PREPARING CONTRACTS Ontario Chiropractic Association

May 4, 2016

Denise Robertson,

Mills & Mills LLP

Joined Mills & Mills LLP as an Associate in 2005.

Denise advises regulated health professionals including

private practices, multi-disciplinary clinics and long-

term care facilities.

Focus on starting a practice and running a practice, and

protecting the business and legal needs of her clients.

AGENDA

1. Types of Contracts

2. Requirements for a legal, binding & enforceable

contract

3. Considerations for Preparing Contracts

4. Terms for Agreements

5. Q&A

Overview of Types of Contracts

What Types of Contracts Apply to Your

Practice?

Lease Agreements

Agreements with Shareholders/Partners

Associate Agreements

Employee Agreements

Agreements with Independent Contractors

Goals for Contracts

Achieve clarity and a mutual understanding

Maintain professionalism

Reduce risk

Protect your practice

What is required for a

contract to be legal, binding

and enforceable?

4 things must exist:

1. the intention of the parties to create legal relations;

2. an offer from one of the parties (the “Offeror”) to the other

setting out the terms and conditions of the proposed

agreement;

3. an acceptance of the offer by the recipient of the offer (the

“Offeree”), which must be communicated to the Offeror;

and

4. a consideration must pass between the Offeror and the

Offeree.

Intention to create legal relations

In Ontario, the intention of the parties to create legal

relations is presumed. This is especially so in commercial

transactions between strangers.

Examples of legal relations:

going into business with another regulated health

professional

Intention to create legal relations

Examples con’t….

entering into a lease

hiring a receptionist or a bookkeeper

agreeing to provide services to an insurance

company for a fee

Offer and Acceptance

One party communicates an interest in

striking an agreement with another party

The other party accepts or makes a

counteroffer

Offer and Acceptance

If a counteroffer is made, the initial party

accepts the counteroffer, presents a

counteroffer of his or her own or decides not to

enter into the agreement at all.

Offer and acceptance can take many forms – it

may or may not be in writing; however…

Offer and Acceptance

Best practice is to reduce an offer to writing,

setting out key business terms and

conditions, and to have the offeree sign that

they accept the offer.

Offer and Acceptance

Remember, your motto should be…

“If it is not in writing, it doesn’t exist”:

ALL AGREEMENTS SHOULD BE DOCUMENTED IN WRITING!

Consideration

There must be an exchange of something of

value between an offeror and an offeree.

Typically, this is a promise to perform a service

in exchange for a promise to pay an agreed fee.

For example,

• In a contract between you and your

receptionist, your receptionist is providing

services for a fee (in the form of a salary).

Consideration

When renting space, your landlord agrees to

allow you to use space in return for lease

payments. You are permitted to use the space and

your landlord receives monetary compensation in

return.

Example

John is a chiropractor with a practice in Toronto.

His practice has been growing steadily and he

decides that it is the right time to hire another

chiropractor to work for him.

He remembers that he met Jane at a recent

networking event.

Example continued…

Jane is a chiropractor who recently moved to

Toronto and indicated she is looking to join an

established practice.

John approaches Jane and offers to hire her. John

and Jane meet to discuss the business relationship.

John puts their conversation in writing. Jane

reviews it and agrees that the contract accurately

describes their discussions.

Example

Intention to enter a legal relationship: John and Jane intend to enter an employment relationship. Offer: John offers to hire Jane as an employee. After discussion, the offer is documented in a written contract. Acceptance: Jane signs the written contract to document her acceptance of John’s offer. Consideration: Jane will work for John’s practice, providing services in accordance with the agreement between her and John. John will pay Jane a salary.

Get it in writing!

Overall, if there is an intention to create legal relations, an offer, acceptance and consideration, you have a contract.

Get it in Writing!

While the relationship is still amicable, be clear

on what is being agreed to.

Do not assume that the other party knows what

you intend.

Get it in Writing!

Two people often remember the same event in

two different ways. Perhaps not surprisingly,

this is even more often the case where the

relationship sours (people tend to “remember”

the original agreement in the way that is most

favourable to them).

Consideration for Preparing

Contracts

Drafting/Reviewing a Contract

When entering into an agreement, ask yourself the

following questions:

Who are the parties to the agreement? (i.e. Who

are the people entering into the contract?)

