It’s fun when students are interested in your scholarship.  Yesterday, one of my students engaged me to talk about my work on limited liability operating agreements as contracts.  (I have mentioned this work in class, and the student also is a regular reader of this blog, where I have referenced this work a number of times, including most prominently here.)  He began the exchange with something akin to the following question: “Why is it that we take two full semesters of contract law during the first year of law school and then all but ignore the connection of contract law to business entities once we get to Business Associations?”

I think I know what he means.  While the segregation of legal doctrine by subject matter in law schools enables instructors to focus students narrowly on a single–often new–body of law, it also tends to obscure the interconnections between and among applicable bodies of law, including connections between contract law and the law of business entities.  Admittedly (and I pointed this out to the student), the typical Business Associations course does typically address contracts at several points.  These junctures include, among others, the course segment in which sole proprietorships are distinguished from statutory forms of business entity, discussions on the nexus of contracts theory of the corporation, and dialog on the validity of shareholder agreements.

This conversation reminded me that I learned an important thing about the Restatement (Second) of Contracts at the 11th International Conference on Contracts (KCON XI) last weekend at St. Mary’s University School of Law in San Antonio, Texas.  (Keep in mind as you read this that I do not teach and have never taught the 1L course on contract law.)  What did I learn?  I learned how to use the Restatement properly in assessing the existence and validity of a contract!

Specifically, I learned that the traditional elements of a legally valid contract, those that I had learned in law school (offer, acceptance, and consideration) are, under the Restatement (Second) of Contracts, non-exclusive means of qualifying an agreement as a valid contract.  Specifically, Section 17 of the Restatement provides as follows:

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§82-94.

The comments to Section 17 cast additional light on types of contract–including several different kinds of formal contract,–that do not need to meet the requirements of mutual assent and consideration.  Moreover, the sections of the Restatement referenced in Section 17(2) include Section 90, which helpfully provides in subsection 1 that

[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

I guess I knew that, but somehow I missed remembering or fully understanding it.

All of this, and much more from KCON XI, will come in handy in my future work on contracts in the business entity context, deepening and enriching points I want to make.  It’s sometimes really enlightening–a scholarly “breath of fresh air”–to attend a conference of academics focused on a subject matter or scholarly tradition that is different from one’s own.  I may try to do this more often.

Also, my student’s point on the need to more often and more integrally show the interdisciplinary of law in the upper division classroom is not lost on me.  That’s an area in which I can make immediate changes.  And with the help of my contract law brethren from KCON XI, contract law is sure to be a part of the dialogue.