Legal and Regulatory Environment of Business 16th Edition Pagnattaro - Test Bank

Legal and Regulatory Environment of Business 16th Edition Pagnattaro – Test Bank

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Sample Questions Are Posted Below

5
Student: ___________________________________________________________________________
1. Litigation is the quickest method of dispute resolution.
True False
2. A dispute arises when one party makes a claim that another party denies.
True False
3. Negotiation is the process used to persuade or coerce someone to do what you want them to do.
True False
4. Positional bargaining is an approach based on principled, interest-based negotiations.
True False
5. Positional negotiation creates barriers to resolution that may be removed by using principles instead of
positions.
True False
6. Once a lawsuit has been filed, ADR may not be used until the suit has gone to judgment or has been
dismissed.
True False
7. A negotiated settlement is generally more expensive and time-consuming than litigation.
True False
8. Juries often decide close questions of liability, as well as size of the verdict, against business
organizations.
True False
9. Focus groups can deliver binding decisions in civil cases.
True False
10. To avoid costly public litigation, parties can agree to have a private third party decide the merits of their
dispute.
True False
11. The arbitrator should be disinterested in any financial impact of the decision.
True False
12. The arbitrator is empowered by the parties to reach a binding decision in a voluntary arbitration.
True False
13. Normally, the decision to submit a dispute to arbitration is irrevocable.
True False
14. If a party is unhappy with the way a private arbitration is going, it may unilaterally close the proceedings
and move the dispute to public litigation.
True False
15. In most state statutes authorizing voluntary arbitration, the agreement to submit to arbitration may be
written or oral.
True False
16. Private arbitrators are not permitted to decide on questions of law.
True False
17. The arbitrator chooses the issues of the hearing to be resolved.
True False
18. An arbitrator must be a lawyer or a judge in good standing in the community where the arbitration is to
take place.
True False
19. The sole source of qualified expert arbitrators currently is the American Arbitration Association.
True False
20. Each state has its own licensing regulations for arbitrators.
True False
21. Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or the
reasons for an award.
True False
22. The Federal Arbitration Act is largely responsible for the prominent role and positive perception of
arbitration among businesses today.
True False
23. In order for a federal court to assume that parties did not intend to arbitrate, a court must believe with
positive assurance that the parties did not intend to include the particular dispute in the arbitration
clause.
True False
24. Individual states are not limited by the Constitution when they make laws that deny arbitration of certain
disputes
True False
25. The federal system and all state systems require arbitration hearings to comply with established rules of
evidence.
True False
26. From the perspective of judicial review, voluntary arbitration is a more effective alternative to litigation
than mandatory arbitration.
True False
27. Absent fraud or other inappropriate behavior, arbitration awards in voluntary proceedings are not subject
to judicial review on the merits of the decision.
True False
28. The judicial review of an arbitrator’s award in a voluntary proceeding is quite restricted and is more
limited than the appellate review of a trial court’s decision.
True False
29. If an arbitrator makes a clearly erroneous ruling pursuant to a voluntary contract-based arbitration, there
will be sufficient grounds for a judge to set aside the award.
True False
30. Mandatory arbitration proceedings are generally subject to a de novo judicial review if a party is
dissatisfied with the award.
True False
31. The failure of a party to be present at an arbitration hearing constitutes a waiver of the right to reject the
award and seek de novo judicial review.
True False
32. Statutorily mandated arbitration requires a higher level of judicial review of an award than voluntary
arbitration.
True False
33. An arbitrator may be considered partial or corrupt by independently investigating a material matter after
the close of hearings without telling either party about the investigation.
True False
34. Rules related to court-annexed mediation are federally mandated.
True False
35. A mediator cannot impose a binding solution on the parties.
True False
36. The court mandates an enforcement mechanism that ensures the parties will mediate in good faith.
True False
37. _____ is the process used to persuade or coerce someone to do what you want them to do.
A. Avoidance
B. Accommodation
C. Negotiation
D. Competition
E. Collusion
38. A negotiation between a seller and a buyer begins with each party stating their respective expectations.
The seller starts with as high an asking price as is considered reasonable. Likewise, the buyer begins with
the lowest reasonable price. This is an example of:
A. positional bargaining.
B. principled negotiation.
C. interest-based negotiation.
D. fact bargaining.
E. surface bargaining.
39. Interest-based negotiations are superior to position-based negotiation because:
A. the differences between the interests of the parties are often large.
B. interest-based negotiations allow room for consideration of non-factual concerns, such as relationships
and long-term interests.
C. position-based negotiation is often only concerned with preparing for litigation.
D. interest-based negotiation requires the presence of a judge or magistrate.
E. interest-based negotiation forces the parties to discuss resolution options for the week prior to open
negotiation.
40. Roger Fisher, William Ury, and Bruce Patton wrote a seminal book on negotiation titled _____.
A. The Principled Proposition
B. Making It Work
C. Let’s Just Talk
D. Getting to Yes
E. Letting It
Go
41. According to Roger Fisher, William Ury, and Bruce Patton, _____ is the element of interest-based
negotiation that involves the application of accepted standards to the topic negotiated—rather than having
the parties state unsupported propositions.
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
42. According to Roger Fisher, William Ury, and Bruce Patton, the element of interest-based negotiation that
instructs parties to brainstorm possible solutions to the dispute is referred to as:
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
43. According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are
outcomes that are possible without the agreement of the other party.
A. commitments
B. alternatives
C. options
D. interests
E. relationships
44. Which of the following is true of the use of ADR techniques?
A. ADR techniques are ineffective once the pretrial process has begun.
B. Disputing parties must begin a lawsuit to use any form of ADR.
C. Disputing parties cannot use an ADR technique not specified in the original agreement.
D. Disputing parties can agree to use an ADR technique after the dispute arises.
E. Litigation precludes the use of ADR techniques for dispute resolution.
45. Often, to provide a dress rehearsal for jury trials, attorneys argue their cases in front of a(n) _____ on
the basis of assumed facts, presenting arguments and expected evidence to this mock jury composed of
citizens.
A. arbitrator
B. barrister
C. magistrate
D. class
E. focus group
46. Which of the following is true of arbitration?
A. The record of proceedings is available to the press and others.
B. The decisions arising from arbitration are binding on the parties.
C. Arbitration cannot be imposed on the disputing parties.
D. The parties themselves resolve all the matters of contention, without the intervention of a third party.
E. The arbitrator need not be a disinterested party.
47. The act of referring a matter to arbitration is called:
A. a submission.
B. a summons.
C. appealing.
D. de novo review.
E. collective bargaining.
48. In the absence of a statute, the rights and duties of the parties to a submission for arbitration are described
and limited by:
A. the Constitution.
B. de novo review.
C. class-action certification.
D. arbitrability.
E. the agreement.
49. The decision by an arbitrator is called a(n):
A. submission.
B. award.
C. verdict.
D. judgment.
E. edict.
50. A(n) _____ will be enforced by the courts as if it were a judgment of the courts.
A. award
B. submission
C. appeal
D. pleading
E. caucus
51. Which of the following is true of the Federal Arbitration Act?
A. It covers any arbitration clause in a contract that involves interstate commerce.
B. It favors litigation over arbitration in cases where an arbitration clause is ambiguous.
C. It nullifies the rights of parties to litigate disputes if an arbitration clause exists.
D. It ensures that arbitration is used only in federal cases, and not in state cases.
E. It guarantees that all arbitration clauses are irrevocable under any circumstances.
52. Arbitrators are typically chosen by:
A. the U.S. Supreme Court.
B. fiat.
C. the disputing parties.
D. Federal Rules of Civil Procedure.
E. mediators.
53. When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the
allegations:
A. automatically nullify the panel’s opinion.
B. normally do not impact the results of arbitration.
C. result in a judge overturning the opinion.
D. normally remove that arbitrator’s opinion from the results of the arbitration.
E. set off a new round of litigation.
54. In most cases, an arbitrator’s award:
A. needs to set forth the legal reasons for the result.
B. needs to set forth the findings of fact.
C. needs to set forth the specific credentials of the arbitrator.
D. needs not set forth any specific facts, law, or reasons.
E. needs to set forth the names of the parties.
55. Which of the following is true of arbitration?
A. Arbitration is more expensive and time-consuming than litigation.
B. Arbitrators’ decisions are rarely binding on the parties.
C. Arbitrators must be licensed pursuant to the American Arbitration Association.
D. An arbitrator is always a neutral third party.
E. Arbitrators must be licensed and trained to assume the role.
56. Who frames the issues to be resolved in arbitration?
A. The arbitrator
B. The judge
C. The parties to the dispute
D. The Supreme Court
E. The National Federation of Arbitrators
57. The _____ of the U.S. Constitution is often used to set aside state laws that improperly deny arbitration of
certain disputes.
A. Takings Clause
B. Bill of Rights
C. Supremacy Clause
D. Third Amendment
E. Due Process Clause
58. Contract-based arbitration is considered to be:
A. voluntary because both parties have willingly agreed to participate.
B. unconstitutional in most states because it limits redress of grievances.
C. coercive because it provides an unfair advantage to the party originating the contract.
D. restrictive and undesirable because of expense and time considerations.
E. legally impractical because these agreements are too difficult to reach in early contract negotiations.
59. A(n) _____ is a decision that arises when parties already in dispute decide that arbitration is better than
litigation.
A. submission
B. motion to compel arbitration
C. injunction
D. arbitrability award
E. postdispute arbitration agreement
60. Which of the following distinguishes mandatory arbitration from voluntary arbitration?
A. The right of the dissatisfied party to reject the award
B. The dollar amount involved
C. Whether or not an attorney is required
D. The quality of the arbitrators
E. Whether there will be one or three arbitrators
61. Ben and Jerry enter into a business agreement to assemble and sell prepackaged salads. In their written
agreement, they both agree that they will be required to settle all disputes through arbitration. Which of
the following is true of this situation?
A. This is an example of a mandatory arbitration clause.
B. This is an example of a voluntary arbitration clause.
C. This is an example of a caucus.
D. This is an example of court-annexed mediation.
E. This is an example of a postdispute arbitration agreement.
62. Which of the following is true of arbitration procedures?
A. Arbitration is a voluntary procedure that cannot be forced on the parties.
B. Judicial review of the arbitrator’s award occurs in most cases.
C. The award resulting from the voluntary arbitration procedure is final.
D. If the arbitrator made erroneous rulings during the hearings, the award can be set aside.
E. The arbitrator’s award is binding on the parties only if there was no error of law on the part of the
arbitrator.
63. Courts can use judicial review to change the awards of voluntary arbitration when:
A. either disputing party is dissatisfied with the award.
B. the arbitrator made erroneous rulings during the hearing.
C. the actions of the arbitrator are deemed fraudulent or arbitrary.
D. the arbitrator reached erroneous findings of fact from the evidence.
E. an arbitrator makes a mistake of law during the proceedings.
64. In which of the following cases will courts most likely use judicial review to change the awards of
voluntary arbitration?
A. Both parties are dissatisfied with the award.
B. The decision violates a positive mandate of the law.
C. The arbitrator reached erroneous findings of fact from the evidence.
D. One party is dissatisfied with the award.
E. The arbitrator misunderstands the law.
65. For mandatory arbitration to be constitutional:
A. proceedings must be bound by standard judicial tenets such as discovery.
B. licensed practitioners must preside over all proceedings.
C. all disputing parties must agree in advance to be bound by the arbitration award.
D. fair procedures must be provided by the legislature and ultimate judicial review is available.
E. the foundational statute must have passed with a super-majority.
66. A party dissatisfied with the mandatory arbitration award has the right to:
A. appeal the award directly to the state supreme court.
B. appeal the award directly to the U.S. Supreme Court.
C. reject the award and seek a review in the appropriate trial court.
D. sue the arbitrator.
E. ignore the disputed award.
67. If arbitration is conducted pursuant to state statute:
A. the statute determines what grounds may be used to challenge an award in court.
B. if a dispute arises involving interstate commerce, the statute of the state where the dispute is first
submitted prevails.
C
.
a disputing party may choose to have Federal Arbitration Act provisions govern any resolution of the
dispute if the state statute appears unfavorable to his or her position.
D. only Congress can overturn it.
E. only the U.S. Supreme Court can overturn it.
68. De novo review means that:
A. the court appoints an arbitrator to initiate arbitration proceedings.
B. the court tries the issues anew as if no arbitration occurred.
C. the court recommends that the party opt for mediation instead of litigation.
D. the court halts a mediation process and begins litigation.
E. the court takes into account the arbitrator’s award in the litigation.
69. James has been appointed as an arbitrator in a dispute. Which of the following can he do without the
danger of it constituting misconduct?
A. Accepting gifts from a party to the proceedings
B. Holding hearings without a member of the arbitration panel present
C. Communication with a party to the proceedings with consent of the other party
D. Receipt of evidence as to a material fact without notice to a party
E. Conducting an independent investigation into a material matter after the close of hearings
70. The outcome of mediation:
A. is binding on all parties.
B. can have no impact on dispute resolution in any way.
C. is a legal finding that may be used in court if the dispute proceeds to litigation.
D. helps point out weaknesses in a case without an actual trial.
E. is a necessary precursor to arbitration.
71. Mediators are similar to arbitrators in that:
A. they can impose binding decisions on the parties.
B. they must be qualified and trained to practice.
C. their decisions can be imposed in a court of law.
D. they operate in cases of federal rather than local importance.
E. they must be disinterested third parties.
72. Typically, mediators utilize the principles of:
A. positional bargaining.
B. fact bargaining.
C. option-based negotiation.
D. surface bargaining.
E. interest-based negotiation.
73. Which of the following is true of mediation?
A. Mediators tend to be more expert in the field than arbitrators so their decisions are less likely to be
erroneous.
B. The disputing parties do not have control over the process, reducing preparation time.
C. Though mediation is typically more expensive than litigation and arbitration, the quality is often better.
D. A mediator cannot impose a binding solution on the parties as he is an interested party to the dispute.
E. A trial judge can require the disputing parties to submit to the mediation process before litigation.
74. The difference between a mediator and an arbitrator is that:
A. a mediator is not a neutral party.
B. an arbitrator is chosen by the disputing parties, while a mediator is not.
C. an arbitrator can force a binding solution on both parties.
D. a mediator can impose a binding solution on the parties.
E. only an arbitrator may be appointed by a judge.
75. _____ occurs when a trial judge requires the disputing parties to submit to the mediation process before a
complaint can be litigated formally.
A. Restorative justice
B. Party-directed mediation
C. Precursor mediation
D. A caucus
E. Court-annexed mediation
76. Which of the following is true of caucuses in dispute resolution?
A. They generally occur during a mediation proceeding.
B. They only occur when mandated by a court order.
C. A caucus involves both parties negotiating without the mediator.
D. They are illegal because they are considered ex parte communications.
E. Caucuses are synonymous with de novo reviews.
77. The meeting between a mediator and one disputant outside the presence of the other disputant is called a
_____.
A. calumny.
B. consensus.
C. convention.
D. convocation.
E. caucus.
78. Which of the following is true of a caucus in the process of mediation?
A. It constitutes misconduct on the part of the arbitrator.
B. Once the mediator uses a caucus, the parties cannot meet face-to-face.
C. A caucus is only allowable if both parties are present at all times.
D. The presence of a mediator is not essential to the conduct of a caucus.
E. A caucus involves the mediator, and only one of the disputing parties.
79. The final step of a successful mediation is:
A. submitting any conclusions to a judge for judicial approval prior to implementation.
B. writing down the basic agreement reached and having it signed by all the parties.
C. providing all evidence given during the mediation to the parties’ attorneys for use in the next phase of
litigation.
D. agreeing that all future disputes be resolved in the same manner.
E. turning the results over to the arbitrator as the submission for arbitration.
80. When parties agree to resolve all the matters of contention that they can and to arbitrate the unresolved
matters, they are said to be using a variation of dispute resolution known as:
A. judicial review.
B. a focus group.
C. submission.
D. Med-Arb.
E. a caucus.
81. Discuss Roger Fisher, William Ury, and Bruce Patton’s influential book and the seven elements of
negotiation presented in it. What is the focus of the book and how do the authors hope to change the focus
of negotiation through it?
82. Why would a business choose to settle a dispute with a customer rather than litigate, even if the business
is likely to prevail?
83. With regard to dispute resolution, what is a focus group and why and when might one be used?
84. Discuss the importance of arbitration for labor relations disputes.
85. What potential problems do you see arising as a result of a poorly drafted predispute arbitration clause?
86. What functions do experts serve in an arbitration?
87. What are the advantages of using an expert rather than a judge as an arbitrator?
88. What are the benefits and difficulties of choosing a panel of three arbitrators over a single arbitrator?
89. Discuss arbitral awards and their relation to the courts.
90. What impact has the Federal Arbitration Act had on how the courts view arbitration?
91. How are arbitrators selected and compensated for mandatory arbitration proceedings?
92. Compare and contrast voluntary and mandatory arbitration.
93. What is the role of judicial review in voluntary contract-based arbitration awards?
94. What are some of the constitutional challenges to mandatory arbitration?
95. What are the four grounds that section 10 of the Federal Arbitration Act provides for vacating an
arbitration award?
