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The International Association of Medical Equipment Remarketers and Servicers, founded in 1993, is dedicated to creating a professional, secondary market by bringing together leading dealers, leassors, refurbishers and services committed to ethics and professionalism. Member companies represent a wide variety of medical specialties but are bound together by their commitment to IAMERS' written and enforceable Code of Ethics and Professionalism in the Diagnostic Imaging industry.

IAMERS News Article

Be Careful in Your Next Joint Venture

One of the great advantages of IAMERS is that two members with well-earned reputations for honesty and "follow through" will often partner successfully to get an equipment deal done. However, in this risky climate, you have to be careful so that your new "partnership" does not cause you to become liable for another member's debts. Sounds remote? Well the doctrines of De Facto Merger and Apparent Authority should be considered. De Facto Merger and Apparent Authority causes of action may exist when one business permits itself to be held out as merged or represent by another business. This may happen by the occurrence of a number of events such as joint advertisements, emails from a seller to a prospective buyer with copies to another indicating that it is committing the other party financially (and there are no emails suggesting otherwise). Joint press releases and shared convention booths may also cause confusion. No single act is outcome determinative but collectively you don't want to be confused with another party who may not be in the same financial condition as you.

Think the possibility for confusion and liability is remote? Let me paint a scenario similar to one that occurred. Note: As they use to say in a TV program: the names and facts have been changed to protect the innocent. One Boston member learns that a radiology practice in Los Angeles might have an equipment need. A Chicago member learns that a Cleveland hospital has exactly the piece of equipment needed and that the equipment will be available next month. The equipment is de-installed and successfully reinstalled with a parts and service warranty. The members do a number of deals together. In the midst of the deals, one member has to take a substantial portion of cash out of the business to buy back shares as a result of a divorce settlement in which the spouse is a significant shareholder. The post-divorce business is slow and company debt rises. Lifestyles don't change so the member is taking out more than the business can afford. Creditors are now chasing the member.

At the RSNA, a competitor notes that the members are sharing booth space and passing out literature about their partnership/joint venture. He tells one of the creditors who now sues the innocent member and alleges de facto merger. The creditor's case against the so-called innocent venturer may well rest on whether the venturer maintained a separate identity or whether he/she permitted the public to perceive of the two companies as one.

Practice Tip to protect your reputation: when doing a joint deal make sure your emails have a recitation at the bottom on the email which acknowledges in some way that you are in a separate company. Make sure you have clear correspondence that indicates the other party to the deal cannot commit you financially. Keep things separate. But still do the deal!

Robert Kerwin is a shareholder in the Boston firm of Tarlow Breed Hart & Rodgers, P.C. and IAMERS general counsel. He may be reached with comments on this article by emailing him at rkerwin@tbhr-law.com.

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