A large segment of Ethiopian population has no personal physician, and a patient often seeks treatment from medical institutions and those who practice within it. However, the medical treatments rendered by these institutions may sometimes go wrong and entail injuries on patients. This in turn brings the issue of liability of medical institutions for injuries sustained by its patients. Normally, determining the liability of medical institutions for injury occurring within its premise is very much dependent up on the legal relationship that brings the patient and the institution together. In Ethiopia too, the medical institution-patient relationship is essentially formed through contract even though there is a very slim possibility to apply tort law in the liability of medical institutions.As such, in the existing legal framework, medical institutions in Ethiopia can use contractual arrangements to insulate themselves from liability for acts of medical malpractice or negligence committed up on its premises.