96. What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the vacating
of an arbitrator’s award.
97. What are the typical steps in the mediation process?
98. What is a caucus? How is it used in mediation?
99. The Magnuson-Moss Warranty Act provides that if a business adopts an informal dispute resolution
system to handle complaints about its product warranties, then a customer cannot sue the manufacturer
or seller for breach of warranty without first going through the informal procedures. How does the act
benefit the business and the consumer?
100.According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are
outcomes that are possible without the agreement of the other party.
A. commitments
B. alternatives
C. options
D. interests
E. relationships
101.Juries often decide close questions of liability, as well as size of the verdict, against business
organizations.
True False
102.Which of the following is true of the use of ADR techniques?
A. ADR techniques are ineffective once the pretrial process has begun.
B. Disputing parties must begin a lawsuit to use any form of ADR.
C. Disputing parties cannot use an ADR technique not specified in the original agreement.
D. Disputing parties can agree to use an ADR technique after the dispute arises.
E. Litigation precludes the use of ADR techniques for dispute resolution.
103.Focus groups can deliver binding decisions in civil cases.
True False
104.Often, to provide a dress rehearsal for jury trials, attorneys argue their cases in front of a(n) _____ on
the basis of assumed facts, presenting arguments and expected evidence to this mock jury composed of
citizens.
A. arbitrator
B. barrister
C. magistrate
D. class
E. focus group
105.To avoid costly public litigation, parties can agree to have a private third party decide the merits of their
dispute.
True False
106.Which of the following is true of arbitration?
A. The record of proceedings is available to the press and others.
B. The decisions arising from arbitration are binding on the parties.
C. Arbitration cannot be imposed on the disputing parties.
D. The parties themselves resolve all the matters of contention, without the intervention of a third party.
E. The arbitrator need not be a disinterested party.
107.The arbitrator should be disinterested in any financial impact of the decision.
True False
108.The act of referring a matter to arbitration is called:
A. a submission.
B. a summons.
C. appealing.
D. de novo review.
E. collective bargaining.
109.The arbitrator is empowered by the parties to reach a binding decision in a voluntary arbitration.
True False
110.In the absence of a statute, the rights and duties of the parties to a submission for arbitration are described
and limited by:
A. the Constitution.
B. de novo review.
C. class-action certification.
D. arbitrability.
E. the agreement.
111.Normally, the decision to submit a dispute to arbitration is irrevocable.
True False
112.The decision by an arbitrator is called a(n):
A. submission.
B. award.
C. verdict.
D. judgment.
E. edict.
113.If a party is unhappy with the way a private arbitration is going, it may unilaterally close the proceedings
and move the dispute to public litigation.
True False
114.A(n) _____ will be enforced by the courts as if it were a judgment of the courts.
A. award
B. submission
C. appeal
D. pleading
E. caucus
115.In most state statutes authorizing voluntary arbitration, the agreement to submit to arbitration may be
written or oral.
True False
116.Which of the following is true of the Federal Arbitration Act?
A. It covers any arbitration clause in a contract that involves interstate commerce.
B. It favors litigation over arbitration in cases where an arbitration clause is ambiguous.
C. It nullifies the rights of parties to litigate disputes if an arbitration clause exists.
D. It ensures that arbitration is used only in federal cases, and not in state cases.
E. It guarantees that all arbitration clauses are irrevocable under any circumstances.
117.Private arbitrators are not permitted to decide on questions of law.
True False
118.Arbitrators are typically chosen by:
A. the U.S. Supreme Court.
B. fiat.
C. the disputing parties.
D. Federal Rules of Civil Procedure.
E. mediators.
119.The arbitrator chooses the issues of the hearing to be resolved.
True False
120.When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the
allegations:
A. automatically nullify the panel’s opinion.
B. normally do not impact the results of arbitration.
C. result in a judge overturning the opinion.
D. normally remove that arbitrator’s opinion from the results of the arbitration.
E. set off a new round of litigation.
121.An arbitrator must be a lawyer or a judge in good standing in the community where the arbitration is to
take place.
True False
122.In most cases, an arbitrator’s award:
A. needs to set forth the legal reasons for the result.
B. needs to set forth the findings of fact.
C. needs to set forth the specific credentials of the arbitrator.
D. needs not set forth any specific facts, law, or reasons.
E. needs to set forth the names of the parties.
123.The sole source of qualified expert arbitrators currently is the American Arbitration Association.
True False
124.Which of the following is true of arbitration?
A. Arbitration is more expensive and time-consuming than litigation.
B. Arbitrators’ decisions are rarely binding on the parties.
C. Arbitrators must be licensed pursuant to the American Arbitration Association.
D. An arbitrator is always a neutral third party.
E. Arbitrators must be licensed and trained to assume the role.
125.Each state has its own licensing regulations for arbitrators.
True False
126.Who frames the issues to be resolved in arbitration?
A. The arbitrator
B. The judge
C. The parties to the dispute
D. The Supreme Court
E. The National Federation of Arbitrators
127.Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or the
reasons for an award.
True False
128.The _____ of the U.S. Constitution is often used to set aside state laws that improperly deny arbitration of
certain disputes.
A. Takings Clause
B. Bill of Rights
C. Supremacy Clause
D. Third Amendment
E. Due Process Clause
129.The Federal Arbitration Act is largely responsible for the prominent role and positive perception of
arbitration among businesses today.
True False
130.Litigation is the quickest method of dispute resolution.
True False
131.A dispute arises when one party makes a claim that another party denies.
True False
132.Negotiation is the process used to persuade or coerce someone to do what you want them to do.
True False
133.Positional bargaining is an approach based on principled, interest-based negotiations.
True False
134.Positional negotiation creates barriers to resolution that may be removed by using principles instead of
positions.
True False
135.Once a lawsuit has been filed, ADR may not be used until the suit has gone to judgment or has been
dismissed.
True False
136.A negotiated settlement is generally more expensive and time-consuming than litigation.
True False
137.Juries often decide close questions of liability, as well as size of the verdict, against business
organizations.
True False
138.Focus groups can deliver binding decisions in civil cases.
True False
139.To avoid costly public litigation, parties can agree to have a private third party decide the merits of their
dispute.
True False
140.The arbitrator should be disinterested in any financial impact of the decision.
True False
141.The arbitrator is empowered by the parties to reach a binding decision in a voluntary arbitration.
True False
142.Normally, the decision to submit a dispute to arbitration is irrevocable.
True False
143.If a party is unhappy with the way a private arbitration is going, it may unilaterally close the proceedings
and move the dispute to public litigation.
True False
144.In most state statutes authorizing voluntary arbitration, the agreement to submit to arbitration may be
written or oral.
True False
145.Private arbitrators are not permitted to decide on questions of law.
True False
146.The arbitrator chooses the issues of the hearing to be resolved.
True False
147.An arbitrator must be a lawyer or a judge in good standing in the community where the arbitration is to
take place.
True False
148.The sole source of qualified expert arbitrators currently is the American Arbitration Association.
True False
149.Each state has its own licensing regulations for arbitrators.
True False
150.Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or the
reasons for an award.
True False
151.The Federal Arbitration Act is largely responsible for the prominent role and positive perception of
arbitration among businesses today.
True False
152.In order for a federal court to assume that parties did not intend to arbitrate, a court must believe with
positive assurance that the parties did not intend to include the particular dispute in the arbitration
clause.
True False
153.Individual states are not limited by the Constitution when they make laws that deny arbitration of certain
disputes
True False
154.The federal system and all state systems require arbitration hearings to comply with established rules of
evidence.
True False
155.From the perspective of judicial review, voluntary arbitration is a more effective alternative to litigation
than mandatory arbitration.
True False
156.Absent fraud or other inappropriate behavior, arbitration awards in voluntary proceedings are not subject
to judicial review on the merits of the decision.
True False
157.The judicial review of an arbitrator’s award in a voluntary proceeding is quite restricted and is more
limited than the appellate review of a trial court’s decision.
True False
158.If an arbitrator makes a clearly erroneous ruling pursuant to a voluntary contract-based arbitration, there
will be sufficient grounds for a judge to set aside the award.
True False
159.Mandatory arbitration proceedings are generally subject to a de novo judicial review if a party is
dissatisfied with the award.
True False
160.The failure of a party to be present at an arbitration hearing constitutes a waiver of the right to reject the
award and seek de novo judicial review.
True False
161.Statutorily mandated arbitration requires a higher level of judicial review of an award than voluntary
arbitration.
True False
162.An arbitrator may be considered partial or corrupt by independently investigating a material matter after
the close of hearings without telling either party about the investigation.
True False
163.Rules related to court-annexed mediation are federally mandated.
True False
164.A mediator cannot impose a binding solution on the parties.
True False
165.The court mandates an enforcement mechanism that ensures the parties will mediate in good faith.
True False
166._____ is the process used to persuade or coerce someone to do what you want them to do.
A. Avoidance
B. Accommodation
C. Negotiation
D. Competition
E. Collusion
167.A negotiation between a seller and a buyer begins with each party stating their respective expectations.
The seller starts with as high an asking price as is considered reasonable. Likewise, the buyer begins with
the lowest reasonable price. This is an example of:
A. positional bargaining.
B. principled negotiation.
C. interest-based negotiation.
D. fact bargaining.
E. surface bargaining.
168.Interest-based negotiations are superior to position-based negotiation because:
A. the differences between the interests of the parties are often large.
B. interest-based negotiations allow room for consideration of non-factual concerns, such as relationships
and long-term interests.
C. position-based negotiation is often only concerned with preparing for litigation.
D. interest-based negotiation requires the presence of a judge or magistrate.
E. interest-based negotiation forces the parties to discuss resolution options for the week prior to open
negotiation.
169.Roger Fisher, William Ury, and Bruce Patton wrote a seminal book on negotiation titled _____.
A. The Principled Proposition
B. Making It Work
C. Let’s Just Talk
D. Getting to Yes
E. Letting It
Go
170.According to Roger Fisher, William Ury, and Bruce Patton, _____ is the element of interest-based
negotiation that involves the application of accepted standards to the topic negotiated—rather than having
the parties state unsupported propositions.
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
171.According to Roger Fisher, William Ury, and Bruce Patton, the element of interest-based negotiation that
instructs parties to brainstorm possible solutions to the dispute is referred to as:
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
172.According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are
outcomes that are possible without the agreement of the other party.
A. commitments
B. alternatives
C. options
D. interests
E. relationships
173.Which of the following is true of the use of ADR techniques?
A. ADR techniques are ineffective once the pretrial process has begun.
B. Disputing parties must begin a lawsuit to use any form of ADR.
C. Disputing parties cannot use an ADR technique not specified in the original agreement.
D. Disputing parties can agree to use an ADR technique after the dispute arises.
E. Litigation precludes the use of ADR techniques for dispute resolution.
174.Often, to provide a dress rehearsal for jury trials, attorneys argue their cases in front of a(n) _____ on
the basis of assumed facts, presenting arguments and expected evidence to this mock jury composed of
citizens.
A. arbitrator
B. barrister
C. magistrate
D. class
E. focus group
175.Which of the following is true of arbitration?
A. The record of proceedings is available to the press and others.
B. The decisions arising from arbitration are binding on the parties.
C. Arbitration cannot be imposed on the disputing parties.
D. The parties themselves resolve all the matters of contention, without the intervention of a third party.
E. The arbitrator need not be a disinterested party.
176.The act of referring a matter to arbitration is called:
A. a submission.
B. a summons.
C. appealing.
D. de novo review.
E. collective bargaining.
177.In the absence of a statute, the rights and duties of the parties to a submission for arbitration are described
and limited by:
A. the Constitution.
B. de novo review.
C. class-action certification.
D. arbitrability.
E. the agreement.
178.The decision by an arbitrator is called a(n):
A. submission.
B. award.
C. verdict.
D. judgment.
E. edict.
179.A(n) _____ will be enforced by the courts as if it were a judgment of the courts.
A. award
B. submission
C. appeal
D. pleading
E. caucus
180.Which of the following is true of the Federal Arbitration Act?
A. It covers any arbitration clause in a contract that involves interstate commerce.
B. It favors litigation over arbitration in cases where an arbitration clause is ambiguous.
C. It nullifies the rights of parties to litigate disputes if an arbitration clause exists.
D. It ensures that arbitration is used only in federal cases, and not in state cases.
E. It guarantees that all arbitration clauses are irrevocable under any circumstances.
181.Arbitrators are typically chosen by:
A. the U.S. Supreme Court.
B. fiat.
C. the disputing parties.
D. Federal Rules of Civil Procedure.
E. mediators.
182.When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the
allegations:
A. automatically nullify the panel’s opinion.
B. normally do not impact the results of arbitration.
C. result in a judge overturning the opinion.
D. normally remove that arbitrator’s opinion from the results of the arbitration.
E. set off a new round of litigation.
183.In most cases, an arbitrator’s award:
A. needs to set forth the legal reasons for the result.
B. needs to set forth the findings of fact.
C. needs to set forth the specific credentials of the arbitrator.
D. needs not set forth any specific facts, law, or reasons.
E. needs to set forth the names of the parties.
184.Which of the following is true of arbitration?
A. Arbitration is more expensive and time-consuming than litigation.
B. Arbitrators’ decisions are rarely binding on the parties.
C. Arbitrators must be licensed pursuant to the American Arbitration Association.
D. An arbitrator is always a neutral third party.
E. Arbitrators must be licensed and trained to assume the role.
185.Who frames the issues to be resolved in arbitration?
A. The arbitrator
B. The judge
C. The parties to the dispute
D. The Supreme Court
E. The National Federation of Arbitrators
186.The _____ of the U.S. Constitution is often used to set aside state laws that improperly deny arbitration of
certain disputes.
A. Takings Clause
B. Bill of Rights
C. Supremacy Clause
D. Third Amendment
E. Due Process Clause
187.Contract-based arbitration is considered to be:
A. voluntary because both parties have willingly agreed to participate.
B. unconstitutional in most states because it limits redress of grievances.
C. coercive because it provides an unfair advantage to the party originating the contract.
D. restrictive and undesirable because of expense and time considerations.
E. legally impractical because these agreements are too difficult to reach in early contract negotiations.
188.A(n) _____ is a decision that arises when parties already in dispute decide that arbitration is better than
litigation.
A. submission
B. motion to compel arbitration
C. injunction
D. arbitrability award
E. postdispute arbitration agreement
189.Which of the following distinguishes mandatory arbitration from voluntary arbitration?
A. The right of the dissatisfied party to reject the award
B. The dollar amount involved
C. Whether or not an attorney is required
D. The quality of the arbitrators
E. Whether there will be one or three arbitrators
190.Ben and Jerry enter into a business agreement to assemble and sell prepackaged salads. In their written
agreement, they both agree that they will be required to settle all disputes through arbitration. Which of
the following is true of this situation?
A. This is an example of a mandatory arbitration clause.
B. This is an example of a voluntary arbitration clause.
C. This is an example of a caucus.
D. This is an example of court-annexed mediation.
E. This is an example of a postdispute arbitration agreement.
191.Which of the following is true of arbitration procedures?
A. Arbitration is a voluntary procedure that cannot be forced on the parties.
B. Judicial review of the arbitrator’s award occurs in most cases.
C. The award resulting from the voluntary arbitration procedure is final.
D. If the arbitrator made erroneous rulings during the hearings, the award can be set aside.
E. The arbitrator’s award is binding on the parties only if there was no error of law on the part of the
arbitrator.
192.Courts can use judicial review to change the awards of voluntary arbitration when:
A. either disputing party is dissatisfied with the award.
B. the arbitrator made erroneous rulings during the hearing.
C. the actions of the arbitrator are deemed fraudulent or arbitrary.
D. the arbitrator reached erroneous findings of fact from the evidence.
E. an arbitrator makes a mistake of law during the proceedings.
193.In which of the following cases will courts most likely use judicial review to change the awards of
voluntary arbitration?
A. Both parties are dissatisfied with the award.
B. The decision violates a positive mandate of the law.
C. The arbitrator reached erroneous findings of fact from the evidence.
D. One party is dissatisfied with the award.
E. The arbitrator misunderstands the law.
194.For mandatory arbitration to be constitutional:
A. proceedings must be bound by standard judicial tenets such as discovery.
B. licensed practitioners must preside over all proceedings.
C. all disputing parties must agree in advance to be bound by the arbitration award.
D. fair procedures must be provided by the legislature and ultimate judicial review is available.
E. the foundational statute must have passed with a super-majority.
195.A party dissatisfied with the mandatory arbitration award has the right to:
A. appeal the award directly to the state supreme court.
B. appeal the award directly to the U.S. Supreme Court.
C. reject the award and seek a review in the appropriate trial court.
D. sue the arbitrator.
E. ignore the disputed award.
196.If arbitration is conducted pursuant to state statute:
A. the statute determines what grounds may be used to challenge an award in court.
B. if a dispute arises involving interstate commerce, the statute of the state where the dispute is first
submitted prevails.
C
.
a disputing party may choose to have Federal Arbitration Act provisions govern any resolution of the
dispute if the state statute appears unfavorable to his or her position.
