Breach Of Contract By Hospital On Surgeon


Rural Hospital believes that it needs the services of a surgeon to serve its market. Rural Hospital invites a surgeon to come to its community for an interview. During the interview, the Hospital Administrator orally advises the surgeon that she believes that there are enough patients to create a successful surgery practice. Rural Hospital also offers to provide an eighteen-month income guarantee through which Rural Hospital will loan funds to the surgeon until the practice is successful, and the parties enter into a loan agreement and promissory note to memorialize the loan. The loan agreement provides that the loan will be forgiven if the surgeon remains in the community for four years. The surgeon and his family move 1,000 miles to relocate to the Rural Hospital community. However, the other physicians in the community decide that they do not like the surgeon, and the other physicians refer their patients to surgeons in urban medical centers. After six months, it is clear to the surgeon that he will be unable to develop a successful practice in the Rural Hospital community, and he is fortunate to be able to return to his old practice 1,000 miles away. Rural Hospital sues the surgeon for repayment of funds advanced under the loan agreement and promissory note.

1.    What remedies will Rural Hospital seek from the surgeon?
2.    What defenses could the surgeon raise?
3.    What clause or clauses in the loan agreement should be reviewed by the parties to determine their respective rights and obligations?
4.    Would the loan agreement be enforceable if it was oral and not written? Why or why not?


The question belongs to Law and it discusses about a scenario where a hospital appoints a surgeon and offers him a loan that will be waived off, if the surgeon stays at the hospital for at least 4 years. The surgeon, due to lack of practice quits and hospital in favor of practice and the hospital sues him.

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