Acquiring a hospital is among the most complex transactions in the healthcare business: property, equipment, licensing and staffing issues converge with significant financial exposure at the same table. This page addresses the contractual side of the transaction, which Georgian civil law governs through the sale regime of the Civil Code — from Article 477 to Article 498. These are precisely the norms that create the framework of guarantees a buyer relies on when purchasing a hospital: what the seller must transfer, which costs the seller must reimburse when a defect is discovered, and when the buyer may demand rescission of the contract. Understanding this statutory baseline is what turns due diligence from a formal exercise into an enforceable legal position.
The Contract of Sale — Obligations of the Parties
Article 477 of the Civil Code defines the essence of the contract: under a contract of sale, the seller is obliged to transfer to the buyer the right of ownership in the property, to hand over the documents connected with it and to deliver the goods; the buyer, in turn, must pay the agreed price and accept the property purchased. In a hospital acquisition this formulation has a very practical meaning: the list of transferred objects — the building, equipment, devices, debts and any other property — must be defined precisely in the contract, because the buyer cannot demand the transfer of anything the document does not mention. If the price is not directly indicated in the contract, the parties may agree on the means of its determination — a clause that carries particular weight in high-value transactions where the consideration may be structured in stages or tied to verifiable metrics.
Defect Guarantees — The Legal Function of Due Diligence
The central block of buyer protection sits in Article 490. If the goods sold have a defect, the seller must either remedy the defect or, where the case concerns a generic thing, replace the thing within the period necessary for the purpose (paragraph 1). The seller bears the reimbursement of the costs necessary to remedy the defect, including the costs of transportation, road, performance of work and materials (paragraph 2) — in the hospital acquisition context this means that the actual costs of repairing or relocating equipment are by law shifted onto the seller. At the same time, the seller may refuse both to remedy the defect and to replace the thing if this would require disproportionately large expenditures (paragraph 3); and where the seller transfers to the buyer a thing free of defects for the purpose of remedying the defect, the seller may demand the return of the defective thing (paragraph 4). Due diligence exists precisely to activate these norms: documenting each defect at the right moment determines which guarantee comes into play and against what evidence.
Rescission and the Transfer of Rights
If the defect is so substantial that the buyer cannot sustain the deal, the buyer may demand rescission of the contract on the ground of the defect of the thing, according to the procedure established by the Civil Code, and the seller must reimburse the buyer's expenses (Article 491). Hospital deals, moreover, frequently involve an entire package of rights, which brings Article 498 directly into play: the rules governing the sale of a thing apply accordingly to the sale of a right or other property as well; in the sale of a right, the seller bears the burden of substantiating the authenticity of that right and the expenses of its transfer; and where a right that gives the possibility of possessing a thing has been sold, the seller is obliged to transfer to the buyer a thing free of both material and legal defects. As for the corporate form of a merger — combination, consolidation or spin-off — it is regulated by the Georgian Law on Entrepreneurs and lies outside the scope of this page: here we deal with the civil-law purchase mechanism, which is the form most hospital acquisitions in practice take.
Frequently Asked Questions
What must the seller transfer when selling a hospital?
Under Article 477: the right of ownership in the property, the documents connected with it, and delivery of the goods. The buyer, for its part, must pay the price and accept the property.
Who bears the costs arising after a defect is discovered?
The seller. Under Article 490 the seller must reimburse the costs necessary to remedy the defect, including transportation, road, work and materials — unless remedying would require disproportionately large expenditures.
Can the buyer demand rescission of the contract?
Yes — on the ground of the defect of the thing, in the procedure established by the Civil Code; in that case the seller must also reimburse the buyer's expenses (Article 491).
Do these rules extend to the acquisition of rights?
Yes. Under Article 498 the sale rules apply accordingly to rights and other property, and the seller answers for the authenticity of the right and the expenses of its transfer.
How We Help on Legal.ge
The Legal.ge team guides hospital purchase and sale transactions on the contractual side: we draw up the inventory of transferred property and rights, document due diligence findings, plan the notice deadlines and the activation of defect guarantees, and, where necessary, prepare claims for rescission and reimbursement of expenses. Contact Legal.ge — our experience in healthcare transactions serves the protection of your investment.