D. only Congress can overturn it.
E. only the U.S. Supreme Court can overturn it.
197.De novo review means that:
A. the court appoints an arbitrator to initiate arbitration proceedings.
B. the court tries the issues anew as if no arbitration occurred.
C. the court recommends that the party opt for mediation instead of litigation.
D. the court halts a mediation process and begins litigation.
E. the court takes into account the arbitrator’s award in the litigation.
198.James has been appointed as an arbitrator in a dispute. Which of the following can he do without the
danger of it constituting misconduct?
A. Accepting gifts from a party to the proceedings
B. Holding hearings without a member of the arbitration panel present
C. Communication with a party to the proceedings with consent of the other party
D. Receipt of evidence as to a material fact without notice to a party
E. Conducting an independent investigation into a material matter after the close of hearings
199.The outcome of mediation:
A. is binding on all parties.
B. can have no impact on dispute resolution in any way.
C. is a legal finding that may be used in court if the dispute proceeds to litigation.
D. helps point out weaknesses in a case without an actual trial.
E. is a necessary precursor to arbitration.
200.Mediators are similar to arbitrators in that:
A. they can impose binding decisions on the parties.
B. they must be qualified and trained to practice.
C. their decisions can be imposed in a court of law.
D. they operate in cases of federal rather than local importance.
E. they must be disinterested third parties.
201.Typically, mediators utilize the principles of:
A. positional bargaining.
B. fact bargaining.
C. option-based negotiation.
D. surface bargaining.
E. interest-based negotiation.
202.Which of the following is true of mediation?
A. Mediators tend to be more expert in the field than arbitrators so their decisions are less likely to be
erroneous.
B. The disputing parties do not have control over the process, reducing preparation time.
C. Though mediation is typically more expensive than litigation and arbitration, the quality is often better.
D. A mediator cannot impose a binding solution on the parties as he is an interested party to the dispute.
E. A trial judge can require the disputing parties to submit to the mediation process before litigation.
203.The difference between a mediator and an arbitrator is that:
A. a mediator is not a neutral party.
B. an arbitrator is chosen by the disputing parties, while a mediator is not.
C. an arbitrator can force a binding solution on both parties.
D. a mediator can impose a binding solution on the parties.
E. only an arbitrator may be appointed by a judge.
204._____ occurs when a trial judge requires the disputing parties to submit to the mediation process before a
complaint can be litigated formally.
A. Restorative justice
B. Party-directed mediation
C. Precursor mediation
D. A caucus
E. Court-annexed mediation
205.Which of the following is true of caucuses in dispute resolution?
A. They generally occur during a mediation proceeding.
B. They only occur when mandated by a court order.
C. A caucus involves both parties negotiating without the mediator.
D. They are illegal because they are considered ex parte communications.
E. Caucuses are synonymous with de novo reviews.
206.The meeting between a mediator and one disputant outside the presence of the other disputant is called a
_____.
A. calumny.
B. consensus.
C. convention.
D. convocation.
E. caucus.
207.Which of the following is true of a caucus in the process of mediation?
A. It constitutes misconduct on the part of the arbitrator.
B. Once the mediator uses a caucus, the parties cannot meet face-to-face.
C. A caucus is only allowable if both parties are present at all times.
D. The presence of a mediator is not essential to the conduct of a caucus.
E. A caucus involves the mediator, and only one of the disputing parties.
208.The final step of a successful mediation is:
A. submitting any conclusions to a judge for judicial approval prior to implementation.
B. writing down the basic agreement reached and having it signed by all the parties.
C. providing all evidence given during the mediation to the parties’ attorneys for use in the next phase of
litigation.
D. agreeing that all future disputes be resolved in the same manner.
E. turning the results over to the arbitrator as the submission for arbitration.
209.When parties agree to resolve all the matters of contention that they can and to arbitrate the unresolved
matters, they are said to be using a variation of dispute resolution known as:
A. judicial review.
B. a focus group.
C. submission.
D. Med-Arb.
E. a caucus.
210.Discuss Roger Fisher, William Ury, and Bruce Patton’s influential book and the seven elements of
negotiation presented in it. What is the focus of the book and how do the authors hope to change the focus
of negotiation through it?
211.Why would a business choose to settle a dispute with a customer rather than litigate, even if the business
is likely to prevail?
212.With regard to dispute resolution, what is a focus group and why and when might one be used?
213.Discuss the importance of arbitration for labor relations disputes.
214.What potential problems do you see arising as a result of a poorly drafted predispute arbitration clause?
215.What functions do experts serve in an arbitration?
216.What are the advantages of using an expert rather than a judge as an arbitrator?
217.What are the benefits and difficulties of choosing a panel of three arbitrators over a single arbitrator?
218.Discuss arbitral awards and their relation to the courts.
219.What impact has the Federal Arbitration Act had on how the courts view arbitration?
220.How are arbitrators selected and compensated for mandatory arbitration proceedings?
221.Compare and contrast voluntary and mandatory arbitration.
222.What is the role of judicial review in voluntary contract-based arbitration awards?
223.What are some of the constitutional challenges to mandatory arbitration?
224.What are the four grounds that section 10 of the Federal Arbitration Act provides for vacating an
arbitration award?
225.What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the vacating
of an arbitrator’s award.
226.What are the typical steps in the mediation process?
227.What is a caucus? How is it used in mediation?
228.The Magnuson-Moss Warranty Act provides that if a business adopts an informal dispute resolution
system to handle complaints about its product warranties, then a customer cannot sue the manufacturer
or seller for breach of warranty without first going through the informal procedures. How does the act
benefit the business and the consumer?
5 Key
1. Litigation is the quickest method of dispute resolution.
FALSE
The litigation process within the court system imposes tremendous costs in terms of time, money,
emotional stress, and harmony in relationships. This fact is a major reason why you probably have
very little personal experience with litigation. It also is the reason most businesses try to avoid
litigation and use it as a means of last resort to resolve disputes.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #1
Topic: Conflicts and Negotiation
2. A dispute arises when one party makes a claim that another party denies.
TRUE
A dispute arises when one party makes a claim that another party denies.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #2
Topic: Conflicts and Negotiation
3. Negotiation is the process used to persuade or coerce someone to do what you want them to do.
TRUE
Negotiation is the process used to persuade or coerce someone to do what you want them to do. All
of us instinctively engage in some form of negotiation. Even as evidence of a conflict is exhibited
(through comments or sighs or groans), the parties are negotiating.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #3
Topic: Conflicts and Negotiation
4. Positional bargaining is an approach based on principled, interest-based negotiations.
FALSE
In positional bargaining, the parties begin in a competitive style by stating their respective
expectations. For example, in a sales transaction, the seller starts with as high an asking price as is
considered reasonable. Likewise, the buyer begins with the lowest reasonable price.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #4
Topic: Conflicts and Negotiation
5. Positional negotiation creates barriers to resolution that may be removed by using principles instead of
positions.
TRUE
Most people instinctively use a negotiation method called positional bargaining. A better approach to
negotiating among disputing parties has been described as principled, interest-based negotiations.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #5
Topic: Conflicts and Negotiation
6. Once a lawsuit has been filed, ADR may not be used until the suit has gone to judgment or has been
dismissed.
FALSE
Effective use of ADR systems can save disputing parties many of the costs associated with litigation,
even after it has begun.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #6
Topic: Alternative Dispute Resolution (ADR) Systems
7. A negotiated settlement is generally more expensive and time-consuming than litigation.
FALSE
The winning party in a lawsuit is a loser to the extent of the attorney’s fees— which are often
substantial. The fact that the loser usually also has to pay court costs is an added incentive to
settlement without litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #7
Topic: Alternative Dispute Resolution (ADR) Systems
8. Juries often decide close questions of liability, as well as size of the verdict, against business
organizations.
TRUE
Juries are frequently sympathetic to individuals who have suits against large corporations or
defendants who are covered by insurance. Juries often decide close questions of liability, as well as
size of the verdict, against business organizations because of their presumed ability to pay. As a result,
businesses settle many disputes even though they might possibly prevail in litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #8
Topic: Alternative Dispute Resolution (ADR) Systems
9. Focus groups can deliver binding decisions in civil cases.
FALSE
Attorneys frequently use focus groups in significant cases. The attorneys assemble a group of citizens
and present their evidence. This group then deliberates and makes findings. This dress rehearsal gives
attorneys insight into possible jury reaction to the evidence and points up weaknesses in the case.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #9
Topic: Alternative Dispute Resolution (ADR) Systems
10. To avoid costly public litigation, parties can agree to have a private third party decide the merits of
their dispute.
TRUE
To avoid the various expenses of litigation, disputing parties sometimes agree to have a third party
decide the merits of the dispute. This formal ADR system is called arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #10
Topic: Arbitration
11. The arbitrator should be disinterested in any financial impact of the decision.
TRUE
The primary reason for the use of arbitration is the laudable goal of providing a relatively quick and
inexpensive resolution of disputes. The arbitrator should be disinterested in any financial impact of the
decision.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #11
Topic: Arbitration
12. The arbitrator is empowered by the parties to reach a binding decision in a voluntary arbitration.
TRUE
Submission to arbitration often occurs when the disputing parties agree to use this form of ADR.
Such an agreement by the parties is a submission to voluntary arbitration. Generally, an agreement
to submit an issue to arbitration is irrevocable, and a party that thinks the process is not going well
cannot withdraw from the arbitration and resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #12
Topic: Arbitration
13. Normally, the decision to submit a dispute to arbitration is irrevocable.
TRUE
Generally, an agreement to submit an issue to arbitration is irrevocable, and a party that thinks the
process is not going well cannot withdraw from the arbitration and resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #13
Topic: Arbitration
14. If a party is unhappy with the way a private arbitration is going, it may unilaterally close the
proceedings and move the dispute to public litigation.
FALSE
The parties authorize an arbitrator to make a decision that binds these parties and resolves their
dispute. A party that thinks the process is not going well cannot withdraw from the arbitration and
resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #14
Topic: Arbitration
15. In most state statutes authorizing voluntary arbitration, the agreement to submit to arbitration may be
written or oral.
FALSE
The act of referring a matter to arbitration is called submission. Submission to arbitration often occurs
when the disputing parties agree to use this form of ADR. Most state statutes authorizing voluntary
arbitration require the agreement to arbitrate to be in writing.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #15
Topic: Arbitration
16. Private arbitrators are not permitted to decide on questions of law.
FALSE
The issues submitted to arbitration, as framed in the submission, may be questions of fact, questions of
law, or mixed questions of fact and law.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #16
Topic: Arbitration
17. The arbitrator chooses the issues of the hearing to be resolved.
FALSE
The issues submitted to arbitration, as framed in the submission, may be questions of fact, questions
of law, or mixed questions of fact and law. Parties that have contracted to arbitrate are not required to
arbitrate any matters other than those they contractually agree to arbitrate.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #17
Topic: Arbitration
18. An arbitrator must be a lawyer or a judge in good standing in the community where the arbitration is
to take place.
FALSE
There are no licensing requirements an arbitrator must satisfy. Appraisers can be used to decide
disputes about the value of real estate, medical doctors can be used to decide health care disputes, and
academicians can be used to decide issues within their area of expertise.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #18
Topic: Arbitration
19. The sole source of qualified expert arbitrators currently is the American Arbitration Association.
FALSE
Arbitrators generally are chosen by the disputing parties. A provision in the agreement to arbitrate or
in the statute that requires the arbitration describes how the arbitrator is selected.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #19
Topic: Arbitration
20. Each state has its own licensing regulations for arbitrators.
FALSE
Arbitration provides for decision making by experts with experience in the particular industry and
with knowledge of the customs and practices of the particular work site.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #20
Topic: Arbitration
21. Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or the
reasons for an award.
TRUE
Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or
the reasons for an award. However, a disclosure of findings and the reasons must be given if the
applicable statute, arbitration agreement, or submission so requires. When the arbitrator does provide
the basis for decision in the form of an opinion or letter, that document becomes a part of the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #21
Topic: Arbitration
22. The Federal Arbitration Act is largely responsible for the prominent role and positive perception of
arbitration among businesses today.
TRUE
Prior to the enactment of the FAA, our common law system preferred litigation over arbitration as
a means of resolving disputes. In 1925, congressional enactment of the FAA began to change this
presumed way of dispute resolution.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #22
Topic: Arbitration
23. In order for a federal court to assume that parties did not intend to arbitrate, a court must believe with
positive assurance that the parties did not intend to include the particular dispute in the arbitration
clause.
TRUE
The federal policy clearly favors arbitration of commercial disputes. The FAA provides that
arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.”
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #23
Topic: Arbitration
24. Individual states are not limited by the Constitution when they make laws that deny arbitration of
certain disputes
FALSE
The Commerce Clause and the Supremacy Clause of the U.S. Constitution are often used to set aside
such state laws that deny arbitration of certain disputes.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #24
Topic: Arbitration
25. The federal system and all state systems require arbitration hearings to comply with established rules
of evidence.
FALSE
States have different rules relating to the admissibility of evidence. In most states the established
rules of evidence must be followed by the arbitrators. Several jurisdictions, however, do not require
hearings to be conducted according to the established rules of evidence.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #25
Topic: Arbitration
26. From the perspective of judicial review, voluntary arbitration is a more effective alternative to
litigation than mandatory arbitration.
TRUE
The arbitration process is less time consuming and less costly than litigation only if the parties
are limited in seeking judicial review of the arbitrators’ awards. From this perspective, voluntary
arbitration is a more effective alternative to litigation than mandatory arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #26
Topic: Arbitration
27. Absent fraud or other inappropriate behavior, arbitration awards in voluntary proceedings are not
subject to judicial review on the merits of the decision.
TRUE
The fact that the arbitrator made erroneous rulings during the hearing, or reached erroneous findings
of fact from the evidence, is no ground for setting aside the award because the parties have agreed that
he or she should be the judge of the facts. An erroneous view of the law no matter how egregious is
binding because the parties have agreed to accept the arbitrator’s view of the law.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #27
Topic: Arbitration
28. The judicial review of an arbitrator’s award in a voluntary proceeding is quite restricted and is more
limited than the appellate review of a trial court’s decision.
TRUE
Courts do not interfere with an award by examining the merits of the controversy, the sufficiency
of the evidence supporting the award, or the reasoning supporting the decision. Were it otherwise,
arbitration would fail in its chief purpose: to preclude the need for litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #28
Topic: Arbitration
29. If an arbitrator makes a clearly erroneous ruling pursuant to a voluntary contract-based arbitration,
there will be sufficient grounds for a judge to set aside the award.
FALSE
Error of law renders the award void only when it requires the parties to commit a crime or otherwise
to violate a positive mandate of the law.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #29
Topic: Arbitration
30. Mandatory arbitration proceedings are generally subject to a de novo judicial review if a party is
dissatisfied with the award.
TRUE
Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes
as against the constitutional challenges previously mentioned where a dissatisfied party can reject the
arbitrator’s award and seek a de novo judicial review of that award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #30
Topic: Arbitration
31. The failure of a party to be present at an arbitration hearing constitutes a waiver of the right to reject
the award and seek de novo judicial review.
TRUE
The failure of a party to be present, either in person or by counsel, at an arbitration constitutes a
waiver of the right to reject the award and seek de novo judicial review. In essence, a party’s lack of
participation operates as consent to the entry by the court of a judgment on the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #31
Topic: Arbitration
32. Statutorily mandated arbitration requires a higher level of judicial review of an award than voluntary
arbitration.
TRUE
Although a party may voluntarily consent to almost any restriction upon or deprivation of a right, a
similar restriction or deprivation, when compelled by government, must be in accord with procedural
and substantive due process of law. Statutorily mandated arbitration requires a higher level of judicial
review of the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #32
Topic: Arbitration
33. An arbitrator may be considered partial or corrupt by independently investigating a material matter
after the close of hearings without telling either party about the investigation.
TRUE
Section 10 of the Federal Arbitration Act provides that an arbitration award may be vacated or set
aside on any one of four grounds, including arbitral misconduct. The concept of arbitral “misconduct”
does not lend itself to a precise definition, but undertaking independent, unauthorized investigations
have been found to fit that definition.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #33
Topic: Arbitration
34. Rules related to court-annexed mediation are federally mandated.
FALSE
Rules related to court-annexed mediation are local in nature; thus, there are wide variations as to the
type of cases that courts require to be mediated.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #34
Topic: Mediation
35. A mediator cannot impose a binding solution on the parties.
TRUE
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #35
Topic: Mediation
36. The court mandates an enforcement mechanism that ensures the parties will mediate in good faith.
TRUE
Even in the court-annexed mediations, a party usually satisfies the court’s order to mediate by simply
showing up. Generally, there is no enforcement mechanism that ensures the parties will mediate in
good faith.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #36
Topic: Mediation
37. _____ is the process used to persuade or coerce someone to do what you want them to do.
