The Legal and Regulatory Environment of Business Marisa Pagnattaro 18e - Test Bank

The Legal and Regulatory Environment of Business Marisa Pagnattaro 18e – Test Bank

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The Legal and Regulatory Environment of Business, 18e (Pagnattaro)

Chapter 5 Alternative Dispute Resolution

1) By definition, conflicts are always negative and can never be productive.

Answer: FALSE

Explanation: By definition conflicts are not always negative, and they can be productive. The definition of a conflict is simply an occurrence in life when two or more viewpoints exist. Because of this, conflicts can produce great discoveries and new ways of thinking and can foster amicable decision-making.

Difficulty: 2 Medium

Topic: Conflicts and Negotiation

Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to resolve their differences.

Bloom’s: Understand

AACSB: Analytical Thinking

2) Litigation is the most frequently used method of resolving business disputes.

Answer: FALSE

Explanation: Most business try to avoid litigation when resolving business disputes. The litigation process within the court system imposes tremendous costs in terms of time, money, emotional stress, and harmony in relationships.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to resolve their differences.

Bloom’s: Remember

AACSB: Analytical Thinking

3) A dispute arises when one party makes a claim that another party denies.

Answer: TRUE

Explanation: A dispute arises when one party makes a claim that another party denies. It may be more beneficial to everyone involved to have a conflict become a dispute so the parties involved can more easily express their emotions.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to resolve their differences.

Bloom’s: Remember

AACSB: Analytical Thinking

4) When negotiating, the chances of a negotiated settlement through positional bargaining are high because positional bargaining focuses on the underlying conflicts.

Answer: FALSE

Explanation: When negotiating, the chances of a negotiated settlement through positional bargaining are minimal. This result occurs because positional bargaining does not focus on the underlying conflicts.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

5) Compromising is the most difficult negotiating style to demonstrate despite being a common response during a negotiation.

Answer: TRUE

Explanation: Compromising is the hardest negotiation style to demonstrate despite being a common response in a negotiation. Understanding the styles used in negotiations is not enough; analyses of negotiation processes also need to focus on the methods used by the negotiators.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

6) Positional bargaining is an approach based on principled, interest-based negotiations.

Answer: FALSE

Explanation: In positional bargaining, typically, the disputing parties begin in a competitive style by stating their respective expectations. A better approach to negotiating among disputing parties has been described as principled, interest-based negotiations in the book Getting to Yes by Roger Fisher, William Ury, and Bruce Patton.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

7) Instinctively, most people use positional bargaining as a negotiation method.

Answer: TRUE

Explanation: Most people instinctively use positional bargaining as a negotiation method.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

8) Concentrating on the seven elements of interest-based negotiation proposed by Roger Fisher, William Ury, and Bruce Patton can help remove some of the barriers created by positional negotiation.

Answer: TRUE

Explanation: Concentrating on the seven elements of interest-based negotiation proposed by Roger Fisher, William Ury, and Bruce Patton can help remove some of the barriers created by positional negotiation. The elements will vary in importance depending on the factual situation in dispute and on the parties’ individual perspectives.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

9) If a case is in litigation, the use of alternative dispute resolution will be prohibited.

Answer: FALSE

Explanation: Litigation does not prohibit the use of alternative dispute resolution. Indeed, it is very common for disputes to be arbitrated, mediated, or settled through negotiations during the pretrial process.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

10) One of the incentives to settle a lawsuit without going to litigation is that a losing party in litigation will usually have to pay court costs.

Answer: TRUE

Explanation: The fact that the losing party in a lawsuit usually pays court costs is an added incentive to settlement without litigation. The winning party in the lawsuit is a loser to the extent of the attorney’s fees—which are often substantial.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

11) Juries often decide close questions of liability, as well as size of the verdict, against business organizations.

Answer: TRUE

Explanation: 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.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Remember

AACSB: Analytical Thinking

12) Focus groups give attorneys insight into possible jury reaction to evidence and point up weaknesses in a case.

