Resale of medical equipment should be done carefully

Contract Language. By Steven M. Harris, AMNews contributor. March 6, 2006.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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A physician recently asked me to draft an equipment contract for the sale of a laser to another physician practice group. My client purchased the laser several years ago, and he wants to sell his current laser before he expends additional capital for new medical equipment.

This transaction involved the customary contract issues that are related to the negotiation of purchase price and transition of ownership. But both the seller and purchaser had to consider additional issues regarding indemnity, disclaimers, ownership transfer and HIPAA before signing the contract.

It is important that a written agreement or detailed bill of sale be signed in connection with the resale of medical equipment. This column will explore key issues that physicians should address when reviewing a proposed medical equipment contract.

Indemnity. The seller is most likely to be interested in the indemnity provision of a medical equipment contract, because this is a key contract provision to limit his liability and any future exposure.

The following is an example of an indemnity provision that a physician selling equipment might consider inserting into a contract:

"Purchaser agrees to indemnify and hold harmless seller and seller's officers, directors, shareholders, agents and employees against any and all liabilities, obligations, claims, demands, costs and expenses of every kind and nature, including attorneys' fees and litigation expenses, arising from or related to the equipment, including, without limitation, the manufacture, selection, purchase, delivery, possession, use, operation or return of the equipment or from any breach or default on the part of seller in the performance of any agreement of seller to be performed pursuant to the terms of this Agreement."