A. Avoidance
B. Accommodation
C. Negotiation
D. Competition
E. Collusion
Negotiation is the process used to persuade or coerce someone to do what you want them to do. All of
us negotiate all the time with ourselves, our family members, our co-workers, and even with strangers.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #37
Topic: Conflicts and Negotiation
38. A negotiation between a seller and a buyer begins with each party stating their respective
expectations. The seller starts with as high an asking price as is considered reasonable. Likewise, the
buyer begins with the lowest reasonable price. This is an example of:
A. positional bargaining.
B. principled negotiation.
C. interest-based negotiation.
D. fact bargaining.
E. surface bargaining.
In positional bargaining, the parties begin in a competitive style by stating their respective
expectations.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #38
Topic: Conflicts and Negotiation
39. Interest-based negotiations are superior to position-based negotiation because:
A. the differences between the interests of the parties are often large.
B. interest-based negotiations allow room for consideration of non-factual concerns, such as
relationships and long-term interests.
C. position-based negotiation is often only concerned with preparing for litigation.
D. interest-based negotiation requires the presence of a judge or magistrate.
E. interest-based negotiation forces the parties to discuss resolution options for the week prior to open
negotiation.
Parties would likely benefit by discussing how each could benefit by continuing their relationship of
customer and supplier. They may be able to solve the current problem and maintain, if not enhance,
their future business opportunities together.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #39
Topic: Conflicts and Negotiation
40. Roger Fisher, William Ury, and Bruce Patton wrote a seminal book on negotiation titled _____.
A. The Principled Proposition
B. Making It Work
C. Let’s Just Talk
D. Getting to Yes
E. Letting It
Go
The book presents a better approach to negotiating among disputing parties and presents seven
elements that should become the focus of negotiators.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #40
Topic: Conflicts and Negotiation
41. According to Roger Fisher, William Ury, and Bruce Patton, _____ is the element of interest-based
negotiation that involves the application of accepted standards to the topic negotiated—rather than
having the parties state unsupported propositions.
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
Legitimacy involves the application of accepted standards to the topic negotiated—rather than having
the parties state unsupported propositions.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #41
Topic: Conflicts and Negotiation
42. According to Roger Fisher, William Ury, and Bruce Patton, the element of interest-based negotiation
that instructs parties to brainstorm possible solutions to the dispute is referred to as:
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
The parties should brainstorm possible options or solutions to their dispute. This exploration process
is best done with the parties agreeing that an option mentioned is not necessarily a proposal for
compromise.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #42
Topic: Conflicts and Negotiation
43. According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are
outcomes that are possible without the agreement of the other party.
A. commitments
B. alternatives
C. options
D. interests
E. relationships
Alternatives are outcomes that are possible without the agreement of the other party. In essence,
alternatives are the thing that parties to a negotiation can do away from the bargaining table.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #43
Topic: Arbitration
44. Which of the following is true of the use of ADR techniques?
A. ADR techniques are ineffective once the pretrial process has begun.
B. Disputing parties must begin a lawsuit to use any form of ADR.
C. Disputing parties cannot use an ADR technique not specified in the original agreement.
D. Disputing parties can agree to use an ADR technique after the dispute arises.
E. Litigation precludes the use of ADR techniques for dispute resolution.
Disputing parties may agree to use an ADR technique after the dispute arises even if they did not
foresee the possibility of needing to use a dispute resolution system at the time of their original
agreement.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #44
Topic: Alternative Dispute Resolution (ADR) Systems
45. Often, to provide a dress rehearsal for jury trials, attorneys argue their cases in front of a(n) _____ on
the basis of assumed facts, presenting arguments and expected evidence to this mock jury composed
of citizens.
A. arbitrator
B. barrister
C. magistrate
D. class
E. focus group
The attorneys assemble a group of citizens and present their evidence. This group then deliberates
and makes findings. The verdicts often cause plaintiffs to take a more realistic view of the damages to
which they think they are entitled.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #45
Topic: Alternative Dispute Resolution (ADR) Systems
46. Which of the following is true of arbitration?
A. The record of proceedings is available to the press and others.
B. The decisions arising from arbitration are binding on the parties.
C. Arbitration cannot be imposed on the disputing parties.
D. The parties themselves resolve all the matters of contention, without the intervention of a third
party.
E. The arbitrator need not be a disinterested party.
Arbitrators are authorized to make decisions that are binding on the parties, thereby resolving the
dispute.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #46
Topic: Arbitration
47. The act of referring a matter to arbitration is called:
A. a submission.
B. a summons.
C. appealing.
D. de novo review.
E. collective bargaining.
The act of referring a matter to arbitration is called submission. Submission to arbitration often occurs
when the disputing parties agree to use this form of ADR.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #47
Topic: Arbitration
48. In the absence of a statute, the rights and duties of the parties to a submission for arbitration are
described and limited by:
A. the Constitution.
B. de novo review.
C. class-action certification.
D. arbitrability.
E. the agreement.
Parties that have contracted to arbitrate are not required to arbitrate any matters other than those they
contractually agree to arbitrate.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #48
Topic: Arbitration
49. The decision by an arbitrator is called a(n):
A. submission.
B. award.
C. verdict.
D. judgment.
E. edict.
The arbitrator’s decision is known as an award. In most states the arbitrator’s award must be in writing.
The award is valid as long as it settles the entire controversy and states which party is to pay the other
a sum of money.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #49
Topic: Arbitration
50. A(n) _____ will be enforced by the courts as if it were a judgment of the courts.
A. award
B. submission
C. appeal
D. pleading
E. caucus
An arbitrator’s award is final on all issues submitted, and it will be enforced by the courts as if it were
a judgment of the court.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #50
Topic: Arbitration
51. Which of the following is true of the Federal Arbitration Act?
A. It covers any arbitration clause in a contract that involves interstate commerce.
B. It favors litigation over arbitration in cases where an arbitration clause is ambiguous.
C. It nullifies the rights of parties to litigate disputes if an arbitration clause exists.
D. It ensures that arbitration is used only in federal cases, and not in state cases.
E. It guarantees that all arbitration clauses are irrevocable under any circumstances.
The FAA covers any arbitration clause in a contract that involves interstate commerce.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #51
Topic: Arbitration
52. Arbitrators are typically chosen by:
A. the U.S. Supreme Court.
B. fiat.
C. the disputing parties.
D. Federal Rules of Civil Procedure.
E. mediators.
A provision in the agreement to arbitrate or in the statute that requires the arbitration describes how
the arbitrator is selected.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #52
Topic: Arbitration
53. When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the
allegations:
A. automatically nullify the panel’s opinion.
B. normally do not impact the results of arbitration.
C. result in a judge overturning the opinion.
D. normally remove that arbitrator’s opinion from the results of the arbitration.
E. set off a new round of litigation.
It is not surprising that when this procedure is used, allegations of bias are often made by the losing
party. Courts generally do not allow such allegations to form a basis for overturning a panel’s award
unless there is evidence of overt corruption or misconduct in the arbitration proceedings.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #53
Topic: Arbitration
54. In most cases, an arbitrator’s award:
A. needs to set forth the legal reasons for the result.
B. needs to set forth the findings of fact.
C. needs to set forth the specific credentials of the arbitrator.
D. needs not set forth any specific facts, law, or reasons.
E. needs to set forth the names of the parties.
However, a disclosure of findings and the reasons must be given if the applicable statute, arbitration
agreement, or submission so requires.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #54
Topic: Arbitration
55. Which of the following is true of arbitration?
A. Arbitration is more expensive and time-consuming than litigation.
B. Arbitrators’ decisions are rarely binding on the parties.
C. Arbitrators must be licensed pursuant to the American Arbitration Association.
D. An arbitrator is always a neutral third party.
E. Arbitrators must be licensed and trained to assume the role.
The arbitrator should be disinterested in any financial impact of the decision and neutral regarding
the issues presented in the dispute. There are no licensing requirements an arbitrator must satisfy.
However, an arbitrator often is chosen from a list of qualified arbitrators provided by the arbitration
service.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #55
Topic: Arbitration
56. Who frames the issues to be resolved in arbitration?
A. The arbitrator
B. The judge
C. The parties to the dispute
D. The Supreme Court
E. The National Federation of Arbitrators
The parties themselves, by virtue of the submission, frame the issues to be resolved and define the
scope of the arbitrator’s powers.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #56
Topic: Arbitration
57. The _____ of the U.S. Constitution is often used to set aside state laws that improperly deny
arbitration of certain disputes.
A. Takings Clause
B. Bill of Rights
C. Supremacy Clause
D. Third Amendment
E. Due Process Clause
The federal policy favoring arbitration frequently conflicts with state laws favoring litigation as
the means to resolve a dispute. The Supreme Court exhibits great deference to arbitration and the
authority of the arbitrator.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #57
Topic: Arbitration
58. Contract-based arbitration is considered to be:
A. voluntary because both parties have willingly agreed to participate.
B. unconstitutional in most states because it limits redress of grievances.
C. coercive because it provides an unfair advantage to the party originating the contract.
D. restrictive and undesirable because of expense and time considerations.
E. legally impractical because these agreements are too difficult to reach in early contract
negotiations.
In essence, the contracting parties show good judgment in understanding conflicts exist, conflicts give
rise to disputes, and disputes are better resolved through arbitration rather than by litigating.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #58
Topic: Arbitration
59. A(n) _____ is a decision that arises when parties already in dispute decide that arbitration is better
than litigation.
A. submission
B. motion to compel arbitration
C. injunction
D. arbitrability award
E. postdispute arbitration agreement
Postdispute arbitration agreements arise when parties already in dispute decide that arbitration is better
than litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #59
Topic: Arbitration
60. Which of the following distinguishes mandatory arbitration from voluntary arbitration?
A. The right of the dissatisfied party to reject the award
B. The dollar amount involved
C. Whether or not an attorney is required
D. The quality of the arbitrators
E. Whether there will be one or three arbitrators
Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes
as against the constitutional challenges previously mentioned where a dissatisfied party can reject the
arbitrator’s award and seek a de novo judicial review of that award.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #60
Topic: Arbitration
61. Ben and Jerry enter into a business agreement to assemble and sell prepackaged salads. In their written
agreement, they both agree that they will be required to settle all disputes through arbitration. Which
of the following is true of this situation?
A. This is an example of a mandatory arbitration clause.
B. This is an example of a voluntary arbitration clause.
C. This is an example of a caucus.
D. This is an example of court-annexed mediation.
E. This is an example of a postdispute arbitration agreement.
Agreements to voluntarily arbitrate come in two basic forms. One is known as the predispute
arbitration clause. In essence, the contracting parties show good judgment in understanding conflicts
exist, conflicts give rise to disputes, and disputes are better resolved through arbitration rather than by
litigating.
AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #61
Topic: Arbitration
62. Which of the following is true of arbitration procedures?
A. Arbitration is a voluntary procedure that cannot be forced on the parties.
B. Judicial review of the arbitrator’s award occurs in most cases.
C. The award resulting from the voluntary arbitration procedure is final.
D. If the arbitrator made erroneous rulings during the hearings, the award can be set aside.
E. The arbitrator’s award is binding on the parties only if there was no error of law on the part of the
arbitrator.
Generally, the award resulting from the voluntary arbitration procedure is final. The arbitrator’s
findings on questions of both fact and law are conclusive.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #62
Topic: Arbitration
63. Courts can use judicial review to change the awards of voluntary arbitration when:
A. either disputing party is dissatisfied with the award.
B. the arbitrator made erroneous rulings during the hearing.
C. the actions of the arbitrator are deemed fraudulent or arbitrary.
D. the arbitrator reached erroneous findings of fact from the evidence.
E. an arbitrator makes a mistake of law during the proceedings.
The arbitrator’s findings on questions of both fact and law are conclusive. The judicial review of an
arbitrator’s award is quite restricted and is more limited than the appellate review of a trial court’s
decision.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #63
Topic: Arbitration
64. In which of the following cases will courts most likely use judicial review to change the awards of
voluntary arbitration?
A. Both parties are dissatisfied with the award.
B. The decision violates a positive mandate of the law.
C. The arbitrator reached erroneous findings of fact from the evidence.
D. One party is dissatisfied with the award.
E. The arbitrator misunderstands the law.
Error of law renders the award void only when it requires the parties to commit a crime or otherwise
to violate a positive mandate of the law.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #64
Topic: Arbitration
65. For mandatory arbitration to be constitutional:
A. proceedings must be bound by standard judicial tenets such as discovery.
B. licensed practitioners must preside over all proceedings.
C. all disputing parties must agree in advance to be bound by the arbitration award.
D. fair procedures must be provided by the legislature and ultimate judicial review is available.
E. the foundational statute must have passed with a super-majority.
Although a party may voluntarily consent to almost any restriction upon or deprivation of a right, a
similar restriction or deprivation, when compelled by government, must be in accord with procedural
and substantive due process of law.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #65
Topic: Arbitration
66. A party dissatisfied with the mandatory arbitration award has the right to:
A. appeal the award directly to the state supreme court.
B. appeal the award directly to the U.S. Supreme Court.
C. reject the award and seek a review in the appropriate trial court.
D. sue the arbitrator.
E. ignore the disputed award.
Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes
as against the constitutional challenges previously mentioned where a dissatisfied party can reject the
arbitrator’s award and seek a de novo judicial review of that award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #66
Topic: Arbitration
67. If arbitration is conducted pursuant to state statute:
A. the statute determines what grounds may be used to challenge an award in court.
B. if a dispute arises involving interstate commerce, the statute of the state where the dispute is first
submitted prevails.
C
.
a disputing party may choose to have Federal Arbitration Act provisions govern any resolution of
the dispute if the state statute appears unfavorable to his or her position.
D. only Congress can overturn it.
E. only the U.S. Supreme Court can overturn it.
When the arbitration is pursuant to state statute, that statute determines what, if any, grounds are
available to challenge an award in court. In cases that involve interstate commerce issues, the
provisions of the Federal Arbitration Act control.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #67
Topic: Arbitration
68. De novo review means that:
A. the court appoints an arbitrator to initiate arbitration proceedings.
B. the court tries the issues anew as if no arbitration occurred.
C. the court recommends that the party opt for mediation instead of litigation.
D. the court halts a mediation process and begins litigation.
E. the court takes into account the arbitrator’s award in the litigation.
De novo review means that the court tries the issues anew as if no arbitration occurred.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #68
Topic: Arbitration
69. James has been appointed as an arbitrator in a dispute. Which of the following can he do without the
danger of it constituting misconduct?
A. Accepting gifts from a party to the proceedings
B. Holding hearings without a member of the arbitration panel present
C. Communication with a party to the proceedings with consent of the other party
D. Receipt of evidence as to a material fact without notice to a party
E. Conducting an independent investigation into a material matter after the close of hearings
The concept of arbitral “misconduct” does not lend itself to a precise definition, but it is not likely
considered misconduct if the arbitrator has discussions with a party when the other party has given
consent.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #69
Topic: Arbitration
70. The outcome of mediation:
A. is binding on all parties.
B. can have no impact on dispute resolution in any way.
C. is a legal finding that may be used in court if the dispute proceeds to litigation.
D. helps point out weaknesses in a case without an actual trial.
E. is a necessary precursor to arbitration.
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #70
Topic: Mediation
71. Mediators are similar to arbitrators in that:
A. they can impose binding decisions on the parties.
B. they must be qualified and trained to practice.
C. their decisions can be imposed in a court of law.
D. they operate in cases of federal rather than local importance.
E. they must be disinterested third parties.
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #71
Topic: Mediation
72. Typically, mediators utilize the principles of:
A. positional bargaining.
B. fact bargaining.
C. option-based negotiation.
D. surface bargaining.
E. interest-based negotiation.
Parties to a dispute may agree that mediation should be attempted as an alternative to litigating their
controversy.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #72
Topic: Mediation
73. Which of the following is true of mediation?
A. Mediators tend to be more expert in the field than arbitrators so their decisions are less likely to be
erroneous.
B. The disputing parties do not have control over the process, reducing preparation time.
C. Though mediation is typically more expensive than litigation and arbitration, the quality is often
better.
D. A mediator cannot impose a binding solution on the parties as he is an interested party to the
dispute.
E. A trial judge can require the disputing parties to submit to the mediation process before litigation.
A trial judge can require the disputing parties to submit to the mediation process before a complaint
can be litigated formally. There is a growing movement in this court-annexed mediation as one means
of controlling the heavy caseload faced by courts.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #73
Topic: Mediation
74. The difference between a mediator and an arbitrator is that:
A. a mediator is not a neutral party.
B. an arbitrator is chosen by the disputing parties, while a mediator is not.
C. an arbitrator can force a binding solution on both parties.
D. a mediator can impose a binding solution on the parties.
E. only an arbitrator may be appointed by a judge.
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #74
Topic: Arbitration, Mediation
75. _____ occurs when a trial judge requires the disputing parties to submit to the mediation process
before a complaint can be litigated formally.
A. Restorative justice
B. Party-directed mediation
C. Precursor mediation
D. A caucus
E. Court-annexed mediation
A trial judge can require the disputing parties to submit to the mediation process before a complaint
can be litigated formally. There is a growing movement in this court-annexed mediation as one means
of controlling the heavy caseload faced by courts.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #75
Topic: Mediation
76. Which of the following is true of caucuses in dispute resolution?
A. They generally occur during a mediation proceeding.
B. They only occur when mandated by a court order.
C. A caucus involves both parties negotiating without the mediator.
D. They are illegal because they are considered ex parte communications.
E. Caucuses are synonymous with de novo reviews.
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #76
Topic: Mediation
77. The meeting between a mediator and one disputant outside the presence of the other disputant is called
a _____.