Answer: TRUE

Explanation: Attorneys frequently use focus groups in significant cases. 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.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Remember

AACSB: Analytical Thinking

13) To avoid the various expenses of litigation, disputing parties can agree to have a third party decide the merits of their dispute.

Answer: TRUE

Explanation: To avoid the various expenses of litigation, disputing parties sometimes agree to have a third party decide the merits of the dispute. This formal alternative dispute resolution system is called arbitration.

Difficulty: 1 Easy

Topic: Arbitration

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.; 05-04 To explain the differences between arbitration and mediation and to know when each is the most appropriate method of ADR.

Bloom’s: Remember

AACSB: Analytical Thinking

14) Arbitration may function as a precursor to litigation.

Answer: FALSE

Explanation: Arbitration may function as a substitute for and not as a prelude to litigation. It is a private proceeding with no public record available to the press and others.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

15) After a hearing is conducted by an arbitrator or arbitrators, the submission to arbitration occurs.

Answer: FALSE

Explanation: 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 alternative dispute resolution. Such an agreement by the parties is a submission to voluntary arbitration.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

16) An agreement to submit an issue to arbitration is revocable.

Answer: FALSE

Explanation: An agreement to submit an issue to arbitration is typically irrevocable, and a party that thinks the process is not going well cannot withdraw from the arbitration and resort to litigation. The parties authorize an arbitrator to make a decision that binds these parties and resolves their dispute.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

17) A party involved in arbitration can withdraw from the arbitration process and resort to litigation if the members of that party think the process is not going well.

Answer: FALSE

Explanation: 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

18) Most state statutes authorizing voluntary arbitration accept an agreement to arbitrate even if it is oral in form.

Answer: FALSE

Explanation: Most state statutes authorizing voluntary arbitration require the agreement to arbitrate to be in writing. Because the goal of arbitration is to obtain a quick resolution of disputes, most statutes require submission within a stated time period, usually six months, after the dispute arises.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

19) Questions of fact, questions of law, or a mixture of questions of fact and law can be submitted to arbitration in any state.

Answer: TRUE

Explanation: Questions of fact, questions of law, or a mixture of questions of fact and law can be submitted to arbitration. They may include the interpretation of an arbitration agreement.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

20) Arbitration enables the disputing parties to avoid the formalities of a courtroom.

Answer: TRUE

Explanation: Arbitration not only helps the disputing 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

21) A panel of three arbitrators is required to decide on any dispute regardless of any prior agreement by the parties concerning the number of arbitrators to be used.

Answer: FALSE

Explanation: The number of arbitrators is based on an agreement between the parties to a dispute. It is common to use one arbitrator who is considered objective and impartial. 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

22) An arbitrator does not have to satisfy any licensing requirements.

Answer: TRUE

Explanation: Any person the disputing parties agree upon can be an arbitrator. An arbitrator does not have to satisfy any licensing requirements.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

23) The disputing parties in arbitration can choose an arbitrator only from a list of qualified arbitrators provided by the arbitration service regardless of any agreement made prior to the selection of arbitrators.

Answer: FALSE

Explanation: 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

24) Each state has its own licensing regulations for arbitrators.

Answer: FALSE

Explanation: Any person the disputing parties agree upon can be an arbitrator. There are no licensing requirements an arbitrator must satisfy.

Difficulty: 1 Easy

Topic: Arbitration

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.

Bloom’s: Remember

AACSB: Analytical Thinking

25) Generally, an arbitrator’s award does not need to set forth conclusions of law or the reasons for an award.

Answer: TRUE

Explanation: 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

26) The important role and positive perception of arbitration among businesses today probably would not exist without the Federal Arbitration Act.