What is your understanding of what the

agreement between you and the other party is?

Drafting/Reviewing a Contract

Does the contract accurately describe your

understanding of the agreement?

What is the term / length of the agreement?

Have you / the other party received legal advice?

Ask yourself what you are agreeing

to. If the contract doesn’t clearly

answer this question then more work

is required.

Something to consider

If a disagreement arises that ends up in court -

the court may ask:

• What was the intention of the parties?

• What would an objective, reasonable person

understand the contract to mean?

• Are any of the terms ambiguous, vague or

missing?

Something to consider • Who drafted the contract?

• Is there an equitable basis to set aside the

contract?

What are specific terms for

lease agreements?

Lease Agreement

What space will you be leasing?

Leasehold improvements – who pays? Who

owns?

What is included in the lease?

What price will you be paying?

Will you need to make additional payments to

cover the maintenance of common areas of the

building?

Lease Agreement

What can the landlord do if you don’t pay rent?

When will you be making payments?

What is the length of the lease?

How will the lease be renewed?

What services are being included?

What happens if there is damage to the building?

What are your responsibilities when the lease

ends?

Agreements with Shareholders /

Partners

Is this a shareholders’ arrangement or

partnership arrangement?

If the business is incorporated and you and the

other party are shareholders, a shareholders’

agreement should be drafted.

Agreements with Shareholders /

Partners

If the business is not incorporated but there are

two or more people going into business together,

a partnership agreement should be drafted.

These agreements should cover how business

will be carried out and any important elements

of the business relationship.

Agreements with Shareholders /

Partners

What services will be provided by each of the

parties?

How will the parties be remunerated?

Will the parties receive an equal share of the

profits of the business?

How will clients be divided?

Agreements with Shareholders /

Partners

Will each party be expected to work a minimum

number of hours?

How will decisions be made? Will anyone be

able to veto another shareholder/partner?

What will be the grounds for termination of this

agreement?

Agreements with Shareholders /

Partners

If the business is wound up, how will its assets be

divided?

Have you included confidentiality provisions in the

agreement?

Have you considered how solicitation of

clients/employees and competition will be handled

if one of the shareholders / partners leaves the

business?

Shareholders Agreement

What will happen to a shareholder’s shares on

death or incapacity?

What will be the result of either of the

shareholders wanting to sell their shares / exit

the practice?

Shareholders Agreement

What will happen if one of the shareholders

separates from her or his spouse?

Will each shareholder be entitled to nominate a

director?

Will there be any restrictions on the powers of

the directors?

Associate Agreements

Who is making the agreement?

What are the services to be provided by each of

the parties (for example, the clinic, associate,

any other party)?

What will the associate’s responsibilities

include?

Associate Agreements

Will the associate be working at multiple

locations?

Who will be responsible for the assignment of

new incoming patients and how will the patients

be assigned to the Chiropractors working at the

clinic?

Who will be responsible for obtaining, paying for

and/or maintaining professional memberships?

Associate Agreements

How will remuneration and expenses be

handled?

How will the relationship be handled on

termination of the agreement?

Employment and Independent

Contractor Agreements

First, what’s the difference between employees

and independent contractors?

Employment Agreements

What is the date of hire?

Will there be a probationary period?

What will the employee’s roles and

responsibilities consist of?

What will be the employee’s salary? When and

how will the salary be paid?

• Will the employee be entitled to bonuses or

commission?

Employment Agreements

What will the employee’s vacation and sick day

entitlement be?

Have termination provisions been included in

the contract?

What restrictive covenants are appropriate (i.e.

non-solicitation, confidentiality, non-

competition)?

Independent Contractors Agreements

What services are included?

What is being paid for the services?

Who is responsible for expenses?

What is the term/renewal of the contract?

What are the responsibilities of the parties?

On what grounds can the contract be terminated

and by whom?

Independent Contractors Agreements

Can the contract be assigned by one or both of

the parties? If so, how?

Any insurance requirements?

Conclusion

Remember:

Clarity trumps complexity

Legalese is not necessary

Protect your practice

Sign the agreement

And……if it’s not in writing it doesn’t exist!

Questions?

The information contained in this presentation is of a general nature and cannot be relied upon as legal advice.

For legal assistance, contact Denise Robertson at 416-682-7139, or denise.robertson@millsandmills.ca.