FAQS

Healthcare Law

1. What do you do when a government investigator shows up at your office?

The unannounced investigations from insurance companies and or law enforcement obviously can be a very stressful time for both the client as well as their staff. First, we discuss with our clients and their staff how to handle various issues to be addressed when an investigator or law enforcement shows up at the home or office unannounced. Clients are educated to obtain the identification and contact information of all investigators present as well as their badge numbers if applicable. Next, we want to verify the investigators or law enforcement agents are who they purport to be. This is critical for numerous reasons including but not limited to protecting Protected Health Information. Clients and their staff are directed to let the investigators know they have legal representation and provide counsel’s contact information. The final step will be for the staff and or the client to immediately contact the law firm. The law firm will contact the investigators/agents and have all requests for documents, or any questions directed to the law firm.

2. How can you avoid insurance audits?

The key to avoiding insurance audits is documentation, documentation, documentation! At our firm we recommend to our clients to be proactive about this and to retain the services of a certified coder who will review your documentation in your coding, making sure the documentation supports the codes that you’re billing. Unfortunately, many clients come to us After they received notice from an insurance company or law enforcement requesting records or documents. At that point in time, we will then retain the services of an appropriate consultant to review and analyze the documentation in coding and then be able to enter into a corrective action plan in the event that there are any issues related to their documentation and/or coding. These types of investigations stem from either a disgruntled employee, a disgruntled patient, and/or the insurance companies that have billing algorithms that will indicate you as an outlier. So insurance audits are a rapidly growing area of our law firm and it is prevalent in the industry across all sub-specialties in medicine.

3. Can a hospital purchase a physician practice in New York?

In New York, a hospital can purchase a physician practice but it’s not as simple as that. In most types of transactions, the most important part of the transaction is how much money is the buyer paying the seller for the business. In New York, when a hospital purchases a physician practice, the most important part of the deal, usually is not the purchase price for various reasons. So why would a physician sell the physician’s practice to a hospital if the physician can’t receive a large purchase price? The answer is that given the consolidation in New York State in the healthcare industry in the last 10 or 15 years, physicians are looking to get more out of the sale of their practice than just money. Most physicians are looking for security and the most important part of a deal when a physician is selling the physician’s practice to a hospital is making sure that the physician has a long-term relationship with the hospital and that the physician is relieved that the administrative burden of operating the physician practice. That’s why most physicians are doing deals with hospitals right now in New York. That’s why many physicians are selling their practice, so that they can reduce the administrative burden and guarantee an income stream for a longer period of time than if they were just practicing by themselves. There are rules and regs that we have to be careful about. We have to make sure that there are no violations of the Anti-Kickback Statute. We also want to make sure that there’s no violation of the Prohibition Against the Corporate Practice of Medicine. In the event that a client comes to our firm and they are in violation of the Anti-Kickback Statute and with the Stark Law, fee splitting rules and regs or the Prohibition Against the Corporate Practice of Medicine, it would be a case-by-case scenario as to the analysis of what has to be done and direct the client accordingly.

4. What should I do if I get a letter from OPMC stating there is an investigation?

In the event you receive a letter from the Office of Professional Discipline or Office of Professional Medical Conduct, one of the first things you should do is contact your attorney immediately. The second thing that I would do is contact your malpractice insurance carrier and let them know that you received a letter from OPMC or OPD and find out if they provide coverage for a legal defense cost, and find out if your attorney’s on that panel. In the event that your malpractice carrier covers administrative proceedings such as an Office of Professional Medical Conduct an investigation or an Office of Professional Discipline investigation, typically the limits for the legal defense costs are on the low end of $25,000 as high as $100,000. The first thing you should do is try not to panic. Even though that’s hard to avoid doing. The good news is that according to statistics that I’ve seen from the Department of Health, a large bulk of the investigations are closed at the investigatory stage and don’t even get to the point of dealing with charges. The approach that I’ve taken over the past 25 years that I’ve been handling many many of these cases, is to take the investigation very seriously, to be fully prepared for the interview, and at times to go out and get an expert review of the cases, so you can go in at the first instance and persuade the state that there was no misconduct and that there’s nothing worthwhile pursuing. So when the state makes its prosecutorial determination of where they want to use its resources to go after a physician they don’t choose your case as an example. It’s a matter of almost preventative medicine and nipping the situation in the bud.