Answer: TRUE

Explanation: The important role and positive perception of arbitration among businesses today probably would not exist without the Federal Arbitration Act (FAA). Prior to the enactment of the FAA, our common law system preferred litigation over arbitration as a means of resolving disputes.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

27) A court-annexed mediation will follow rules that have been determined by federal regulations.

Answer: FALSE

Explanation: Rules related to court-annexed mediation are local, not federal, in nature; thus, there are wide variations as to the type of cases that courts require to be mediated.

Difficulty: 1 Easy

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

28) A court assumes arbitration was intended unless it can say with positive assurance that the arbitration clause was not intended to include the particular dispute.

Answer: TRUE

Explanation: A court assumes arbitration was intended unless it can say with positive assurance that the arbitration clause was not intended to include the particular dispute. The federal policy clearly favors arbitration of commercial disputes.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

29) A mediator is allowed to require the disputing parties to adhere to his or her resolution to the dispute.

Answer: FALSE

Explanation: A mediator cannot impose a required solution on the parties. However, as an unbiased and disinterested third party, a mediator is often able to help the disputing parties bring about an understanding of a dispute and, thus, avoid litigation of it.

Difficulty: 1 Easy

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

30) Individual states are not limited by the constitution when they make laws that deny arbitration of certain disputes.

Answer: TRUE

Explanation: The Commerce Clause and the Supremacy Clause of the U.S. Constitution are often used to set aside state laws that deny arbitration of certain disputes. State laws cannot prevent arbitration of disputes if the disputing parties are engaged in or affect interstate commerce.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

31) The court mandates an enforcement mechanism that ensures the disputing parties will mediate in good faith.

Answer: FALSE

Explanation: Generally, there is no enforcement mechanism that ensures the disputing parties will mediate in good faith. When the mediation is not aiding the parties, any of them can stop the process by simply stating that they will not participate further.

Difficulty: 1 Easy

Topic: Mediation

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.

Bloom’s: Remember

AACSB: Analytical Thinking

32) An advantage of mediation is that the parties maintain full control over the resolution of their controversy.

Answer: TRUE

Explanation: An advantage of mediation is that the disputing parties retain full control over the resolution of their controversy. Through retaining this control, the parties can decide how much time and effort to put into the mediation process.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

33) The federal system and all state systems require arbitration hearings to be conducted according to the established rules of evidence.

Answer: FALSE

Explanation: 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

34) Rita files a case against her husband involving the custody of their child. This is an example of a case that is subject to court-annexed mediation.

Answer: TRUE

Explanation: This case falls under court-annexed mediation. Generally, cases involving domestic-relations issues (such as divorce and child custody) and cases involving a dollar amount in dispute below a stated threshold level are examples of those that are subject to court-annexed mediation.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

35) From the perspective of judicial review, voluntary arbitration is a more effective alternative to litigation than mandatory arbitration.

Answer: TRUE

Explanation: The arbitration process is less time consuming and less costly than litigation only if the disputing 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.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

36) An arbitrator’s incorrect view of the law does not allow for an award to be set aside because the disputing parties agreed to accept their arbitrator’s view of the law.

Answer: TRUE

Explanation: The fact that an arbitrator made erroneous rulings during a hearing, or reached erroneous findings of fact from evidence, is no ground for setting aside an award because the parties have agreed that the arbitrator should be the judge of the facts. An erroneous view of the law is binding because the parties have agreed to accept the arbitrator’s view of the law.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

37) The judicial review of an arbitrator’s award in a voluntary arbitration procedure is quite restricted and is more limited than the appellate review of a trial court’s decision.

Answer: TRUE

Explanation: 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. The arbitrator’s findings on questions of both fact and law are conclusive.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

38) Judicial review of voluntary/contract-based arbitration requires a de novo review of the interpretation and application of the law by the arbitrators.

Answer: FALSE

Explanation: Judicial review of mandatory arbitration requires a de novo review of the interpretation and application of the law by the arbitrators. The scope of review by courts of an arbitrator’s award in a voluntary/contract-based arbitration is extremely limited.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

39) Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes as against the constitutional challenges where a dissatisfied party can reject an arbitrator’s award and seek a de novo judicial review of that award.

