Contracts

Contract

· A special agreement, written or oral, that involves legally binding obligations between two or more parties.

Purpose of a Contract

· To specify, limit, & define agreements that are legally enforceable.

· A contract forces the participants to be specific in their understandings & expectations of each other.

· Contracts serve to minimize misunderstanding & offer a means for parties of a contract to resolve disputes that may arise.

Types of Contracts – I

· Express

· Oral

· Written

· Implied

· Voidable

Elements of a Contract – I

· Offer

· Consideration

· Adequacy

Elements of a Contract – Acceptance

· Meeting of the Minds

· Definite & Complete

· Duration

· Complete and Conforming

Breach of Contract

· Occurs when there is a violation of one or more of the terms of the contract.

· Elements necessary to establish a breach

· a valid contract was executed.

· plaintiff performed as specified in the contract.

· defendant failed to perform as specified in the contract.

· plaintiff suffered economic loss as a result of defendant's breach of contract.

Competent Parties

· Corporations

· Partnerships

· Agents

· Independent Contractors

Legality of Object

· To be a valid contract, the contract must not violate any federal or state statute, law, rule or regulation.

Conditions

· Act/s or event/s that must occur or be performed by one party before the 2nd party has any responsibility to perform under the contract.

Performance

· Substantial performance by one party to a contract will obligate the other parties to perform.

Nonperformance Defenses – I

· Fraud

· Mistakes

· Mistake of Fact

· Mistake of Law

· Duress

· Illegal Contract

· Impossibility

· Statute of Limitations

Remedies

· Specified Performance

· Monetary Damages

· General & Consequential Damages

· Duty to Mitigate Damages

Employment Contracts

· Express Agreement

· Implied Contracts

Text Cases: Employment Contracts

· Nurse Breaches Contract:

· Repayment of Tuition Required

· No Express Agreement: Right to Terminate

· Restrictive Covenant Enforceable

· Restrictive Covenant Not Enforceable

Employee Handbooks – I

· Elements necessary to establish employee handbook as a contract:

· policy statement that clearly sets forth a promise the employee can construe to be an offer

· policy statement must be distributed to the employee, making him or her aware of the offer

· after learning about the offer & policy statement, the employee must “begin” or “continue” to work

Employee Handbooks – II

· Hospital Violates Provisions of Employee Handbook

· Handbook Not a Contract Due to Disclaimer

· Termination of Contract Due to Insubordination

Medical Staff Bylaws a Contract

· Applicants for appointment to a medical-dental staff submit a signed application attesting he has read & agree to accept & abide by the bylaws.

· The physician promises to abide by the medical staff bylaws in exchange for medical staff privileges.

· Exchange of promises, constitutes consideration to support any contract of this bilateral nature.

Exclusive Contracts

· An organization often enters into an exclusive contract with physicians or medical groups for the purpose of providing a specific service to the organization.

· Exclusive contracts generally occur within the organization's ancillary service departments (e.g., radiology, anesthesiology, and pathology).

Noncompetitive Contract Clauses

· Often included in employment agreements.

· Agreement not to practice within agreed upon geographic area.

· Legal counsel should be sought prior to executing such agreements.

Transfer Agreements – I

· Identification of parties to agreement

· Purpose of agreement

· Policies & procedures for transfer

· Organizational responsibilities for transfer

· Exchanging/Sharing information

Transfer Agreement – II

· Retention of autonomy

· Procedure for settling disputes

· Procedure for modification or termination

· Sharing of Services

· Publicity

· Exclusive v. Non-exclusive agreement

Insurance Contracts

· Form of risk management used primarily to hedge against risk of potential loss.

· Insurer obligation to indemnify insured for losses caused by specified events.

· Insured pays fixed premium