5. What should I do if untrue damaging information is listed about me in the National Practitioner Data Bank?

The National Practitioner Data Bank is a clearinghouse of information regarding disciplinary actions taken against a physician. They’re subject to a series of rules and regulations which do provide that under certain limited circumstances, if the information posted with the data bank is false, it can be removed either by communicating with the hospital that made the inappropriate posting or by administratively contesting it with the data bank. Alternatively, the physician if he or she cannot get the posting removed, might have the opportunity to post what is called a subject statement, which is the physician’s perspective on what happened which led the hospital to make the posting with the data bank.

6. Why is working with a lawyer necessary when it comes to summary suspension?

A summary suspension poses a dramatic threat to a physician’s practice. Not only does it, at least temporarily, suspend a physician’s ability to work at a hospital, but it could have downstream collateral adverse effects on the physician’s medical license, his or her privileges at other facilities, participation in managed care plans and even board certification. There are typically hearing rights at a hospital to contest the suspension, which have to be requested on a timely basis following a thorough review of the hospital’s medical staff bylaws and any related hearing policies, which at times are difficult to decipher. 

Medical staff hearings are informal, and at times procedural rules are lacking entirely. Occurring at the same time, the physician is typically dealing with adverse reporting issues, such as to the National Practitioner Data Bank. All of these issues are further complicated by the fact that in many instances the physician is also employed by the hospital which raised several other contractual and human resources-related issues. Having legal counsel, familiar with these matters, is helpful in navigating the myriad of procedural and substantive issues the physician client will be facing to address and hopefully resolve the suspension in a favorable manner. 

Moreover, legal counsel representing the physician will serve as an effective counter-balance to the influence which the hospital’s counsel will exert in the process, which at times is quite significant.

7. What are some important laws regarding summary suspension for physicians in New York?

There are state and federal laws that are implicated by a summary suspension, including New York Public Health Law Sections 2801-b and 2801-c, which regulate to some limited extent the permissible bases which a hospital can rely upon to terminate, suspend  or curtail medical staff privileges. These laws also afford an administrative review process before the NYS Public Health and Health Planning Council. Likewise, the federal Healthcare Quality Improvement Act includes a variety of “due process” requirements applicable to the hospital hearing and review processes, which hospitals typically attempt to comply with through their medical staff bylaws in an attempt to gain qualified immunity from liability.

8. How can Weiss Zarett Brofman Sonnenklar & Levy, P.C. help when it comes to summary suspension?

In the past, we have been able at times to represent clients and accomplish a reversal of the summary suspension through informal negotiations and persuasion with hospital counsel. Other times we have been able to assist the physician in the hearing process. Likewise, we have had positive results in representing physicians in the process of limiting the adverse effect of the summary suspension to the institution in question, so that the physician could transition his or her practice to other hospitals and remain in managed care companies despite the summary suspension.  Typically, we have found that able legal assistance is quite useful when it comes to compliance with procedural rules and processes at the hearing; and more importantly, to assist the client in preparing to present as compelling a case as possible in order to have the suspension reversed. Interaction with medical experts sometimes plays a pivotal role in responding to a summary suspension. Moreover, legal assistance is typically needed to assist the client in minimizing the downstream consequences of a summary suspension, when it comes to licensure and other practice-related issues, such as privileges at other hospitals and managed care participation.

9. What are the benefits of forming an MSO specifically in the healthcare industry?

MSOs can be an extremely valuable tool for physicians who struggle to balance the provision of medical care with the day-to-day responsibilities of running a business, as MSOs can provide organizational and administrative services to physicians’ offices. MSOs can provide real and appreciable benefits to busy practitioners, allowing them to provide better patient care, unencumbered by the demands of micromanaging the business. The ability to provide a turn-key office for busy physicians, and the diverse array of administrative services and equipment that physicians typically require, present an opportunity for MSOs.

10. What’s the process of forming an MSO?

Forming an MSO is easy. One can choose between forming a corporation or a Limited Liability Company. The owner of the MSO should seek the advice of an accountant to determine which one is best for their situation.

