This article is written by Saroj Chauhan who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.
The people who are engaged in a regular business transaction as a part of their professions or even a normal exchange of goods or services often end up in a situation where they wish that they had some proof of the transaction in writing. This is usually because most of them believe that several kinds of transactions work well on trust, but when things are ambiguous or go wrong, they realize that a written document should have been in place and regret avoiding one to begin with. Thus, the recording of the transaction which occurred between the two parties through the agreement where one party offers the other goods or services and the other party in return agree to pay some kind of consideration is termed as the contract, contracts are governed by the CONTRACT ACT 1872 where it can be in writing or oral while written contracts are usually circumvented in day-to-day business transactions to do away with complications or avoid “bad blood”, one usually ends up creating more by choosing not to have them.
Once the requirements for the valid contract as enumerated under the CONTRACT ACT 1872 have been fulfilled, the parties are said to have concluded a contract – a legal concept creating a legal relationship and capable of legal enforcement.
As can be seen from the conditions stated above, it is not necessary always that the terms of the contract have to be written. Oral contracts are also recognized under the law and are common enough in business transactions. However, oral contracts can be disadvantageous in several ways, the most important ones are:
- The conditions of the oral contract are formed from the conduct of the parties. Many a time, the actual conduct of the parties to a contract may be different from the terms agreed upon and hence, the interpretation of the contract may be different from what the parties had originally intended;
- Certain provisions such as consequences in case of breach of contract, time for performance and manner of performance may be left open to interpretation by a third party in the absence of a written contract, thus leaving room for incorrect interpretations.
It is therefore as a best practice and in the best interest of the parties that an oral contract shall be avoided and that the contract should be in writing. Such a contract should address not only the commercial terms agreed between the parties but also the essential legal provisions from the perspective of the law applicable to a particular transaction.
Another point in favour of executing written contracts is that most of the terms agreed between the parties are clearly stated in the contract. It is important to keep the terms simple, not ambiguous and are detailed to the extent possible. By ensuring the above, the parties to a contract will, to a large extent, be in a position to ensure that the contract is given an interpretation as close to the terms intended and agreed by the parties as possible.
An important point to note is that each business transaction will be different. A transaction for the sale of goods will entail a different set of obligations than one for the services, and even different kinds of services involve different duties and rights in each case. Using a standard contract for different situations will often result in loopholes and complications. Therefore, for a complete, effective and reliable contract, the contract for each transaction should always be tailored to the unique needs of the parties and the type of relationship contemplated. In the same context here we will be discussing one such important agreement which is used in business that is involved in providing medical services known as Medical Service Agreement.
What is a Medical Services Agreement?
Medical service Agreement is the contract between the employer and the doctors or any person providing medical services considered a service provider. The Medical service agreement is covered under the Contract Act 1876. It ensures that the medical service provider fulfils those medical services that are mentioned in the medical service agreement and provides services only to the specific parties. This helps and ensures that the employer is not bearing unnecessary services and protects the medical service provider from liability issues. Under this clause various medical services for which a hospital or any health care company wants to engage the person will be mentioned, majorly 4 types of services which are health promotion, disease prevention diagnosis and treatment and rehabilitation.
Professional component and Medical administrative services
Under this clause, all the medical services which are required to be performed by the medical service provider needs to be mention in detail and the kind of knowledge which the person posses in the medical field .the clause should also mention the day to day medical services providing situation and in case if there is an emergency or natural disaster it also includes that in a case in future if there is some additional service which employer want to take from the medical service provider in case of need or situation arises that deemed to included in this clause.
Management services and duties
This clause shall state about the management services which is required to be performed for the daily support of the medical institution or hospital like checking the staffing in the premise, maintaining the data of the people whom services or medical assistance is given on such time interval as agreed by the parties to the contract, the clause should also mention if the service provider is required to maintain the data of all medical equipment which is under his possession that they are functional or they require any maintenance all such duties which the medical service provider needs to perform apart from the professional services required to be mention under this clause as a part of his engagement with the employer under the agreement. If there is any duty regarding the taking care of biowaste that also needs to be mentioned here.
Compensation clauses should be drafted carefully as in some cases the service provider is paid a fixed amount every month for the services provided by him or sometimes the fee is based on the number of patients attended by the medical service provider or how many times the medical service provider needed by the employer for the services if in case he is not full time employed if parties agreed for some particular days or time for services all these things needs to be taken care which can be the basis for compensation. Sometimes medical service providers get paid for each visit on the same day. If there is any cost that should be borne by the medical service provider then how that cost is compensated by the employer shall also be mentioned.
Relationship of the Parties
In this clause, the relationship of the parties shall be mention whether they have employer, employee relationship, principal-agent or they are individual contractors, a freelancer who came together only for this agreement, this clause should be drafted carefully as to not incur any unreasonable liability on either party because of the reason of misunderstanding about there relationship between parties.
No Connection to Referrals
Under this clause it should be mentioned that the Agreement is for the services which will be provided by the medical service provider and the compensation mentioned in the Agreement is for the same there is no direct or indirect connection or purpose of the agreement for referrals of patients or generating business under the agreement.
Term and Termination
The term used in this agreement shall mean the duration for which the employer services provider is willing to avail the services from him, the duties and services are only provided during the term of the agreement.
Termination events are explained in the termination clause employer on finding out about the breach of any condition shall inform the medical service provider about the termination the parties shall also ensure that if there is any right that survives termination, it shall be stated expressly or if there is any information equipment files data shall go back to employer given or acquired by a medical service provider during the term of his employment under the medical service agreement.
Proprietor Confidential Information and Trade Secrets
As per the confidentiality clause, neither party shall disclose to any unrelated third party any information concerning terms and provisions of the agreement during and after the term of the agreement. Apart from what is required by the law. the parties may agree mutually what else would compromise the confidential information.
Under the assignment clause, the service provider cannot assign in any situation whatsoever the duties, services which he needs to perform as per the term of this agreement to another person without the prior approval of the employer.
Survival and Remedies
The clause shall mention that in case of any breach of the terms and condition of the agreement by either party what are the remedies available to the non-breaching party like whether the party can go court obtain injunctive relief, damages, etc. and a clause shall also mention the cases when their breach but still contract will survive or will remain in force.
Access to Records
This clause states that the medical service provider is required to maintain the record of each medical service provided by him and shall fill the forms maintain books, data as required by him under his engagement in a medical service agreement and also the person hiring the medical service provider shall have the access to such records are and when required, it should be also mentioned that the medical service provider is required to furnish such records as and when required by law.
As per this clause if any term or provision of the medical service agreement is found void or contrary to law, such terms shall be deemed to be severable, the agreement shall be treated as if those terms were never in the agreement and stand valid as per the laws prevailing for the time being in force .
Cost of enforcement
This clause shall mention clearly that in case of any dispute or any third party claim arising under this agreement what will be the criteria of bearing the cost incurred in behalf of the same for legal formalities like lawyer fee court fee etc.
In this clause, we need to state that the headings which are used in the agreement are for convenience and shall not limit an effect or change the meaning or scope of the agreement.
This clause states that any notice which is required to be given as per the medical service agreement shall be delivered in writing and delivered to the party to whom it is addressed in person or by registered mail.
As we keep in mind the clause which is mentioned in this article we can draft medical service agreement. There can be more clauses can be added as per the contracting party or the person drafting the agreement. Hence we can see from the above-stated clause that we often end up thinking that all agreements drafting technique is same but if we look closely, every agreement is different from the other it requires a lot of focus while drafting any agreement just using any random template will not suffice the purpose of drafting the contract as such practice might give trouble in future.
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