A. calumny.
B. consensus.
C. convention.
D. convocation.
E. caucus.
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #77
Topic: Mediation
78. Which of the following is true of a caucus in the process of mediation?
A. It constitutes misconduct on the part of the arbitrator.
B. Once the mediator uses a caucus, the parties cannot meet face-to-face.
C. A caucus is only allowable if both parties are present at all times.
D. The presence of a mediator is not essential to the conduct of a caucus.
E. A caucus involves the mediator, and only one of the disputing parties.
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #78
Topic: Mediation
79. The final step of a successful mediation is:
A. submitting any conclusions to a judge for judicial approval prior to implementation.
B. writing down the basic agreement reached and having it signed by all the parties.
C. providing all evidence given during the mediation to the parties’ attorneys for use in the next phase
of litigation.
D. agreeing that all future disputes be resolved in the same manner.
E. turning the results over to the arbitrator as the submission for arbitration.
Through the good judgment and experience of the mediator, the differences between the parties
hopefully will be resolved and a common agreement can be produced. The final step to a successful
mediation is the writing of the agreement and the signing of the agreement by the parties.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #79
Topic: Mediation
80. When parties agree to resolve all the matters of contention that they can and to arbitrate the unresolved
matters, they are said to be using a variation of dispute resolution known as:
A. judicial review.
B. a focus group.
C. submission.
D. Med-Arb.
E. a caucus.
The parties resolve all the matters of contention that they can and they agree to arbitrate the
unresolved matters. This variation has become known as Med-Arb.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #80
Topic: Mediation
81. Discuss Roger Fisher, William Ury, and Bruce Patton’s influential book and the seven elements of
negotiation presented in it. What is the focus of the book and how do the authors hope to change the
focus of negotiation through it?
The book, Getting to Yes, presents the principled, or interest-based, negotiation scheme, which focuses
on Communication, Relationship, Interests, Options, Legitimacy, Alternatives, and Commitment.
The elements will vary in importance depending on the factual situation in dispute and on the parties’
individual perspectives, but the authors argue that concentrating on these elements can help remove
some of the barriers created by positional negotiation. Students should address the individual elements
and discuss how the “softer,” more interests-based approach can foster more amiable, and less
contentious, negotiations. When the parties take time to address each other’s concerns and truly dig
down to their interests, they may find that positional, adversarial negotiation is counter-productive.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #81
Topic: Conflicts and Negotiation
82. Why would a business choose to settle a dispute with a customer rather than litigate, even if the
business is likely to prevail?
In addition to personal reasons, a business would settle rather than litigate to preserve goodwill and
public relations, and because any delays in the court process, which may be protracted even without
delays, costs the business time and in most cases, time is money. Litigation is an emotional and
financial drain on companies that they should avoid if possible. Juries tend to favor individuals over
businesses and given the litigious environment, avoiding litigation is a wise business decision.
AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #82
Topic: Evaluating Various Forms of ADR
83. With regard to dispute resolution, what is a focus group and why and when might one be used?
A focus group is a group of citizens assembled by an attorney to simulate a jury. The attorney presents
evidence to the focus group which then deliberates and makes findings. This dress rehearsal gives
the attorney an opportunity to assess a potential jury’s reaction to evidence and allows the attorney
to determine his or her strengths and weaknesses regarding the case at hand. Attorneys look to focus
groups as a form of a reality test to see how potential juries will react to their evidence and arguments.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #83
Topic: Evaluating Various Forms of ADR
84. Discuss the importance of arbitration for labor relations disputes.
Students’ answers may vary. Over the past 80 years, arbitration has played an increasingly important
role in resolving business disputes. Historically, arbitration has been the most commonly used ADR
system. The primary reason for the use of arbitration is the laudable goal of providing a relatively
quick and inexpensive resolution of disputes. Arbitration not only helps the parties avoid the expense
of litigation but also provides a means of avoiding the formalities of the courtroom. Formal pleadings,
for example, and other procedural steps such as discovery and the rules of evidence are usually not
used in an arbitration hearing. Arbitration is of special importance in labor relations, where it provides
the grievance procedures under collective bargaining contracts. Arbitration is a means for industrial
self-government, a system of private law for all problems that may arise in the workplace.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #84
Topic: Arbitration
85. What potential problems do you see arising as a result of a poorly drafted predispute arbitration
clause?
Students’ answers may vary. The benefit of arbitration is that the parties get a lot of control over what
happens should a dispute arise, but the parties may not be very good at choosing what control they
exert. Though the parties have planned for arbitration, they may not be able to plan for all disputes,
so the clause may leave out something, which will cause issues of arbitrability. Because they did not
think of covering all disputes, one of the parties may resist arbitration, which will force the other to
compel arbitration. This would force an additional step in their dispute resolution that will force them
into court, which they ostensibly were hoping to avoid in the first place. Also, the parties may not
be sophisticated enough to choose a good arbitrator, good procedures, or a proper venue, making the
resulting dispute resolution confusing and potentially null and void.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #85
Topic: Arbitration
86. What functions do experts serve in an arbitration?
Arbitration has the advantage of submitting many disputes to experts for solutions. The specific
issues under dispute may be very nuanced or idiosyncratic, so sending them to an expert, rather than a
generalist judge, cuts out the necessity of explaining the industry, goods, and business characteristics
before you can even address the dispute. For example, if the issue involves whether a building has
been properly constructed, the matter could be submitted to an architect for resolution. If it involves a
technical accounting problem, it could be submitted to a certified public accountant.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #86
Topic: Arbitration
87. What are the advantages of using an expert rather than a judge as an arbitrator?
One reason arbitration is frequently preferable to litigation is the use of an expert to resolve the
dispute. Appraisers can be used to decide disputes about the value of real estate, medical doctors can
be used to decide health care disputes, and academicians can be used to decide issues within their area
of expertise. Arbitration provides for decision making by experts with experience in the particular
industry and with knowledge of the customs and practices of the particular work site. Parties expect
the arbitrator to look beyond strictly legal criteria to other factors that bear on the proper resolution of
a dispute.
These factors may include the impact of a particular result on productivity, its consequences to
morale, and whether tensions will be heightened or diminished. The ablest judge usually does not
bring the same experience and competence to bear upon the determination of a grievance, because the
judge cannot be as informed as the expert arbitrator.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #87
Topic: Arbitration
88. What are the benefits and difficulties of choosing a panel of three arbitrators over a single arbitrator?
It is common to use one arbitrator who is considered objective and impartial. Any person the disputing
parties agree upon can be an arbitrator. There are no licensing requirements an arbitrator must satisfy.
However, an arbitrator often is chosen from a list of qualified arbitrators provided by the arbitration
service. The disputing parties are not limited to the list unless they have agreed to make their selection
from this list. It is also common to have a panel of three arbitrators. In such cases, each party selects
an arbitrator and the two so selected choose a third. It is not surprising that when this procedure
is used, allegations of bias are often made by the losing party. Courts generally do not allow such
allegations to form a basis for overturning a panel’s award unless there is evidence of overt corruption
or misconduct in the arbitration proceedings. Since such evidence usually is difficult to obtain,
allegations of bias normally do not impact the results of arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #88
Topic: Arbitration
89. Discuss arbitral awards and their relation to the courts.
Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or
the reasons for the award. However, a disclosure of findings and the reasons must be given if the
applicable statute, arbitration agreement, or submission so requires. When the arbitrator does provide
the basis for decision in the form of an opinion or letter, that document becomes a part of the award.
Because the parties themselves, by virtue of the submission, frame the issues to be resolved and define
the scope of the arbitrator’s powers, the parties are generally bound by the resulting award. A court
will make every reasonable presumption in favor of the arbitration award and the arbitrator’s acts
and proceedings. An arbitrator’s award is final on all issues submitted, and it will be enforced by the
courts as if it were a judgment of the court. Awards are not subject to judicial review on the merits of
the decision. Only when fraud or other clearly inappropriate action by the arbitrator can be shown is
a court willing to reverse the award granted in a voluntary arbitration proceeding. After the award is
made by the arbitrator, it is usually filed with the clerk of an appropriate court. If no objections are
filed within a statutory period, it becomes final and enforceable, like a judgment.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #89
Topic: Arbitration
90. What impact has the Federal Arbitration Act had on how the courts view arbitration?
The reenactment of the Federal Arbitration Act (FAA) in 1947 helped change the perceptions of
arbitration. At that time, courts began to encourage the use of arbitration as an alternative to litigation.
The FAA laid the groundwork for enforceable regulation of the arbitration process and provided
a framework for states to individually legislate arbitration. The FAA also addresses contractual
arbitration when interstate commerce is involved, and generally takes precedence over state
regulations in such cases. The Supreme Court widely accepts arbitration as an enforceable alternative
dispute resolution tool.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #90
Topic: Arbitration
91. How are arbitrators selected and compensated for mandatory arbitration proceedings?
The arbitrators in the mandatory arbitration process are retired judges and practicing lawyers, usually
experienced trial attorneys. A list of eligible arbitrators is maintained by court officials in charge
of the mandatory process. Although the parties may agree on using only one arbitrator, mandatory
arbitration cases are usually presented to a panel of three. Arbitrators are paid a per-diem fee. The
parties involved in the arbitration are responsible for paying these costs.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #91
Topic: Arbitration
92. Compare and contrast voluntary and mandatory arbitration.
In voluntary arbitration, submission is based on the parties’ agreement to arbitrate or on the contract,
while in mandatory arbitration, submission is based on state statute. The procedures involved in
voluntary arbitration are quick, informal, with typically no rules or discovery. Mandatory arbitration
involves court supervision, frequently there is discovery, and many states require the rules of evidence
to be followed. Voluntary arbitration allows no review of the award, unless there is proof of fraud or
other inappropriate acts by the arbitrator. For mandatory arbitration, the court will conduct a de novo
hearing as if the hearing had not occurred.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #92
Topic: Arbitration
93. What is the role of judicial review in voluntary contract-based arbitration awards?
In most cases, the award resulting from a voluntary contract-based arbitration is final. Arbitrator’s
findings are considered conclusive even when they result in erroneous findings of law. Judicial review
can correct fraudulent or arbitrary actions by an arbitrator or when the decision is clearly contrary to
public policy.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #93
Topic: Arbitration
94. What are some of the constitutional challenges to mandatory arbitration?
Laws providing for mandatory arbitration are subject to numerous constitutional challenges. Many
courts have generally held that mandatory arbitration statutes that effectively close the courts to the
litigants by compelling them to resort to arbitrators for a final and binding determination are void as
against public policy and are unconstitutional in that they:
1. Deprive one of property and liberty of contract without due process of law.
2. Violate the litigant’s Seventh Amendment right to a jury trial and/or the state’s constitutional access
to courts’ provisions.
3. Result in the unconstitutional delegation of legislative or judicial power in violation of state
constitutional separation-of-powers provisions.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #94
Topic: Arbitration
95. What are the four grounds that section 10 of the Federal Arbitration Act provides for vacating an
arbitration award?
Section 10 of the FAA provides four grounds to vacate an arbitration award: 1) the award was
procured by corruption, fraud, or other undue means; 2) where the arbitrators were obviously partial
or corrupt; 3) where the arbitrators were guilty of misconduct; and 4) the arbitrators exceeded their
powers or so imperfectly executed them that a mutual, final, and definite award upon the subject
matter submitted was not made.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #95
Topic: Arbitration
96. What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the
vacating of an arbitrator’s award.
Although difficult to precisely define, arbitral misconduct occurs when the actions of the arbitrator
cast doubt on the transparency and fairness of the proceeding. Five examples of arbitrator’s
misconduct that could lead to the vacating of the award are (1) communications with a party or
witness without the knowledge or consent of the other party; (2) receiving evidence of a material
fact without notice to a party; (3) holding hearings or deliberations in the absence of a member of
the arbitration panel or rendering an award without consulting a panel member; (4) undertaking an
independent investigation into a material matter after the close of hearings or without notice to the
parties; and (5) accepting gifts or other hospitalities from a party during the proceedings.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #96
Topic: Arbitration
97. What are the typical steps in the mediation process?
The mediation process follows the following steps: 1) the mediator makes an introduction and
explains the mediation; 2) parties make their opening statements; 3) parties exchange dialogue or
negotiation; 4) possible options are brainstormed; and 5) a written agreement is signed. If necessary,
private caucuses are arranged during the process at the mediator’s discretion.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #97
Topic: Mediation
98. What is a caucus? How is it used in mediation?
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus. After each side caucuses with the mediator, the mediator may call the parties back
together for continued discussions, or the mediator may begin to act as a shuttle diplomat, moving
back and forth between the parties who are in separate rooms. Especially during these caucuses, the
mediator must win the trust and confidence of each party to the dispute.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #98
Topic: Mediation
99. The Magnuson-Moss Warranty Act provides that if a business adopts an informal dispute resolution
system to handle complaints about its product warranties, then a customer cannot sue the manufacturer
or seller for breach of warranty without first going through the informal procedures. How does the act
benefit the business and the consumer?
Student answers should address the flexibility of ADR systems, and discuss how creative companies
can keep lawsuits out of the media by forcing consumers to attend to mediation or arbitration before
going to litigation. Many of the informal procedures will require confidentiality, so the allegations will
not flow to the media. Consumers may actually find benefit in this act’s requirements by getting quick
settlements, by avoiding costly litigation, and by having attorneys who specialize in the business’s
informal procedures.
AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #99
Topic: Mediation
100. According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are
outcomes that are possible without the agreement of the other party.
A. commitments
B. alternatives
C. options
D. interests
E. relationships
Alternatives are outcomes that are possible without the agreement of the other party. In essence,
alternatives are the thing that parties to a negotiation can do away from the bargaining table.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #43
Topic: Arbitration
101. Juries often decide close questions of liability, as well as size of the verdict, against business
organizations.
TRUE
Juries are frequently sympathetic to individuals who have suits against large corporations or
defendants who are covered by insurance. Juries often decide close questions of liability, as well as
size of the verdict, against business organizations because of their presumed ability to pay. As a result,
businesses settle many disputes even though they might possibly prevail in litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #8
Topic: Alternative Dispute Resolution (ADR) Systems
102. Which of the following is true of the use of ADR techniques?
A. ADR techniques are ineffective once the pretrial process has begun.
B. Disputing parties must begin a lawsuit to use any form of ADR.
C. Disputing parties cannot use an ADR technique not specified in the original agreement.
D. Disputing parties can agree to use an ADR technique after the dispute arises.
E. Litigation precludes the use of ADR techniques for dispute resolution.
Disputing parties may agree to use an ADR technique after the dispute arises even if they did not
foresee the possibility of needing to use a dispute resolution system at the time of their original
agreement.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #44
Topic: Alternative Dispute Resolution (ADR) Systems
103. Focus groups can deliver binding decisions in civil cases.
FALSE
Attorneys frequently use focus groups in significant cases. The attorneys assemble a group of citizens
and present their evidence. This group then deliberates and makes findings. This dress rehearsal gives
attorneys insight into possible jury reaction to the evidence and points up weaknesses in the case.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #9
Topic: Alternative Dispute Resolution (ADR) Systems
104. Often, to provide a dress rehearsal for jury trials, attorneys argue their cases in front of a(n) _____ on
the basis of assumed facts, presenting arguments and expected evidence to this mock jury composed
of citizens.
A. arbitrator
B. barrister
C. magistrate
D. class
E. focus group
The attorneys assemble a group of citizens and present their evidence. This group then deliberates
and makes findings. The verdicts often cause plaintiffs to take a more realistic view of the damages to
which they think they are entitled.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #45
Topic: Alternative Dispute Resolution (ADR) Systems
105. To avoid costly public litigation, parties can agree to have a private third party decide the merits of
their dispute.
TRUE
To avoid the various expenses of litigation, disputing parties sometimes agree to have a third party
decide the merits of the dispute. This formal ADR system is called arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #10
Topic: Arbitration
106. Which of the following is true of arbitration?
A. The record of proceedings is available to the press and others.
B. The decisions arising from arbitration are binding on the parties.
C. Arbitration cannot be imposed on the disputing parties.
D. The parties themselves resolve all the matters of contention, without the intervention of a third
party.
E. The arbitrator need not be a disinterested party.
Arbitrators are authorized to make decisions that are binding on the parties, thereby resolving the
dispute.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #46
Topic: Arbitration
107. The arbitrator should be disinterested in any financial impact of the decision.
TRUE
The primary reason for the use of arbitration is the laudable goal of providing a relatively quick and
inexpensive resolution of disputes. The arbitrator should be disinterested in any financial impact of the
decision.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #11
Topic: Arbitration
108. The act of referring a matter to arbitration is called:
A. a submission.
B. a summons.
C. appealing.
D. de novo review.
E. collective bargaining.
The act of referring a matter to arbitration is called submission. Submission to arbitration often occurs
when the disputing parties agree to use this form of ADR.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #47
Topic: Arbitration
109. The arbitrator is empowered by the parties to reach a binding decision in a voluntary arbitration.
TRUE
Submission to arbitration often occurs when the disputing parties agree to use this form of ADR.