11. What is the general structure of an MSO?

The Corporate Practice of Medicine
It is well-established that New York law includes a prohibition on the “corporate practice of medicine.” This prohibition reinforces the basic principle, reflected in New York law, that only persons licensed to provide medical services is permitted to engage in the practice of medicine.[i] Thus, a physician may practice medicine only in his/her individual capacity, or as a member of a solo or group practice (either in the form of a professional corporation (PC) or limited liability company (PLLC) where all members or shareholders are licensed physicians themselves). Limited exceptions to this rule apply only to hospitals, clinics, and certain other entities licensed under the New York Public Health Law. In any circumstance not prescribed by New York law, a physician is prohibited from being employed by a non-physician and partnering with a non-physician in a medical capacity.

Fee Splitting
Another issue that arises frequently in the context of MSO’s is New York’s prohibition on fee-splitting. According to New York law, it is professional misconduct to permit “any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice medicine, or a legally authorized trainee practicing under the supervision of a licensee. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law…”[ii]

The Anti-Kickback Statute
The Anti-Kickback Statute (“AKS”) prohibits offering, paying, soliciting or receiving anything of value in order to reward or induce patient referrals where services will be paid by a federal health care program.[iii] The AKS is a criminal statute, and provides that giving or receiving any kickbacks for referrals is a felony punishable by a fine of up to $25,000 and five years in prison, and can also include civil penalties far in excess of that amount. Additionally, conviction under the AKS will also lead to automatic exclusion from all federal healthcare programs, such as Medicare and Medicaid. The AKS is not limited to health care providers; any person can be charged with violating the statute, and liability applies regardless of whether that person is giving or receiving a kickback. 

The AKS contains exceptions for personal services and management contracts, and contracts involving equipment and space rentals. In order for an arrangement to fall within the applicable safe harbor, the arrangement must include the following factors: 
A) Be set out in writing and signed by both parties
B) Cover all the services the MSO will provide to the physician
C) Contain the schedule of services provided if not on a full-time basis
D) Be for a term of at least one year
E) Set aggregate compensation in advance, consistent with fair market value and not taking into account the volume or value of referrals generated
F) Not involve the promotion of any business arrangement which violates any law
G) Not set a level of services beyond what is necessary to accomplish the MSO’s purpose
H) Unlike physician practices which must be owned by physicians, there is no impediment for outside capital investment in an MSO. However, the potential for abuse in the MSO model is vast, and that potential is reflected in the applicable laws and regulations on both the state and federal level. From the services provided by the MSO, to the manner in which the MSO is paid, physicians and MSOs need to be aware of whether the management services arrangement they are contemplating (or are already involved in) is, in fact, a legal one.

In an environment as highly regulated as healthcare, MSOs also present many prospective pitfalls for practitioners to inadvertently run afoul of state and federal law. In light of the complexities with regard to MSOs, it is highly advisable to establish the details of the management agreement, with the guidance of legal counsel experienced in healthcare issues. Similarly, practitioners currently involved with a management company in the absence of a written agreement, or with a written agreement that might be legally noncompliant, should contact an attorney promptly to be sure they are not inadvertently violating the law and to correct any potential deficiencies.

12. How do MSOs help companies avoid regulatory pitfalls?

13. Are restrictive covenants enforceable in New York?

We are asked all the time whether restrictive covenants are enforceable in New York. The very short answer is that restrictive covenants are enforceable in New York. While restrictive covenants are enforceable, they need to be reasonable and they need to be narrowly tailored based on the specific circumstances of the position and that physician’s practice. The technical answer to the question is, yes, restrictive covenants are enforceable but there are significant limitations placed upon the scope of the restrictive covenants and there are a number of defenses that are available such as if the employer breached the contract or if the employer terminated the contract, under circumstances where courts have recognized that a restrictive covenant would not be applicable. As a result of the consolidation of physician providers into health systems, there are also some very novel and the interesting questions being raised concerning a hospital’s ability to enforce restrictive covenants with respect to other health systems in the state, which cases I’m sure will be brewing through the court system of the upcoming years. The courts in New York State typically do not like restrictive covenants against physicians in the state of New York. The reason for that is they really don’t feel comfortable restricting physicians from practicing medicine, however, case law does show that to the extent that the non-compete or the restrictive covenant is deemed to be reasonable they will in fact enforce it. So then the question becomes what’s reasonable in the state of New York.

