Download chapter61485832 - Just Question Answer

© 2014 Jones and Bartlett Publishers
Chapter 6
Contracts
LEARNING OBJECTIVES
• Explain what a contract is and the elements thereof.
• Discuss independent contractors, as they apply to
contract law.
• Describe how a hospital can be liable for the acts of a
physician based on the concept of contract law.
• Explain the possible defenses and remedies for
nonperformance of a contract.
• Describe under what circumstances an employee
handbook could be considered a contract and how to
avoid that assumption.
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
Review Questions – I
1. What is a contract?
2. Describe differences between express &
implied contract.
3. What are the elements of a contract?
4. Discuss remedies available for
nonperformance of a contract.
5. Discuss importance of disclaimers in
employee handbooks.
Review Questions – II
6. Discuss why courts often consider medical
staff bylaws a contract.
7. Explain why exclusive contracts are so
controversial.
8. What is an insurance contract?