Such an agreement by the parties is a submission to voluntary arbitration. Generally, an agreement
to submit an issue to arbitration is irrevocable, and a party that thinks the process is not going well
cannot withdraw from the arbitration and resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #12
Topic: Arbitration
110. In the absence of a statute, the rights and duties of the parties to a submission for arbitration are
described and limited by:
A. the Constitution.
B. de novo review.
C. class-action certification.
D. arbitrability.
E. the agreement.
Parties that have contracted to arbitrate are not required to arbitrate any matters other than those they
contractually agree to arbitrate.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #48
Topic: Arbitration
111. Normally, the decision to submit a dispute to arbitration is irrevocable.
TRUE
Generally, an agreement to submit an issue to arbitration is irrevocable, and a party that thinks the
process is not going well cannot withdraw from the arbitration and resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #13
Topic: Arbitration
112. The decision by an arbitrator is called a(n):
A. submission.
B. award.
C. verdict.
D. judgment.
E. edict.
The arbitrator’s decision is known as an award. In most states the arbitrator’s award must be in writing.
The award is valid as long as it settles the entire controversy and states which party is to pay the other
a sum of money.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #49
Topic: Arbitration
113. If a party is unhappy with the way a private arbitration is going, it may unilaterally close the
proceedings and move the dispute to public litigation.
FALSE
The parties authorize an arbitrator to make a decision that binds these parties and resolves their
dispute. A party that thinks the process is not going well cannot withdraw from the arbitration and
resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #14
Topic: Arbitration
114. A(n) _____ will be enforced by the courts as if it were a judgment of the courts.
A. award
B. submission
C. appeal
D. pleading
E. caucus
An arbitrator’s award is final on all issues submitted, and it will be enforced by the courts as if it were
a judgment of the court.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #50
Topic: Arbitration
115. In most state statutes authorizing voluntary arbitration, the agreement to submit to arbitration may be
written or oral.
FALSE
The act of referring a matter to arbitration is called submission. Submission to arbitration often occurs
when the disputing parties agree to use this form of ADR. Most state statutes authorizing voluntary
arbitration require the agreement to arbitrate to be in writing.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #15
Topic: Arbitration
116. Which of the following is true of the Federal Arbitration Act?
A. It covers any arbitration clause in a contract that involves interstate commerce.
B. It favors litigation over arbitration in cases where an arbitration clause is ambiguous.
C. It nullifies the rights of parties to litigate disputes if an arbitration clause exists.
D. It ensures that arbitration is used only in federal cases, and not in state cases.
E. It guarantees that all arbitration clauses are irrevocable under any circumstances.
The FAA covers any arbitration clause in a contract that involves interstate commerce.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #51
Topic: Arbitration
117. Private arbitrators are not permitted to decide on questions of law.
FALSE
The issues submitted to arbitration, as framed in the submission, may be questions of fact, questions of
law, or mixed questions of fact and law.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #16
Topic: Arbitration
118. Arbitrators are typically chosen by:
A. the U.S. Supreme Court.
B. fiat.
C. the disputing parties.
D. Federal Rules of Civil Procedure.
E. mediators.
A provision in the agreement to arbitrate or in the statute that requires the arbitration describes how
the arbitrator is selected.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #52
Topic: Arbitration
119. The arbitrator chooses the issues of the hearing to be resolved.
FALSE
The issues submitted to arbitration, as framed in the submission, may be questions of fact, questions
of law, or mixed questions of fact and law. Parties that have contracted to arbitrate are not required to
arbitrate any matters other than those they contractually agree to arbitrate.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #17
Topic: Arbitration
120. When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the
allegations:
A. automatically nullify the panel’s opinion.
B. normally do not impact the results of arbitration.
C. result in a judge overturning the opinion.
D. normally remove that arbitrator’s opinion from the results of the arbitration.
E. set off a new round of litigation.
It is not surprising that when this procedure is used, allegations of bias are often made by the losing
party. Courts generally do not allow such allegations to form a basis for overturning a panel’s award
unless there is evidence of overt corruption or misconduct in the arbitration proceedings.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #53
Topic: Arbitration
121. An arbitrator must be a lawyer or a judge in good standing in the community where the arbitration is
to take place.
FALSE
There are no licensing requirements an arbitrator must satisfy. Appraisers can be used to decide
disputes about the value of real estate, medical doctors can be used to decide health care disputes, and
academicians can be used to decide issues within their area of expertise.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #18
Topic: Arbitration
122. In most cases, an arbitrator’s award:
A. needs to set forth the legal reasons for the result.
B. needs to set forth the findings of fact.
C. needs to set forth the specific credentials of the arbitrator.
D. needs not set forth any specific facts, law, or reasons.
E. needs to set forth the names of the parties.
However, a disclosure of findings and the reasons must be given if the applicable statute, arbitration
agreement, or submission so requires.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #54
Topic: Arbitration
123. The sole source of qualified expert arbitrators currently is the American Arbitration Association.
FALSE
Arbitrators generally are chosen by the disputing parties. A provision in the agreement to arbitrate or
in the statute that requires the arbitration describes how the arbitrator is selected.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #19
Topic: Arbitration
124. Which of the following is true of arbitration?
A. Arbitration is more expensive and time-consuming than litigation.
B. Arbitrators’ decisions are rarely binding on the parties.
C. Arbitrators must be licensed pursuant to the American Arbitration Association.
D. An arbitrator is always a neutral third party.
E. Arbitrators must be licensed and trained to assume the role.
The arbitrator should be disinterested in any financial impact of the decision and neutral regarding
the issues presented in the dispute. There are no licensing requirements an arbitrator must satisfy.
However, an arbitrator often is chosen from a list of qualified arbitrators provided by the arbitration
service.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #55
Topic: Arbitration
125. Each state has its own licensing regulations for arbitrators.
FALSE
Arbitration provides for decision making by experts with experience in the particular industry and
with knowledge of the customs and practices of the particular work site.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #20
Topic: Arbitration
126. Who frames the issues to be resolved in arbitration?
A. The arbitrator
B. The judge
C. The parties to the dispute
D. The Supreme Court
E. The National Federation of Arbitrators
The parties themselves, by virtue of the submission, frame the issues to be resolved and define the
scope of the arbitrator’s powers.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #56
Topic: Arbitration
127. Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or the
reasons for an award.
TRUE
Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or
the reasons for an award. However, a disclosure of findings and the reasons must be given if the
applicable statute, arbitration agreement, or submission so requires. When the arbitrator does provide
the basis for decision in the form of an opinion or letter, that document becomes a part of the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #21
Topic: Arbitration
128. The _____ of the U.S. Constitution is often used to set aside state laws that improperly deny
arbitration of certain disputes.
A. Takings Clause
B. Bill of Rights
C. Supremacy Clause
D. Third Amendment
E. Due Process Clause
The federal policy favoring arbitration frequently conflicts with state laws favoring litigation as
the means to resolve a dispute. The Supreme Court exhibits great deference to arbitration and the
authority of the arbitrator.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #57
Topic: Arbitration
129. The Federal Arbitration Act is largely responsible for the prominent role and positive perception of
arbitration among businesses today.
TRUE
Prior to the enactment of the FAA, our common law system preferred litigation over arbitration as
a means of resolving disputes. In 1925, congressional enactment of the FAA began to change this
presumed way of dispute resolution.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #22
Topic: Arbitration
130. Litigation is the quickest method of dispute resolution.
FALSE
The litigation process within the court system imposes tremendous costs in terms of time, money,
emotional stress, and harmony in relationships. This fact is a major reason why you probably have
very little personal experience with litigation. It also is the reason most businesses try to avoid
litigation and use it as a means of last resort to resolve disputes.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #1
Topic: Conflicts and Negotiation
131. A dispute arises when one party makes a claim that another party denies.
TRUE
A dispute arises when one party makes a claim that another party denies.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #2
Topic: Conflicts and Negotiation
132. Negotiation is the process used to persuade or coerce someone to do what you want them to do.
TRUE
Negotiation is the process used to persuade or coerce someone to do what you want them to do. All
of us instinctively engage in some form of negotiation. Even as evidence of a conflict is exhibited
(through comments or sighs or groans), the parties are negotiating.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #3
Topic: Conflicts and Negotiation
133. Positional bargaining is an approach based on principled, interest-based negotiations.
FALSE
In positional bargaining, the parties begin in a competitive style by stating their respective
expectations. For example, in a sales transaction, the seller starts with as high an asking price as is
considered reasonable. Likewise, the buyer begins with the lowest reasonable price.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #4
Topic: Conflicts and Negotiation
134. Positional negotiation creates barriers to resolution that may be removed by using principles instead of
positions.
TRUE
Most people instinctively use a negotiation method called positional bargaining. A better approach to
negotiating among disputing parties has been described as principled, interest-based negotiations.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #5
Topic: Conflicts and Negotiation
135. Once a lawsuit has been filed, ADR may not be used until the suit has gone to judgment or has been
dismissed.
FALSE
Effective use of ADR systems can save disputing parties many of the costs associated with litigation,
even after it has begun.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #6
Topic: Alternative Dispute Resolution (ADR) Systems
136. A negotiated settlement is generally more expensive and time-consuming than litigation.
FALSE
The winning party in a lawsuit is a loser to the extent of the attorney’s fees— which are often
substantial. The fact that the loser usually also has to pay court costs is an added incentive to
settlement without litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #7
Topic: Alternative Dispute Resolution (ADR) Systems
137. Juries often decide close questions of liability, as well as size of the verdict, against business
organizations.
TRUE
Juries are frequently sympathetic to individuals who have suits against large corporations or
defendants who are covered by insurance. Juries often decide close questions of liability, as well as
size of the verdict, against business organizations because of their presumed ability to pay. As a result,
businesses settle many disputes even though they might possibly prevail in litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #8
Topic: Alternative Dispute Resolution (ADR) Systems
138. Focus groups can deliver binding decisions in civil cases.
FALSE
Attorneys frequently use focus groups in significant cases. The attorneys assemble a group of citizens
and present their evidence. This group then deliberates and makes findings. This dress rehearsal gives
attorneys insight into possible jury reaction to the evidence and points up weaknesses in the case.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #9
Topic: Alternative Dispute Resolution (ADR) Systems
139. To avoid costly public litigation, parties can agree to have a private third party decide the merits of
their dispute.
TRUE
To avoid the various expenses of litigation, disputing parties sometimes agree to have a third party
decide the merits of the dispute. This formal ADR system is called arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #10
Topic: Arbitration
140. The arbitrator should be disinterested in any financial impact of the decision.
TRUE
The primary reason for the use of arbitration is the laudable goal of providing a relatively quick and
inexpensive resolution of disputes. The arbitrator should be disinterested in any financial impact of the
decision.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #11
Topic: Arbitration
141. The arbitrator is empowered by the parties to reach a binding decision in a voluntary arbitration.
TRUE
Submission to arbitration often occurs when the disputing parties agree to use this form of ADR.
Such an agreement by the parties is a submission to voluntary arbitration. Generally, an agreement
to submit an issue to arbitration is irrevocable, and a party that thinks the process is not going well
cannot withdraw from the arbitration and resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #12
Topic: Arbitration
142. Normally, the decision to submit a dispute to arbitration is irrevocable.
TRUE
Generally, an agreement to submit an issue to arbitration is irrevocable, and a party that thinks the
process is not going well cannot withdraw from the arbitration and resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #13
Topic: Arbitration
143. If a party is unhappy with the way a private arbitration is going, it may unilaterally close the
proceedings and move the dispute to public litigation.
FALSE
The parties authorize an arbitrator to make a decision that binds these parties and resolves their
dispute. A party that thinks the process is not going well cannot withdraw from the arbitration and
resort to litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #14
Topic: Arbitration
144. In most state statutes authorizing voluntary arbitration, the agreement to submit to arbitration may be
written or oral.
FALSE
The act of referring a matter to arbitration is called submission. Submission to arbitration often occurs
when the disputing parties agree to use this form of ADR. Most state statutes authorizing voluntary
arbitration require the agreement to arbitrate to be in writing.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #15
Topic: Arbitration
145. Private arbitrators are not permitted to decide on questions of law.
FALSE
The issues submitted to arbitration, as framed in the submission, may be questions of fact, questions of
law, or mixed questions of fact and law.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #16
Topic: Arbitration
146. The arbitrator chooses the issues of the hearing to be resolved.
FALSE
The issues submitted to arbitration, as framed in the submission, may be questions of fact, questions
of law, or mixed questions of fact and law. Parties that have contracted to arbitrate are not required to
arbitrate any matters other than those they contractually agree to arbitrate.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #17
Topic: Arbitration
147. An arbitrator must be a lawyer or a judge in good standing in the community where the arbitration is
to take place.
FALSE
There are no licensing requirements an arbitrator must satisfy. Appraisers can be used to decide
disputes about the value of real estate, medical doctors can be used to decide health care disputes, and
academicians can be used to decide issues within their area of expertise.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #18
Topic: Arbitration
148. The sole source of qualified expert arbitrators currently is the American Arbitration Association.
FALSE
Arbitrators generally are chosen by the disputing parties. A provision in the agreement to arbitrate or
in the statute that requires the arbitration describes how the arbitrator is selected.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #19
Topic: Arbitration
149. Each state has its own licensing regulations for arbitrators.
FALSE
Arbitration provides for decision making by experts with experience in the particular industry and
with knowledge of the customs and practices of the particular work site.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #20
Topic: Arbitration
150. Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or the
reasons for an award.
TRUE
Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or
the reasons for an award. However, a disclosure of findings and the reasons must be given if the
applicable statute, arbitration agreement, or submission so requires. When the arbitrator does provide
the basis for decision in the form of an opinion or letter, that document becomes a part of the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #21
Topic: Arbitration
151. The Federal Arbitration Act is largely responsible for the prominent role and positive perception of
arbitration among businesses today.
TRUE
Prior to the enactment of the FAA, our common law system preferred litigation over arbitration as
a means of resolving disputes. In 1925, congressional enactment of the FAA began to change this
presumed way of dispute resolution.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #22
Topic: Arbitration
152. In order for a federal court to assume that parties did not intend to arbitrate, a court must believe with
positive assurance that the parties did not intend to include the particular dispute in the arbitration
clause.
TRUE
The federal policy clearly favors arbitration of commercial disputes. The FAA provides that
arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.”
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #23
Topic: Arbitration
153. Individual states are not limited by the Constitution when they make laws that deny arbitration of
certain disputes
FALSE
The Commerce Clause and the Supremacy Clause of the U.S. Constitution are often used to set aside
such state laws that deny arbitration of certain disputes.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #24
Topic: Arbitration
154. The federal system and all state systems require arbitration hearings to comply with established rules
of evidence.
FALSE
States have different rules relating to the admissibility of evidence. In most states the established
rules of evidence must be followed by the arbitrators. Several jurisdictions, however, do not require
hearings to be conducted according to the established rules of evidence.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #25
Topic: Arbitration
155. From the perspective of judicial review, voluntary arbitration is a more effective alternative to
litigation than mandatory arbitration.
TRUE
The arbitration process is less time consuming and less costly than litigation only if the parties
are limited in seeking judicial review of the arbitrators’ awards. From this perspective, voluntary
arbitration is a more effective alternative to litigation than mandatory arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #26
Topic: Arbitration
156. Absent fraud or other inappropriate behavior, arbitration awards in voluntary proceedings are not
subject to judicial review on the merits of the decision.
TRUE
The fact that the arbitrator made erroneous rulings during the hearing, or reached erroneous findings
of fact from the evidence, is no ground for setting aside the award because the parties have agreed that
he or she should be the judge of the facts. An erroneous view of the law no matter how egregious is
binding because the parties have agreed to accept the arbitrator’s view of the law.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #27
Topic: Arbitration
157. The judicial review of an arbitrator’s award in a voluntary proceeding is quite restricted and is more
limited than the appellate review of a trial court’s decision.
TRUE
Courts do not interfere with an award by examining the merits of the controversy, the sufficiency
of the evidence supporting the award, or the reasoning supporting the decision. Were it otherwise,
arbitration would fail in its chief purpose: to preclude the need for litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #28
Topic: Arbitration
158. If an arbitrator makes a clearly erroneous ruling pursuant to a voluntary contract-based arbitration,
there will be sufficient grounds for a judge to set aside the award.
FALSE
Error of law renders the award void only when it requires the parties to commit a crime or otherwise
to violate a positive mandate of the law.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #29
Topic: Arbitration
159. Mandatory arbitration proceedings are generally subject to a de novo judicial review if a party is
dissatisfied with the award.
TRUE
Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes
as against the constitutional challenges previously mentioned where a dissatisfied party can reject the
arbitrator’s award and seek a de novo judicial review of that award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #30
Topic: Arbitration
160. The failure of a party to be present at an arbitration hearing constitutes a waiver of the right to reject
the award and seek de novo judicial review.