14. If a hospital suspends my medical staff privileges, does that mean I cannot work at another?

Not necessarily, but it will create significant challenges. To the extent that you maintain medical staff privileges at more than one hospital or facility, a suspension of privileges at one hospital may not automatically cause a suspension at another possible. However, a suspension of privileges may be reportable to the National Practitioner Data Bank. Additionally, under the rules at any other hospital where you maintain privileges, you may have an affirmative obligation to inform the hospital of the suspension, and the hospital may investigate or take action against your privileges once it learns of the suspension. Likewise, you may apply for privileges at another hospital when you are under suspension, but you will likely be required to disclose the suspension, which will impact negatively on the other hospital’s decision to grant you privileges.

15. What is the corporate practice of medicine doctrine?

The Corporate Practice of Medicine Doctrine is a rule in most states, including New York, which prohibits any individual or corporation other than a licensed physician or medical practice from employing a physician and providing professional medical services. The rule arises out of a public policy concern that allowing unlicensed individuals and corporations to provide medical services will lead to commercialization of medicine for the sake of profits, which would be contrary to the best interests of patients. There are, however, exceptions to the rule, such as the employment of physicians by hospitals and other appropriately licensed entities.

An important distinction is that, while only a physician may provide actual medical services to patients, unlicensed entities may provide ancillary services which allow the physician to treat patients. These entities are commonly referred to as “management companies” or “MSOs” (management services organizations) and may provide and be compensated for a variety of services, such as the provision of office space, equipment, furnishings, utilities, non-professional/secretarial staff, billing and collection services, medical record-keeping, and others.

16. What is the difference between litigation, arbitration, and meditation?

Arbitration and litigation in the court are two sides of the same thing. They are both litigation type vehicles. Mediation on the other hand is trying to resolve matters and it’s not binding until the parties agree on something. The primary benefits of litigation are, during the court system, which allows you to get discovery, which means obtaining documents and testimony from the other side and finding out what they have and what information they have. There’s much much smaller amount allowed in arbitration if any. The negative part about litigation is the time and the costs. You go through litigation and you find that it may be hours and hours and hours and days and that’s very costly to have attorney time involved plus the fact that the courts backed up and sometimes it’s three years to get a decision. In arbitration, it’s a streamlined process. Sometimes within 180 days and the whole problem is resolved. And so the cost is reduced in that respect, but then you have the cost of the arbitrators. You’ve got to pay the arbitrators. The people pay the judges, the arbitrators are paid privately. Mediation can occur in either of litigation or arbitration. In the commercial parts, the courts have been assigning cases to mediation on a regular basis and it’s I found to be very successful, more than 50% of the time. In arbitration, a lot of times the arbitrators will suggest mediation before they get to the final resolution or sometimes in the middle of the arbitration itself they will sit down and said let me see if we can mediate this and see if we can get it resolved so it is a very effective methodology. There are various things where arbitration is much more helpful: issues such as internal business disputes. A lot of times those can be resolved by arbitration. I put arbitration clauses in a lot of the contracts that I do because of that. I also look at, there are times when litigation is much more effective when there is much more issues of fact, questionable, difficult legal issues. Litigation would be a lot better. Usually, those don’t involve arbitration clauses because once there’s an arbitration clause in an agreement, you have to arbitrate. No, what you can do is you can bring a motion in court. The arbitrator’s decision has to be confirmed by the court under the provisions of the civil practice law and rules. And if you don’t like the decision, you can ask that the decision be thrown out but only on the basis that it was arbitrary and capricious.

17. Are there any rules on what a provider can pay a management company to run a practice?

Yes. Under the federal Anti-Kickback Statute, among other federal and state laws, excessive compensation paid to a management company may be construed as an improper referral fee or “kickback” for the management company’s referral of patients to the provider. This can lead to serious risks for providers, including possible criminal liability. Accordingly, to stay within established “safe harbors” relating to management services, management companies may only be reimbursed the “Fair Market Value” of the services they provide. As to what constitutes Fair Market Value, this is a complex question, which is why we recommend working with experienced counsel to structure these arrangements, and with other qualified professionals to ascertain the fair value of management services being provided.

18. I want to employ a nurse practitioner in my New York medical practice, what do I have to consider?

In New York, there are two practice options for employing an NP with more than 3600 hours of experience. One involves an NP establishing a collaborative relationship with a licensed physician. The other option is to enter into a written practice agreement that meets certain statutory requirements with a collaborating physician. For NPs with less than 3600 hours of experience, only the second option is available. Regardless of which option is used, the collaborating physician must review the NP’s charts at least every three months. In addition to ensuring your new hire is licensed and is practicing pursuant to one of these options, you also need to evaluate where the NP’s scope of practice properly overlaps with the collaborating physician’s scope of practice. If you want to learn more about this topic or have questions, please contact Elizabeth A. Rizzo, Esq. at erizzo@weisszarett.com.