Answer: TRUE

Explanation: Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes as against the constitutional challenges where a dissatisfied party can reject the arbitrator’s award and seek a de novo judicial review of that award. De novo review means that the court tries the issues anew as if no arbitration occurred.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

40) The failure of a party to be present at an arbitration constitutes a waiver of the right to reject the arbitration award and seek de novo judicial review.

Answer: TRUE

Explanation: 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 a consent to the entry by the court of a judgment on the award.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

41) Statutorily mandated arbitration requires a higher level of judicial review of an award than voluntary arbitration.

Answer: TRUE

Explanation: 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. Therefore, statutorily mandated arbitration requires a higher level of judicial review of the award.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

42) A party’s disappointment in an arbitration award is a proper basis for having the award overturned.

Answer: FALSE

Explanation: The grounds for overturning an arbitrator’s award are very limited. A party’s disappointment in the award is not a valid basis for overturning the award.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

43) A dispute between two parties is before a panel of three arbitrators, Larry, Moe, and Curly. Larry decides to conduct deliberations with Curly while Moe is absent. Larry then renders the arbitration award. The arbitration award in this case could be vacated on the grounds of arbitrator misconduct.

Answer: TRUE

Explanation: Section 10 of the Federal Arbitration Act lists grounds for which an arbitration award may be vacated. One of these is arbitrator misconduct. There is no precise definition of arbitrator misconduct, but conducting deliberations in the absence of a member of an arbitration panel has been found to constitute an act of misconduct for which an award may be vacated. Here, Larry deliberated with Curly outside of the presence of Moe, and as such, has committed an act of misconduct, and the award in this case could be overturned.

Difficulty: 3 Hard

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Apply

AACSB: Analytical Thinking

44) If an arbitrator undertakes an independent investigation into a material matter after the close of hearings without notice to the disputing parties, such an action constitutes misconduct on the part of the arbitrator.

Answer: TRUE

Explanation: 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 after the close of hearings have been found to fit that definition.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

45) In mandatory arbitration, an award is an intermediate step in resolving a dispute if the trial itself is desired by a party.

Answer: TRUE

Explanation: In mandatory arbitration, an award is an intermediate step in resolving a dispute if a trial itself is desired. The right to reject the award and to proceed to trial is the sole remedy of a party dissatisfied with the award.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

46) Which of the following describes an element of a conflict?

A) It leads to disputes when coupled with claims that are rejected.
B) It exists only in unproductive relationships.
C) Its nature is only negative.
D) With two or more opinions, it ceases to exist.
E) If fosters a secure environment if left undiscussed.

Answer: A

Explanation: Conflicts lead to disputes when coupled with claims that are rejected. Conflicts exist when there are two or more points of view.

Difficulty: 2 Medium

Topic: Conflicts and Negotiation

Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to resolve their differences.

Bloom’s: Understand

AACSB: Analytical Thinking

47) ________ is the process used to persuade or coerce someone to do what one wants them to do.

A) Dissidence
B) Subservience
C) Negotiation
D) Contention
E) Knowledge transfer

Answer: C

Explanation: Negotiation is the process used to persuade or coerce someone to do what one wants them to do. People negotiate all the time with themselves, their family members, their co-workers, and even with strangers.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

48) A negotiation between a seller and a buyer begins with each party stating their respective expectations in a competitive style. The seller starts with as high an asking price as is considered reasonable. Likewise, the buyer begins with the lowest reasonable price. In the context of negotiation methods, this scenario is an example of ________.

A) positional bargaining
B) principled negotiation
C) distributive negotiation
D) fact bargaining
E) surface bargaining

Answer: A

Explanation: In the context of negotiation methods, this scenario is an example of positional bargaining. In positional bargaining, the disputing parties typically begin in a competitive style by stating their respective expectations.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

49) Which of the following statements is true of principled, interest-based negotiations?

