Describe how a hospital can be liable for the acts of a physician based on the concept of contract law.
Assignment: Jones and Bartlett Publishers

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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

What is a contract?

Describe differences between express & implied contract.

What are the elements of a contract?

Discuss remedies available for nonperformance of a contract.

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?