19. Is it a problem if I characterize a new hire as an independent contractor instead of as an employee?

It is possible to legitimately engage an independent contractor. You must ensure that the characteristics of the position being filled meet the requirements as put forward by the IRS, including certain control issues over the other engagements of the independent contractor. If you are found by the government to have misclassified an individual as an independent contractor instead of as an employee, either full- or part-time, there are several consequences.

In addition to the severe penalties that would be imposed, you could potentially owe back taxes to the federal government, state unemployment taxes and unpaid worker’s compensation premiums, and may owe unpaid overtime or minimum wages, medical expenses and unpaid vacation and sick pay. If it is determined that you failed to provide required workers’ compensation coverage, your exposure will not be not in the nature of unpaid worker’s compensation insurance premiums but rather (1) statutory penalties; and (2) ultimate liability for the awards made in any case where coverage should have been (but wasn’t) in place. While the award is initially paid by the Uninsured Employers Fund, the Fund will have an indemnification claim against you, as the uninsured employer. If you have any questions about whether the position you are hiring for qualifies for independent contractor treatment, you should seek an attorney for assistance. If you want to learn more about this topic or have questions, please contact Elizabeth A. Rizzo, Esq. at erizzo@weisszarett.com.

20. What is a Merchant Cash Advance?

A merchant cash advance (“MCA”) is an alternative way for a small or midsize business to obtain funding, typically very quickly. An MCA company will provide a business with a lump sum of money to purchase a percentage of the business’s future credit card and/or debit card sales. MCA transactions need to be carefully structured to ensure that the transactions cannot later be construed as loans and to avoid a host of legal issues related to priority, recourse and usury, among others. When litigation arises regarding an MCA transaction it is important to work with an experienced attorney who understands the numerous legal nuances frequently presented by these disputes. If you are interested in learning more about this topic or have any questions, please contact Lisa Giunta-Popeil, Esq. at lpopeil@weisszarett.com.

21. What is Factoring?

Factoring is another alternative method of financing, commonly used for small or midsize businesses. With factoring, the factor provides a business with a cash advance and purchases a business’s accounts receivables based upon outstanding invoices. Usually, there are very strict requirements as to the aging and concentration of the accounts being purchased, with the advances typically being a fixed percentage of the face amount of the invoices, with the right of the factor to audit the accounts. Often, factoring agreements preclude the business from obtaining other sources of financing and include a security interest in the accounts receivable of the business and a personal guaranty of the viability of the accounts. Factoring transactions are generally carefully structured with an eye toward avoiding any possibility that the factoring arrangement could be viewed as a loan, given the potential for higher returns to the factor than might be allowed under usury laws. An attorney who is savvy with respect to factor financing is often critical to navigating issues and disputes involving factors, businesses and/or other creditors. If you are interested in learning more about this topic or have any questions, please contact Lisa Giunta-Popeil, Esq. at lpopeil@weisszarett.com.

22. How Will New York’s Commercial Finance Disclosure Law Impact MCAs and Factoring in the State?

Enacted in 2020 and dubbed by some as New York’s “Small Business Truth-in-Lending Law,” the Commercial Finance Disclosure Law (“CFDL”) applies to various forms of alternative financing, including MCAs and factoring. The CFDL, which officially became effective earlier this year, subjects MCAs and factors to certain disclosure requirements and imposes civil penalties up to $10,000 for violations. At present, New York’s Department of Financial Services (“DFS”) is moving toward implementing regulations in connection with CFDL and will thereafter require compliance with CFDL from alternative commercial finance providers doing business in New York. The enactment of CFDL and the DFS’s regulations may introduce new considerations for structuring alternative financing transactions and may present new challenges in any litigation that might arise in connection thereto. If you are interested in learning more about this topic or have any questions, please contact Lisa Giunta-Popeil, Esq. at lpopeil@weisszarett.com.