A) They typically begin in a competitive style with the disputing parties stating their respective expectations.
B) They involve seven elements that vary in importance depending on the factual situation in dispute and on the parties’ individual perspectives.
C) They are concerned only with preparing for litigation to settle disputes.
D) They require the presence of a judge or magistrate to come up with a reasonable outcome that is better than the disputing parties’ alternatives.
E) They force parties to choose alternatives, which are outcomes that are agreeable to everyone involved.

Answer: B

Explanation: Principled, interest-based negotiations involve seven elements that vary in importance depending on the factual situation in dispute and on the parties’ individual perspectives. Concentrating on these elements can help to remove some of the barriers created by positional negotiation.

Difficulty: 2 Medium

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Understand

AACSB: Analytical Thinking

50) In Getting to Yes, Roger Fisher, William Ury, and Bruce Patton take the position that ______is a better approach to negotiating disputes.

A) Compromising negotiation
B) Principled, interest-based negotiation
C) Collaborative negotiation
D) Collaborative bargaining
E) Positional, interest-based bargaining

Answer: B

Explanation: In their book, Getting to Yes, Roger Fisher, William Ury, and Bruce Patton take the position that principled, interest-based negotiation is a better approach to negotiating among disputing parties. These authors present seven elements that should become the focus of negotiators.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

51) According to Roger Fisher, William Ury, and Bruce Patton, ________ is an element of principled, interest-based negotiations that involves the application of accepted standards to the topic negotiated—rather than having the disputing parties state unsupported propositions.

A) accommodation
B) collaboration
C) avoidance
D) competition
E) legitimacy

Answer: E

Explanation: According to Roger Fisher, William Ury, and Bruce Patton, legitimacy is an element of interest-based negotiations that involves the application of accepted standards to the topic negotiated—rather than having the disputing parties state unsupported propositions. Concentrating on this element can help remove some of the barriers created by positional negotiation.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

52) ________, one of the seven elements of principled, interest-based negotiations, involve the negotiating parties brainstorming possible solutions to their dispute.

A) Options
B) Interests
C) Relationships
D) Positions
E) Commitments

Answer: A

Explanation: Options, one of the seven elements of principled, interest-based negotiations involve the negotiating parties brainstorming possible 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.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

53) ________, one of the seven elements of principled, interest-based negotiations, are outcomes that are possible without the agreement of the other party in a negotiation.

A) Commitments
B) Alternatives
C) Options
D) Interests
E) Relationships

Answer: B

Explanation: Alternatives, one of the seven elements of principled, interest-based negotiations, are outcomes that are possible without the agreement of the other party in a negotiation. In essence, alternatives are the thing that parties to a negotiation can do away from the bargaining table.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

54) According to Roger Fisher, William Ury, and Bruce Patton, any successful negotiation must conclude with the disputing parties making realistic ________.

A) commitments
B) aberrations
C) deviations
D) communications
E) assumptions

Answer: A

Explanation: According to Roger Fisher, William Ury, and Bruce Patton, any successful negotiation must conclude with the disputing parties making realistic commitments. Hopefully, the conclusion of the negotiation will be an agreement between the parties that avoids the expense (dollars, time, and emotions) of litigation.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

55) Which of the following statements is true of the use of alternative dispute resolution (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 specify the preferred ADR technique to be used in the parties’ contract.
D) Disputing parties can agree to use an ADR technique after a dispute arises.
E) Litigation precludes the use of ADR techniques for dispute resolution.

Answer: D

Explanation: Disputing parties can agree to use an alternative dispute resolution (ADR) technique after a 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. ADR systems used by disputing parties may be part of a contractual relationship between these parties.

Difficulty: 2 Medium

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Understand

AACSB: Analytical Thinking

56) Which of the following is the most accurate listing of dispute resolution options from highest cost to lowest cost?

