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American Contract Law for a Global Age, 2017a

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_____________________<br />

Review Question 2. The dissent, a majority of states, and section 195 of the<br />

Restatement (Second) of <strong>Contract</strong>s take a position under which the release in Hanks<br />

would be en<strong>for</strong>ced. What would the policies be that favor en<strong>for</strong>cement of a contract<br />

excusing negligence? If parties have the ability to contract around the duty not to be<br />

negligent, how much does that undermine a fundamental purpose of tort law?<br />

_____________________<br />

VALLEY MEDICAL SPECIALISTS v. FARBER<br />

Supreme Court of Arizona<br />

194 Ariz. 363, 982 P.2d 1277 (en banc 1999)<br />

FELDMAN, J.<br />

In 1985, Valley Medical Specialists (“VMS”), a professional corporation, hired<br />

Steven S. Farber, D.O., an internist and pulmonologist who, among other things,<br />

treated AIDS and HIV-positive patients and per<strong>for</strong>med brachytherapy—a procedure<br />

that radiates the inside of the lung in lung cancer patients. Brachytherapy can only<br />

be per<strong>for</strong>med at certain hospitals that have the necessary equipment. A few years<br />

after joining VMS, Dr. Farber became a shareholder and subsequently a minority<br />

officer and director. In 1991, the three directors, including Dr. Farber, entered into<br />

new stock and employment agreements. The employment agreement contained a<br />

restrictive covenant, the scope of which was amended over time.<br />

In 1994, Dr. Farber left VMS and began practicing within the area defined by<br />

the restrictive covenant, which at that time read as follows:<br />

The parties recognize that the duties to be rendered under the terms of this Agreement by<br />

the Employee are special, unique and of an extraordinary character. The Employee, in<br />

consideration of the compensation to be paid to him pursuant to the terms of this<br />

Agreement, expressly agrees to the following restrictive covenants:<br />

(a) The Employee shall not, directly or indirectly:<br />

. . .<br />

(ii) Either separately, jointly, or in association with others, establish, engage in, or<br />

become interested in, as an employee, owner, partner, shareholder or otherwise,<br />

(b) the term exempts one charged with a duty of public service from<br />

liability to one to whom that duty is owed <strong>for</strong> compensation <strong>for</strong> breach of that<br />

duty, or<br />

(c) the other party is similarly a member of a class protected against<br />

the class to which the first party belongs.<br />

______________________________________________________________________________<br />

316 CHAPTER V: CONTRACT DEFENSES

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