23. What do you really need to know about non-compete agreements in NY?

Non-compete agreements

Business Law

1. What is a secured transaction?  

There are two types of secure transactions, but one is on a real estate base and the other is on an asset base. Effectively it’s a lending vehicle. It allows you to get a loan from a lender and lenders protected by collateral either real estate collateral or personalities such as accounts receivable, and equipment inventory. And the benefit to that is that usually they’ll give you a bigger loan because they have more protection. There are other benefits interestingly enough that a good, secured creditor that you’re working with protects you from unsecured creditors. Because people are very afraid of a secured transaction. They think that if I give up collateral, it’s going to be the worst thing in the world for me, but a lot of people won’t get loans without it. In other words, you can’t get a car loan without a car. How do they protect themselves? They take a security interest in your car. It’s that simple. If they’re looking to do a loan on their business and the last thing I want them to do is put up their house as collateral and it happens on occasion. If I’m going to take a loan on my home to use that money for my business, then what I’ll do is, I will tell the client that the best thing for them to do is to borrow the money from the bank on the loan on their home, then take the money and instead of investing in the business, lending it to the business, even their own business and taking it back as a security interest to protect them so that they are secured in the assets of the company. Remember, companies and individuals are separate and you have to remember that and keep them separate otherwise you could pierce the corporate veil.

2. What does it mean to pierce the corporate veil? 

Clients, particularly creditors, come to me to pierce the veil when they feel that the company is not operated in proper corporate form and usually that means as follows: that you form a corporation, and you form a limited liability company solely to protect yourself in personal liability. Well, if you don’t follow proper corporate form, if you’re commingled funds with your own personal funds, then there’s an avenue to go after piercing the corporate veil. And I’ve been successful in doing that. It’s not the easiest thing in New York law but when you see the traits of somebody commingling funds, not following in corporate form, not holding meetings, and not keeping proper records, that gives you the avenue to pierce the corporate veil. And then suddenly shockingly, they find that they have to pay for the debt notwithstanding the fact that they didn’t sign a guarantee.

3. How is healthcare law different than general business law? 

Health Law is different than business law in the sense that we have a large number of regulatory issues that we have to think about when we are drafting contracts in health care transactions. Examples of those would be the Anti-Kickback Statute, the fee-splitting rules and regs, the Stark Law, as well as the Prohibition Against a Corporate Practice of Medicine. Healthcare Law includes general business law, and our firm is a general business law firm but the practice of healthcare law involves knowledge and experience in the entire web of laws and regulations in New York State and around the country that are specific just to healthcare transactions. For example, who can own a healthcare business, who can buy and sell a healthcare business, and how money gets divided and distributed in any healthcare transaction. When we structure a transaction in one of our healthcare deals, we have to be sensitive to a lot of different issues. For example, who’s going to own this particular healthcare business, who’s referring patients to this particular healthcare business, who is the healthcare business referring patients to, and we have to be sensitive to all of these issues because there are many many laws in New York State and in other states and around the country that limit how patients can be referred between healthcare businesses, and who can own a healthcare business, and how money can get paid to owners of the healthcare business and to other businesses doing business with a healthcare business. Health law is different because there are a series of laws rules and regulations that are applicable to health law in this that are not applicable to general businesses. So, a lot of transactions that seem routine and sundry to the ordinary person in the non-healthcare setting can become quite complicated and tricky because of these unique laws that only apply in the healthcare world.

4. Do contracts need to be written to be enforceable?

Oral contracts are generally valid even if not supported by a written document. On the other hand, contract laws require certain contracts to be in writing in order to be enforceable, which include the following:

  • Contracts involving the exchange of land or real property, or an interest in real property (such as a real estate lease).
  • Contracts where one party agrees to be responsible for another party’s debts.  A common example where the owner of an entity guarantees the entity’s obligations under a real estate lease.
  • Contracts that cannot be fulfilled within one year of the start of the contract.
  • Contracts for the sale of goods over $500 or a lease of goods over $1,000.
  • Contracts to give property on or after death.
  • Contracts to sell stocks and bonds.

5. Is a Letter of Intent a contract?

Such letters are common in sale of business transactions, and they can be helpful in providing a foundation for the material terms of a transaction and for moving a transaction forward. However, a letter of intent may create significant problems if the transaction does not go forward. A letter of intent, if not carefully drawn, may nevertheless be held to bind the parties to the subject transaction if the letter of intent contained all the elements of a contract. If the parties wish to use a letter of intent, it is advisable to include language expressly confirming that the letter of intent is not binding on the parties.