TRUE
The failure of a party to be present, either in person or by counsel, at an arbitration constitutes a
waiver of the right to reject the award and seek de novo judicial review. In essence, a party’s lack of
participation operates as consent to the entry by the court of a judgment on the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #31
Topic: Arbitration
161. Statutorily mandated arbitration requires a higher level of judicial review of an award than voluntary
arbitration.
TRUE
Although a party may voluntarily consent to almost any restriction upon or deprivation of a right, a
similar restriction or deprivation, when compelled by government, must be in accord with procedural
and substantive due process of law. Statutorily mandated arbitration requires a higher level of judicial
review of the award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #32
Topic: Arbitration
162. An arbitrator may be considered partial or corrupt by independently investigating a material matter
after the close of hearings without telling either party about the investigation.
TRUE
Section 10 of the Federal Arbitration Act provides that an arbitration award may be vacated or set
aside on any one of four grounds, including arbitral misconduct. The concept of arbitral “misconduct”
does not lend itself to a precise definition, but undertaking independent, unauthorized investigations
have been found to fit that definition.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #33
Topic: Arbitration
163. Rules related to court-annexed mediation are federally mandated.
FALSE
Rules related to court-annexed mediation are local in nature; thus, there are wide variations as to the
type of cases that courts require to be mediated.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #34
Topic: Mediation
164. A mediator cannot impose a binding solution on the parties.
TRUE
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #35
Topic: Mediation
165. The court mandates an enforcement mechanism that ensures the parties will mediate in good faith.
TRUE
Even in the court-annexed mediations, a party usually satisfies the court’s order to mediate by simply
showing up. Generally, there is no enforcement mechanism that ensures the parties will mediate in
good faith.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #36
Topic: Mediation
166. _____ is the process used to persuade or coerce someone to do what you want them to do.
A. Avoidance
B. Accommodation
C. Negotiation
D. Competition
E. Collusion
Negotiation is the process used to persuade or coerce someone to do what you want them to do. All of
us negotiate all the time with ourselves, our family members, our co-workers, and even with strangers.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #37
Topic: Conflicts and Negotiation
167. A negotiation between a seller and a buyer begins with each party stating their respective
expectations. The seller starts with as high an asking price as is considered reasonable. Likewise, the
buyer begins with the lowest reasonable price. This is an example of:
A. positional bargaining.
B. principled negotiation.
C. interest-based negotiation.
D. fact bargaining.
E. surface bargaining.
In positional bargaining, the parties begin in a competitive style by stating their respective
expectations.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #38
Topic: Conflicts and Negotiation
168. Interest-based negotiations are superior to position-based negotiation because:
A. the differences between the interests of the parties are often large.
B. interest-based negotiations allow room for consideration of non-factual concerns, such as
relationships and long-term interests.
C. position-based negotiation is often only concerned with preparing for litigation.
D. interest-based negotiation requires the presence of a judge or magistrate.
E. interest-based negotiation forces the parties to discuss resolution options for the week prior to open
negotiation.
Parties would likely benefit by discussing how each could benefit by continuing their relationship of
customer and supplier. They may be able to solve the current problem and maintain, if not enhance,
their future business opportunities together.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #39
Topic: Conflicts and Negotiation
169. Roger Fisher, William Ury, and Bruce Patton wrote a seminal book on negotiation titled _____.
A. The Principled Proposition
B. Making It Work
C. Let’s Just Talk
D. Getting to Yes
E. Letting It
Go
The book presents a better approach to negotiating among disputing parties and presents seven
elements that should become the focus of negotiators.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #40
Topic: Conflicts and Negotiation
170. According to Roger Fisher, William Ury, and Bruce Patton, _____ is the element of interest-based
negotiation that involves the application of accepted standards to the topic negotiated—rather than
having the parties state unsupported propositions.
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
Legitimacy involves the application of accepted standards to the topic negotiated—rather than having
the parties state unsupported propositions.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #41
Topic: Conflicts and Negotiation
171. According to Roger Fisher, William Ury, and Bruce Patton, the element of interest-based negotiation
that instructs parties to brainstorm possible solutions to the dispute is referred to as:
A. options.
B. collaboration.
C. puzzle-solving.
D. preparatory positioning.
E. legitimacy.
The parties should brainstorm possible options or solutions to their dispute. This exploration process
is best done with the parties agreeing that an option mentioned is not necessarily a proposal for
compromise.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #42
Topic: Conflicts and Negotiation
172. According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are
outcomes that are possible without the agreement of the other party.
A. commitments
B. alternatives
C. options
D. interests
E. relationships
Alternatives are outcomes that are possible without the agreement of the other party. In essence,
alternatives are the thing that parties to a negotiation can do away from the bargaining table.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #43
Topic: Arbitration
173. Which of the following is true of the use of ADR techniques?
A. ADR techniques are ineffective once the pretrial process has begun.
B. Disputing parties must begin a lawsuit to use any form of ADR.
C. Disputing parties cannot use an ADR technique not specified in the original agreement.
D. Disputing parties can agree to use an ADR technique after the dispute arises.
E. Litigation precludes the use of ADR techniques for dispute resolution.
Disputing parties may agree to use an ADR technique after the dispute arises even if they did not
foresee the possibility of needing to use a dispute resolution system at the time of their original
agreement.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #44
Topic: Alternative Dispute Resolution (ADR) Systems
174. Often, to provide a dress rehearsal for jury trials, attorneys argue their cases in front of a(n) _____ on
the basis of assumed facts, presenting arguments and expected evidence to this mock jury composed
of citizens.
A. arbitrator
B. barrister
C. magistrate
D. class
E. focus group
The attorneys assemble a group of citizens and present their evidence. This group then deliberates
and makes findings. The verdicts often cause plaintiffs to take a more realistic view of the damages to
which they think they are entitled.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #45
Topic: Alternative Dispute Resolution (ADR) Systems
175. Which of the following is true of arbitration?
A. The record of proceedings is available to the press and others.
B. The decisions arising from arbitration are binding on the parties.
C. Arbitration cannot be imposed on the disputing parties.
D. The parties themselves resolve all the matters of contention, without the intervention of a third
party.
E. The arbitrator need not be a disinterested party.
Arbitrators are authorized to make decisions that are binding on the parties, thereby resolving the
dispute.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #46
Topic: Arbitration
176. The act of referring a matter to arbitration is called:
A. a submission.
B. a summons.
C. appealing.
D. de novo review.
E. collective bargaining.
The act of referring a matter to arbitration is called submission. Submission to arbitration often occurs
when the disputing parties agree to use this form of ADR.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #47
Topic: Arbitration
177. In the absence of a statute, the rights and duties of the parties to a submission for arbitration are
described and limited by:
A. the Constitution.
B. de novo review.
C. class-action certification.
D. arbitrability.
E. the agreement.
Parties that have contracted to arbitrate are not required to arbitrate any matters other than those they
contractually agree to arbitrate.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #48
Topic: Arbitration
178. The decision by an arbitrator is called a(n):
A. submission.
B. award.
C. verdict.
D. judgment.
E. edict.
The arbitrator’s decision is known as an award. In most states the arbitrator’s award must be in writing.
The award is valid as long as it settles the entire controversy and states which party is to pay the other
a sum of money.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #49
Topic: Arbitration
179. A(n) _____ will be enforced by the courts as if it were a judgment of the courts.
A. award
B. submission
C. appeal
D. pleading
E. caucus
An arbitrator’s award is final on all issues submitted, and it will be enforced by the courts as if it were
a judgment of the court.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #50
Topic: Arbitration
180. Which of the following is true of the Federal Arbitration Act?
A. It covers any arbitration clause in a contract that involves interstate commerce.
B. It favors litigation over arbitration in cases where an arbitration clause is ambiguous.
C. It nullifies the rights of parties to litigate disputes if an arbitration clause exists.
D. It ensures that arbitration is used only in federal cases, and not in state cases.
E. It guarantees that all arbitration clauses are irrevocable under any circumstances.
The FAA covers any arbitration clause in a contract that involves interstate commerce.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #51
Topic: Arbitration
181. Arbitrators are typically chosen by:
A. the U.S. Supreme Court.
B. fiat.
C. the disputing parties.
D. Federal Rules of Civil Procedure.
E. mediators.
A provision in the agreement to arbitrate or in the statute that requires the arbitration describes how
the arbitrator is selected.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #52
Topic: Arbitration
182. When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the
allegations:
A. automatically nullify the panel’s opinion.
B. normally do not impact the results of arbitration.
C. result in a judge overturning the opinion.
D. normally remove that arbitrator’s opinion from the results of the arbitration.
E. set off a new round of litigation.
It is not surprising that when this procedure is used, allegations of bias are often made by the losing
party. Courts generally do not allow such allegations to form a basis for overturning a panel’s award
unless there is evidence of overt corruption or misconduct in the arbitration proceedings.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #53
Topic: Arbitration
183. In most cases, an arbitrator’s award:
A. needs to set forth the legal reasons for the result.
B. needs to set forth the findings of fact.
C. needs to set forth the specific credentials of the arbitrator.
D. needs not set forth any specific facts, law, or reasons.
E. needs to set forth the names of the parties.
However, a disclosure of findings and the reasons must be given if the applicable statute, arbitration
agreement, or submission so requires.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #54
Topic: Arbitration
184. Which of the following is true of arbitration?
A. Arbitration is more expensive and time-consuming than litigation.
B. Arbitrators’ decisions are rarely binding on the parties.
C. Arbitrators must be licensed pursuant to the American Arbitration Association.
D. An arbitrator is always a neutral third party.
E. Arbitrators must be licensed and trained to assume the role.
The arbitrator should be disinterested in any financial impact of the decision and neutral regarding
the issues presented in the dispute. There are no licensing requirements an arbitrator must satisfy.
However, an arbitrator often is chosen from a list of qualified arbitrators provided by the arbitration
service.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #55
Topic: Arbitration
185. Who frames the issues to be resolved in arbitration?
A. The arbitrator
B. The judge
C. The parties to the dispute
D. The Supreme Court
E. The National Federation of Arbitrators
The parties themselves, by virtue of the submission, frame the issues to be resolved and define the
scope of the arbitrator’s powers.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #56
Topic: Arbitration
186. The _____ of the U.S. Constitution is often used to set aside state laws that improperly deny
arbitration of certain disputes.
A. Takings Clause
B. Bill of Rights
C. Supremacy Clause
D. Third Amendment
E. Due Process Clause
The federal policy favoring arbitration frequently conflicts with state laws favoring litigation as
the means to resolve a dispute. The Supreme Court exhibits great deference to arbitration and the
authority of the arbitrator.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #57
Topic: Arbitration
187. Contract-based arbitration is considered to be:
A. voluntary because both parties have willingly agreed to participate.
B. unconstitutional in most states because it limits redress of grievances.
C. coercive because it provides an unfair advantage to the party originating the contract.
D. restrictive and undesirable because of expense and time considerations.
E. legally impractical because these agreements are too difficult to reach in early contract
negotiations.
In essence, the contracting parties show good judgment in understanding conflicts exist, conflicts give
rise to disputes, and disputes are better resolved through arbitration rather than by litigating.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #58
Topic: Arbitration
188. A(n) _____ is a decision that arises when parties already in dispute decide that arbitration is better
than litigation.
A. submission
B. motion to compel arbitration
C. injunction
D. arbitrability award
E. postdispute arbitration agreement
Postdispute arbitration agreements arise when parties already in dispute decide that arbitration is better
than litigation.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #59
Topic: Arbitration
189. Which of the following distinguishes mandatory arbitration from voluntary arbitration?
A. The right of the dissatisfied party to reject the award
B. The dollar amount involved
C. Whether or not an attorney is required
D. The quality of the arbitrators
E. Whether there will be one or three arbitrators
Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes
as against the constitutional challenges previously mentioned where a dissatisfied party can reject the
arbitrator’s award and seek a de novo judicial review of that award.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #60
Topic: Arbitration
190. Ben and Jerry enter into a business agreement to assemble and sell prepackaged salads. In their written
agreement, they both agree that they will be required to settle all disputes through arbitration. Which
of the following is true of this situation?
A. This is an example of a mandatory arbitration clause.
B. This is an example of a voluntary arbitration clause.
C. This is an example of a caucus.
D. This is an example of court-annexed mediation.
E. This is an example of a postdispute arbitration agreement.
Agreements to voluntarily arbitrate come in two basic forms. One is known as the predispute
arbitration clause. In essence, the contracting parties show good judgment in understanding conflicts
exist, conflicts give rise to disputes, and disputes are better resolved through arbitration rather than by
litigating.
AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #61
Topic: Arbitration
191. Which of the following is true of arbitration procedures?
A. Arbitration is a voluntary procedure that cannot be forced on the parties.
B. Judicial review of the arbitrator’s award occurs in most cases.
C. The award resulting from the voluntary arbitration procedure is final.
D. If the arbitrator made erroneous rulings during the hearings, the award can be set aside.
E. The arbitrator’s award is binding on the parties only if there was no error of law on the part of the
arbitrator.
Generally, the award resulting from the voluntary arbitration procedure is final. The arbitrator’s
findings on questions of both fact and law are conclusive.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #62
Topic: Arbitration
192. Courts can use judicial review to change the awards of voluntary arbitration when:
A. either disputing party is dissatisfied with the award.
B. the arbitrator made erroneous rulings during the hearing.
C. the actions of the arbitrator are deemed fraudulent or arbitrary.
D. the arbitrator reached erroneous findings of fact from the evidence.
E. an arbitrator makes a mistake of law during the proceedings.
The arbitrator’s findings on questions of both fact and law are conclusive. The judicial review of an
arbitrator’s award is quite restricted and is more limited than the appellate review of a trial court’s
decision.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #63
Topic: Arbitration
193. In which of the following cases will courts most likely use judicial review to change the awards of
voluntary arbitration?
A. Both parties are dissatisfied with the award.
B. The decision violates a positive mandate of the law.
C. The arbitrator reached erroneous findings of fact from the evidence.
D. One party is dissatisfied with the award.
E. The arbitrator misunderstands the law.
Error of law renders the award void only when it requires the parties to commit a crime or otherwise
to violate a positive mandate of the law.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #64
Topic: Arbitration
194. For mandatory arbitration to be constitutional:
A. proceedings must be bound by standard judicial tenets such as discovery.
B. licensed practitioners must preside over all proceedings.
C. all disputing parties must agree in advance to be bound by the arbitration award.
D. fair procedures must be provided by the legislature and ultimate judicial review is available.
E. the foundational statute must have passed with a super-majority.
Although a party may voluntarily consent to almost any restriction upon or deprivation of a right, a
similar restriction or deprivation, when compelled by government, must be in accord with procedural
and substantive due process of law.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #65
Topic: Arbitration
195. A party dissatisfied with the mandatory arbitration award has the right to:
A. appeal the award directly to the state supreme court.
B. appeal the award directly to the U.S. Supreme Court.
C. reject the award and seek a review in the appropriate trial court.
D. sue the arbitrator.
E. ignore the disputed award.
Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes
as against the constitutional challenges previously mentioned where a dissatisfied party can reject the
arbitrator’s award and seek a de novo judicial review of that award.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #66
Topic: Arbitration
196. If arbitration is conducted pursuant to state statute:
A. the statute determines what grounds may be used to challenge an award in court.
B. if a dispute arises involving interstate commerce, the statute of the state where the dispute is first
submitted prevails.
C
.
a disputing party may choose to have Federal Arbitration Act provisions govern any resolution of
the dispute if the state statute appears unfavorable to his or her position.
D. only Congress can overturn it.
E. only the U.S. Supreme Court can overturn it.
When the arbitration is pursuant to state statute, that statute determines what, if any, grounds are
available to challenge an award in court. In cases that involve interstate commerce issues, the
provisions of the Federal Arbitration Act control.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #67
Topic: Arbitration
197. De novo review means that:
A. the court appoints an arbitrator to initiate arbitration proceedings.
B. the court tries the issues anew as if no arbitration occurred.
C. the court recommends that the party opt for mediation instead of litigation.
D. the court halts a mediation process and begins litigation.
E. the court takes into account the arbitrator’s award in the litigation.
De novo review means that the court tries the issues anew as if no arbitration occurred.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #68
Topic: Arbitration
198. James has been appointed as an arbitrator in a dispute. Which of the following can he do without the
danger of it constituting misconduct?
A. Accepting gifts from a party to the proceedings
B. Holding hearings without a member of the arbitration panel present
C. Communication with a party to the proceedings with consent of the other party
D. Receipt of evidence as to a material fact without notice to a party
E. Conducting an independent investigation into a material matter after the close of hearings
The concept of arbitral “misconduct” does not lend itself to a precise definition, but it is not likely
considered misconduct if the arbitrator has discussions with a party when the other party has given
consent.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #69
Topic: Arbitration
199. The outcome of mediation:
A. is binding on all parties.
B. can have no impact on dispute resolution in any way.
C. is a legal finding that may be used in court if the dispute proceeds to litigation.
D. helps point out weaknesses in a case without an actual trial.
E. is a necessary precursor to arbitration.
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #70
Topic: Mediation
200. Mediators are similar to arbitrators in that:
A. they can impose binding decisions on the parties.
B. they must be qualified and trained to practice.
C. their decisions can be imposed in a court of law.
D. they operate in cases of federal rather than local importance.
E. they must be disinterested third parties.
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #71
Topic: Mediation
201. Typically, mediators utilize the principles of:
A. positional bargaining.
B. fact bargaining.
C. option-based negotiation.
D. surface bargaining.
E. interest-based negotiation.
Parties to a dispute may agree that mediation should be attempted as an alternative to litigating their
controversy.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #72
Topic: Mediation
202. Which of the following is true of mediation?
A. Mediators tend to be more expert in the field than arbitrators so their decisions are less likely to be
erroneous.
