Using standardized contracts in business is not a new
concept. Although this notion is not a particularly innovative one,
contract standardization has proved an invaluable resource in
streamlining transactions while maximizing the legal protection for
all parties involved. In drafting a standardized contract, one should
consider the nature of the industry and the subject matter of the
contract, as well as existing statutory and common law restrictions
imposed upon contractual relations within the industry. Although the
industry utilizes many forms of contracts, one such contract that is a
prime candidate for standardization is the purchase agreement.
A standard short-form purchase agreement should consist of six distinct parts:
- Identification of the parties to the transaction, including identification of the transaction that is agreed to
- A description of the subject matter of the contract. Within the
radiology equipment remarketing industry the description would
normally consist of a summary of the exact equipment to be sold
- A description of the terms and conditions of the contract,
including price or other consideration and payment terms, date and
time for shipment and if the payment is expressly contingent upon the
buyer being paid by the ultimate purchaser
- A clause detailing remedies for late payment and non-payment,
which specifies when payment is considered late, the remedies for such
late or non-payment and a specification for liquidated damages, if
- An acknowledgement of acceptance of the terms and conditions of the contract and
- Signature lines for each of the parties identifying, which party
is represented, the position held by the signatory and the date it was
If a long-form purchase agreement is desired, the
following items should be included in addition to the parts outlined
Integration of Agreement, Non-Cancellation. Contains
an integration clause specifying that the agreement is a complete and
final expression of the agreement, which is non-cancelable and
supersedes any prior agreement between the parties. This clause also
provides that changes to the agreement must be signed by both parties,
that the agreement will not be binding until signed by both parties and
may be withdrawn by either party at any time prior to its execution.
Terms of Payment, Delivery, Late or Non-Payment and
Default. Provides for the designation of the currency used in the
agreement, as well as providing for price or other consideration and
payment terms, including date and time for shipment or delivery.
Provisions for refund of monies paid, in the event of a default on the
part of the seller, may also be provided.
Deinstallation and Transportation. Designates where
responsibility and liability lie for deinstallation, transportation
and related costs, including liability for any damage to the equipment
or the premises or any personal injuries that may arise in connection
with the deinstallation.
Risk of Loss. Designates where the risk of loss from
damage to the equipment lies, both prior to and after delivery of the
equipment. In addition, this clause specifies at what point title to
the equipment will change hands. (Note: Under Article 2 of the Uniform
Commercial Code, if shipment by carrier is not authorized, if the
seller is a merchant, the risk of loss passes to the buyer upon receipt
of the goods.)
Limitation or Disclaimer of Warranties and Liability,
Hold Harmless. Contains specific language limiting the liability of
the seller to the damage terms set forth within the cause and limiting
the warranties associated with the equipment to the provisions, if
any, expressed within this clause. This clause may also be used to
waive all warranties, such as merchantability or fitness.
Applicable Law, Arbitration, Litigation, Jurisdiction
and Venue. Provides for the choice of law under which the terms of the
agreement are to be governed and interpreted. This clause also
provides for the submission to binding arbitration any controversy or
claim arising out of the agreement or breach thereof. The terms of the
arbitration are also set forth by this clause, including which
association's rules will apply, the process by which the arbitrator(s)
will be chosen, the payment of fees associated with the arbitration
and the enforceability of any judgment or award of the arbitrators.
Also contained within this clause is a consent to jurisdiction and venue.
Confidential Information. Provides for the disclosure
of such confidential information as is necessary to complete the
transaction described therein, provided that such information will be
maintained in strict confidence.
Liquidated Damages. This clause provides for
liquidated damages (including legal or collection fees or costs) to be
paid if this information is disclosed to or used to purchase goods
from a third party. Liquidated damages are damages that a party agrees
to pay in the event of a breach of contract. When the liquidated
damage provisions are genuine and reasonable estimates by the parties of
actual damages, they will be enforced. However, when the liquidated
damage provisions are in the nature of penalties designed to ensure
performance of a contract, because of public policy reasons, courts
have historically deemed such clauses unenforceable.
Miscellaneous Provisions. Generally, this clause
contains provisions for the definition of the legal effect, if any of
extraneous language contained within the document, the effect, if any,
of a determination that a provision within the agreement is invalid,
illegal or unenforceable upon the remainder of the agreement and/or the
effect, if any, of the forbearance of either party from enforcing the
terms of the agreement.
Some deals are not always "cookie cutter." Hence, you
should discuss the sale or purchase with a lawyer, even when
proceeding with a standard contract.
- Robert J. Kerwin, Esq., is a shareholder in the
law firm of Tarlow, Breed, Hart & Rodgers, PC, Boston. Kerwin has
served as general counsel to the International Association of Medical
Equipment Remarketers and Servicers (IAMERS) since 1995. John D.
Finnegan is a senior associate in the law firm of Tarlow, Breed, Hart
& Rodgers, PC, Boston. The thoughts expressed are the authors' own
and do not necessarily reflect the views of IAMERS. Readers are
encouraged to consult legal counsel when undertaking a sale or
purchase. Comments or suggestions may be forwarded to email@example.com or firstname.lastname@example.org.