the bar exam, perceived frequency of issues in practice, or some other factor is the best approach. I would like to see law school move more towards requiring a “major” or concentration of skill sets. Right now, there are opportunities for voluntary undertaking through the various “centers” created by law schools.
Jason - March 15, 2007 at 9:29 pm
I actually kind of like my Payments course. Sure, I’m never going to need to know the rules regarding fraud in wire transfers as well as I’m learning them for the (eventual) exam, but it’s still not uninteresting stuff, especially as technology and culture change.
In fact, I think the conlaw-y people could really take things away from a lot of commercial law topics, particularly if you take a comparative perspective.
Nate Oman - March 15, 2007 at 10:40 pm
Tim: It seems to me that it is not the ubiquity of the transactions in real life that matters, but their frequency in legal practice. I use checks, ATMs, and credit cards constantly. I don’t know anyone who dealt with the law of checks, ATMs, and credit cards as part of their practice. Of course, this may simply be a product of the sort of lawyers that I know. Hence, my question…
Rafael Pardo - March 16, 2007 at 12:58 am
For an answer to your question regarding the number of schools that offer payment systems courses, Larry Garvin’s article, The Strange Death of Academic Commercial Law, 68 Ohio State L.J. (forthcoming 2007), offers some interesting insights.
Jeff Lipshaw - March 16, 2007 at 6:23 am
Interesting. I can remember the conversation, at least ten years into my antitrust and securities litigation practice, when I first realized Article 8 applied to the transfer of investment securities. The reason for that must have been that the Michigan bar exam covered Articles 3, 4 and 9, none of which I took in law school, and all of which I learned solely for the purpose of the bar. On the other hand, I took Law of China and Issues in International Human Rights which as far as I know neither showed up on the bar exam nor ever came up in my midwestern practice.
Nevertheless, I have taught Secured Transactions twice now, and like Tim, really enjoy it. Unlike Article 2 which has the burden of its “incorporation of immanent norms” problem, Article 9 is largely self-contained, particularly if you include a little bankruptcy, and nicely systemic. But I have taught it in a three credit course, and even there I eliminated everything on tax liens and enforcement (focusing instead a lot of attention on teaching context of leasing, investment securities markets, loan syndications, and special purpose vehicles).
This thread, however, has made me think about what law school courses really did make a difference over a 25 year career, and I will post something over at LPB on that.
Rachel - July 2, 2007 at 2:56 am
Sounds informative.Bankruptcy Lawyer at http://www.getlawyeradvice.com is an online legal assistant for Bankruptcy and Personal Injury Attorneys
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