B. The disputing parties do not have control over the process, reducing preparation time.
C. Though mediation is typically more expensive than litigation and arbitration, the quality is often
better.
D. A mediator cannot impose a binding solution on the parties as he is an interested party to the
dispute.
E. A trial judge can require the disputing parties to submit to the mediation process before litigation.
A trial judge can require the disputing parties to submit to the mediation process before a complaint
can be litigated formally. There is a growing movement in this court-annexed mediation as one means
of controlling the heavy caseload faced by courts.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #73
Topic: Mediation
203. The difference between a mediator and an arbitrator is that:
A. a mediator is not a neutral party.
B. an arbitrator is chosen by the disputing parties, while a mediator is not.
C. an arbitrator can force a binding solution on both parties.
D. a mediator can impose a binding solution on the parties.
E. only an arbitrator may be appointed by a judge.
A mediator cannot impose a binding solution on the parties. However, as an unbiased and
disinterested third party, a mediator is often able to help the parties bring about an understanding of a
dispute and thus avoid litigation of it.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #74
Topic: Arbitration, Mediation
204. _____ occurs when a trial judge requires the disputing parties to submit to the mediation process
before a complaint can be litigated formally.
A. Restorative justice
B. Party-directed mediation
C. Precursor mediation
D. A caucus
E. Court-annexed mediation
A trial judge can require the disputing parties to submit to the mediation process before a complaint
can be litigated formally. There is a growing movement in this court-annexed mediation as one means
of controlling the heavy caseload faced by courts.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #75
Topic: Mediation
205. Which of the following is true of caucuses in dispute resolution?
A. They generally occur during a mediation proceeding.
B. They only occur when mandated by a court order.
C. A caucus involves both parties negotiating without the mediator.
D. They are illegal because they are considered ex parte communications.
E. Caucuses are synonymous with de novo reviews.
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #76
Topic: Mediation
206. The meeting between a mediator and one disputant outside the presence of the other disputant is called
a _____.
A. calumny.
B. consensus.
C. convention.
D. convocation.
E. caucus.
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #77
Topic: Mediation
207. Which of the following is true of a caucus in the process of mediation?
A. It constitutes misconduct on the part of the arbitrator.
B. Once the mediator uses a caucus, the parties cannot meet face-to-face.
C. A caucus is only allowable if both parties are present at all times.
D. The presence of a mediator is not essential to the conduct of a caucus.
E. A caucus involves the mediator, and only one of the disputing parties.
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #78
Topic: Mediation
208. The final step of a successful mediation is:
A. submitting any conclusions to a judge for judicial approval prior to implementation.
B. writing down the basic agreement reached and having it signed by all the parties.
C. providing all evidence given during the mediation to the parties’ attorneys for use in the next phase
of litigation.
D. agreeing that all future disputes be resolved in the same manner.
E. turning the results over to the arbitrator as the submission for arbitration.
Through the good judgment and experience of the mediator, the differences between the parties
hopefully will be resolved and a common agreement can be produced. The final step to a successful
mediation is the writing of the agreement and the signing of the agreement by the parties.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #79
Topic: Mediation
209. When parties agree to resolve all the matters of contention that they can and to arbitrate the unresolved
matters, they are said to be using a variation of dispute resolution known as:
A. judicial review.
B. a focus group.
C. submission.
D. Med-Arb.
E. a caucus.
The parties resolve all the matters of contention that they can and they agree to arbitrate the
unresolved matters. This variation has become known as Med-Arb.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #80
Topic: Mediation
210. Discuss Roger Fisher, William Ury, and Bruce Patton’s influential book and the seven elements of
negotiation presented in it. What is the focus of the book and how do the authors hope to change the
focus of negotiation through it?
The book, Getting to Yes, presents the principled, or interest-based, negotiation scheme, which focuses
on Communication, Relationship, Interests, Options, Legitimacy, Alternatives, and Commitment.
The elements will vary in importance depending on the factual situation in dispute and on the parties’
individual perspectives, but the authors argue that concentrating on these elements can help remove
some of the barriers created by positional negotiation. Students should address the individual elements
and discuss how the “softer,” more interests-based approach can foster more amiable, and less
contentious, negotiations. When the parties take time to address each other’s concerns and truly dig
down to their interests, they may find that positional, adversarial negotiation is counter-productive.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
Reed – Chapter 05 #81
Topic: Conflicts and Negotiation
211. Why would a business choose to settle a dispute with a customer rather than litigate, even if the
business is likely to prevail?
In addition to personal reasons, a business would settle rather than litigate to preserve goodwill and
public relations, and because any delays in the court process, which may be protracted even without
delays, costs the business time and in most cases, time is money. Litigation is an emotional and
financial drain on companies that they should avoid if possible. Juries tend to favor individuals over
businesses and given the litigious environment, avoiding litigation is a wise business decision.
AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #82
Topic: Evaluating Various Forms of ADR
212. With regard to dispute resolution, what is a focus group and why and when might one be used?
A focus group is a group of citizens assembled by an attorney to simulate a jury. The attorney presents
evidence to the focus group which then deliberates and makes findings. This dress rehearsal gives
the attorney an opportunity to assess a potential jury’s reaction to evidence and allows the attorney
to determine his or her strengths and weaknesses regarding the case at hand. Attorneys look to focus
groups as a form of a reality test to see how potential juries will react to their evidence and arguments.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
Reed – Chapter 05 #83
Topic: Evaluating Various Forms of ADR
213. Discuss the importance of arbitration for labor relations disputes.
Students’ answers may vary. Over the past 80 years, arbitration has played an increasingly important
role in resolving business disputes. Historically, arbitration has been the most commonly used ADR
system. The primary reason for the use of arbitration is the laudable goal of providing a relatively
quick and inexpensive resolution of disputes. Arbitration not only helps the parties avoid the expense
of litigation but also provides a means of avoiding the formalities of the courtroom. Formal pleadings,
for example, and other procedural steps such as discovery and the rules of evidence are usually not
used in an arbitration hearing. Arbitration is of special importance in labor relations, where it provides
the grievance procedures under collective bargaining contracts. Arbitration is a means for industrial
self-government, a system of private law for all problems that may arise in the workplace.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #84
Topic: Arbitration
214. What potential problems do you see arising as a result of a poorly drafted predispute arbitration
clause?
Students’ answers may vary. The benefit of arbitration is that the parties get a lot of control over what
happens should a dispute arise, but the parties may not be very good at choosing what control they
exert. Though the parties have planned for arbitration, they may not be able to plan for all disputes,
so the clause may leave out something, which will cause issues of arbitrability. Because they did not
think of covering all disputes, one of the parties may resist arbitration, which will force the other to
compel arbitration. This would force an additional step in their dispute resolution that will force them
into court, which they ostensibly were hoping to avoid in the first place. Also, the parties may not
be sophisticated enough to choose a good arbitrator, good procedures, or a proper venue, making the
resulting dispute resolution confusing and potentially null and void.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #85
Topic: Arbitration
215. What functions do experts serve in an arbitration?
Arbitration has the advantage of submitting many disputes to experts for solutions. The specific
issues under dispute may be very nuanced or idiosyncratic, so sending them to an expert, rather than a
generalist judge, cuts out the necessity of explaining the industry, goods, and business characteristics
before you can even address the dispute. For example, if the issue involves whether a building has
been properly constructed, the matter could be submitted to an architect for resolution. If it involves a
technical accounting problem, it could be submitted to a certified public accountant.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #86
Topic: Arbitration
216. What are the advantages of using an expert rather than a judge as an arbitrator?
One reason arbitration is frequently preferable to litigation is the use of an expert to resolve the
dispute. Appraisers can be used to decide disputes about the value of real estate, medical doctors can
be used to decide health care disputes, and academicians can be used to decide issues within their area
of expertise. Arbitration provides for decision making by experts with experience in the particular
industry and with knowledge of the customs and practices of the particular work site. Parties expect
the arbitrator to look beyond strictly legal criteria to other factors that bear on the proper resolution of
a dispute.
These factors may include the impact of a particular result on productivity, its consequences to
morale, and whether tensions will be heightened or diminished. The ablest judge usually does not
bring the same experience and competence to bear upon the determination of a grievance, because the
judge cannot be as informed as the expert arbitrator.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #87
Topic: Arbitration
217. What are the benefits and difficulties of choosing a panel of three arbitrators over a single arbitrator?
It is common to use one arbitrator who is considered objective and impartial. Any person the disputing
parties agree upon can be an arbitrator. There are no licensing requirements an arbitrator must satisfy.
However, an arbitrator often is chosen from a list of qualified arbitrators provided by the arbitration
service. The disputing parties are not limited to the list unless they have agreed to make their selection
from this list. It is also common to have a panel of three arbitrators. In such cases, each party selects
an arbitrator and the two so selected choose a third. It is not surprising that when this procedure
is used, allegations of bias are often made by the losing party. Courts generally do not allow such
allegations to form a basis for overturning a panel’s award unless there is evidence of overt corruption
or misconduct in the arbitration proceedings. Since such evidence usually is difficult to obtain,
allegations of bias normally do not impact the results of arbitration.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #88
Topic: Arbitration
218. Discuss arbitral awards and their relation to the courts.
Generally an arbitrator’s award does not need to set forth findings of fact, conclusions of law, or
the reasons for the award. However, a disclosure of findings and the reasons must be given if the
applicable statute, arbitration agreement, or submission so requires. When the arbitrator does provide
the basis for decision in the form of an opinion or letter, that document becomes a part of the award.
Because the parties themselves, by virtue of the submission, frame the issues to be resolved and define
the scope of the arbitrator’s powers, the parties are generally bound by the resulting award. A court
will make every reasonable presumption in favor of the arbitration award and the arbitrator’s acts
and proceedings. An arbitrator’s award is final on all issues submitted, and it will be enforced by the
courts as if it were a judgment of the court. Awards are not subject to judicial review on the merits of
the decision. Only when fraud or other clearly inappropriate action by the arbitrator can be shown is
a court willing to reverse the award granted in a voluntary arbitration proceeding. After the award is
made by the arbitrator, it is usually filed with the clerk of an appropriate court. If no objections are
filed within a statutory period, it becomes final and enforceable, like a judgment.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #89
Topic: Arbitration
219. What impact has the Federal Arbitration Act had on how the courts view arbitration?
The reenactment of the Federal Arbitration Act (FAA) in 1947 helped change the perceptions of
arbitration. At that time, courts began to encourage the use of arbitration as an alternative to litigation.
The FAA laid the groundwork for enforceable regulation of the arbitration process and provided
a framework for states to individually legislate arbitration. The FAA also addresses contractual
arbitration when interstate commerce is involved, and generally takes precedence over state
regulations in such cases. The Supreme Court widely accepts arbitration as an enforceable alternative
dispute resolution tool.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #90
Topic: Arbitration
220. How are arbitrators selected and compensated for mandatory arbitration proceedings?
The arbitrators in the mandatory arbitration process are retired judges and practicing lawyers, usually
experienced trial attorneys. A list of eligible arbitrators is maintained by court officials in charge
of the mandatory process. Although the parties may agree on using only one arbitrator, mandatory
arbitration cases are usually presented to a panel of three. Arbitrators are paid a per-diem fee. The
parties involved in the arbitration are responsible for paying these costs.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
Reed – Chapter 05 #91
Topic: Arbitration
221. Compare and contrast voluntary and mandatory arbitration.
In voluntary arbitration, submission is based on the parties’ agreement to arbitrate or on the contract,
while in mandatory arbitration, submission is based on state statute. The procedures involved in
voluntary arbitration are quick, informal, with typically no rules or discovery. Mandatory arbitration
involves court supervision, frequently there is discovery, and many states require the rules of evidence
to be followed. Voluntary arbitration allows no review of the award, unless there is proof of fraud or
other inappropriate acts by the arbitrator. For mandatory arbitration, the court will conduct a de novo
hearing as if the hearing had not occurred.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #92
Topic: Arbitration
222. What is the role of judicial review in voluntary contract-based arbitration awards?
In most cases, the award resulting from a voluntary contract-based arbitration is final. Arbitrator’s
findings are considered conclusive even when they result in erroneous findings of law. Judicial review
can correct fraudulent or arbitrary actions by an arbitrator or when the decision is clearly contrary to
public policy.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #93
Topic: Arbitration
223. What are some of the constitutional challenges to mandatory arbitration?
Laws providing for mandatory arbitration are subject to numerous constitutional challenges. Many
courts have generally held that mandatory arbitration statutes that effectively close the courts to the
litigants by compelling them to resort to arbitrators for a final and binding determination are void as
against public policy and are unconstitutional in that they:
1. Deprive one of property and liberty of contract without due process of law.
2. Violate the litigant’s Seventh Amendment right to a jury trial and/or the state’s constitutional access
to courts’ provisions.
3. Result in the unconstitutional delegation of legislative or judicial power in violation of state
constitutional separation-of-powers provisions.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #94
Topic: Arbitration
224. What are the four grounds that section 10 of the Federal Arbitration Act provides for vacating an
arbitration award?
Section 10 of the FAA provides four grounds to vacate an arbitration award: 1) the award was
procured by corruption, fraud, or other undue means; 2) where the arbitrators were obviously partial
or corrupt; 3) where the arbitrators were guilty of misconduct; and 4) the arbitrators exceeded their
powers or so imperfectly executed them that a mutual, final, and definite award upon the subject
matter submitted was not made.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
Reed – Chapter 05 #95
Topic: Arbitration
225. What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the
vacating of an arbitrator’s award.
Although difficult to precisely define, arbitral misconduct occurs when the actions of the arbitrator
cast doubt on the transparency and fairness of the proceeding. Five examples of arbitrator’s
misconduct that could lead to the vacating of the award are (1) communications with a party or
witness without the knowledge or consent of the other party; (2) receiving evidence of a material
fact without notice to a party; (3) holding hearings or deliberations in the absence of a member of
the arbitration panel or rendering an award without consulting a panel member; (4) undertaking an
independent investigation into a material matter after the close of hearings or without notice to the
parties; and (5) accepting gifts or other hospitalities from a party during the proceedings.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #96
Topic: Arbitration
226. What are the typical steps in the mediation process?
The mediation process follows the following steps: 1) the mediator makes an introduction and
explains the mediation; 2) parties make their opening statements; 3) parties exchange dialogue or
negotiation; 4) possible options are brainstormed; and 5) a written agreement is signed. If necessary,
private caucuses are arranged during the process at the mediator’s discretion.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #97
Topic: Mediation
227. What is a caucus? How is it used in mediation?
Sometimes, the mediator may decide that the process will be more productive if the parties and their
attorneys meet with the mediator outside the presence of the other disputant. This private meeting is
called a caucus. After each side caucuses with the mediator, the mediator may call the parties back
together for continued discussions, or the mediator may begin to act as a shuttle diplomat, moving
back and forth between the parties who are in separate rooms. Especially during these caucuses, the
mediator must win the trust and confidence of each party to the dispute.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #98
Topic: Mediation
228. The Magnuson-Moss Warranty Act provides that if a business adopts an informal dispute resolution
system to handle complaints about its product warranties, then a customer cannot sue the manufacturer
or seller for breach of warranty without first going through the informal procedures. How does the act
benefit the business and the consumer?
Student answers should address the flexibility of ADR systems, and discuss how creative companies
can keep lawsuits out of the media by forcing consumers to attend to mediation or arbitration before
going to litigation. Many of the informal procedures will require confidentiality, so the allegations will
not flow to the media. Consumers may actually find benefit in this act’s requirements by getting quick
settlements, by avoiding costly litigation, and by having attorneys who specialize in the business’s
informal procedures.
AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
Reed – Chapter 05 #99
Topic: Mediation
5 Summary
Category # of Questions
AACSB: Analytic 396
Blooms: Apply 16
Blooms: Remember 372
Blooms: Understand 8
Difficulty: 1 Easy 116
Difficulty: 2 Medium 200
Difficulty: 3 Hard 80
Learning Objective: 05-
01 To understand why disputing parties seek alternatives to the litigation process as methods to revolve their differences.
28
Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation. 56
Learning Objective: 05-
03 To evaluate the various forms of ADR systems so that efficient choices can be made as to the means of resolving disputes.
192
Learning Objective: 05-
04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.
44
Learning Objective: 05-
05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
76
Reed – Chapter 05 396
Topic: Alternative Dispute Resolution (ADR) Systems 24
Topic: Arbitration 248
Topic: Arbitration, Mediation 4
Topic: Conflicts and Negotiation 48
Topic: Evaluating Various Forms of ADR 8
Topic: Mediation 64