A) Mediation, Arbitration, Trial
B) Trial, Arbitration, Negotiated Settlement
C) Negotiated Settlement, Trial, Mediation
D) Negotiated Settlement, Focus Group, Trial
E) Arbitration, Focus Group, Trial

Answer: B

Explanation: When parties seek a resolution to a dispute, they have many options for what system to use. The systems are often weighed by cost to the parties. Trials (litigation) are the most costly. Focus groups are the second most costly, followed by arbitration and mediation. Negotiated settlements have the lowest cost. Every case is different, but this spectrum holds true for most disputes.

Difficulty: 3 Hard

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Understand

AACSB: Analytical Thinking

57) In the context of alternative dispute resolutions, a focus group would be used to:

A) make findings of fact
B) make findings of law
C) mediate between parties
D) act as a mock jury and provide feedback on the merits of the arguments presented
E) arbitrate a dispute

Answer: D

Explanation: In the context of alternative dispute resolution systems, focus groups deliberate and make findings that give attorneys insight into possible jury reaction to the evidence in a case. The verdicts often cause plaintiffs to take a more realistic view of the damages to which they think they are entitled.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Remember

AACSB: Analytical Thinking

58) Which of the following statements is true of focus groups?

A) They are employed by two disputing parties to decide on feasible solutions.
B) They are used by attorneys, and they point out weaknesses in a particular case.
C) They are a group of experts from the field of law who provide insights into a case.
D) They are primarily employed to determine the facts of a particular case.
E) They are precluded during the pretrial process when a particular case is subject to litigation.

Answer: B

Explanation: Focus groups are used by attorneys, and they point out weaknesses in a particular case. This dress rehearsal also gives attorneys insight into possible jury reaction to evidence in the case.

Difficulty: 2 Medium

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Understand

AACSB: Analytical Thinking

59) What percentage of tort cases filed in the U.S. District Court are reported to be settled prior to trial?

A) 5 percent
B) 25 percent
C) 98 percent
D) 75 percent
E) 10 percent

Answer: C

Explanation: The Department of Justice reports that 98 percent of tort cases filed in the U.S. District Courts are settled prior to trial. This high percentage is evidence that many parties are eager to avoid high litigation costs.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

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.

Bloom’s: Remember

AACSB: Analytical Thinking

60) Which of the following statements 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 disputing parties.
C) The outcomes of an arbitration procedure cannot be imposed on the disputing parties.
D) The disputing parties resolve all of the matters of contention by themselves in arbitration, without the intervention of a third party.
E) The primary function of arbitration is to serve as a prelude to litigation.

Answer: B

Explanation: The decisions arising from arbitration are binding on the disputing parties. The distinctive characteristic of this form of alternative dispute resolution is an arbitrator’s decision on the merits. In essence, the arbitrator takes the place of the jury and judge in the litigation process.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

61) Which of the following would not be considered a benefit of arbitration?

A) Limited discovery
B) Swift resolution
C) Low cost involved
D) Flexibility
E) Privacy

Answer: A

Explanation: Low cost, swift resolutions, flexibility, privacy, and the use of experienced decision-makers are often cited as the benefits of arbitration. Limited discovery is often cited as a disadvantage.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

62) ________ is the term used when a dispute has been referred to arbitration.

A) submission
B) writ of certiorari
C) negotiation
D) certification
E) de novo review

Answer: A

Explanation: In the context of alternative dispute resolution (ADR) systems, submission is the term used when a dispute has been referred to 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

63) In the absence of a statute, the rights and duties of the disputing parties to a submission for arbitration are described and limited by ________.

A) the Constitution
B) the legislature
C) the litigator
D) the arbitrator’s decision
E) the parties’ agreement

Answer: E

Explanation: In the absence of a statute, the rights and duties of the parties to a submission are described and limited by their agreement. Parties that have contracted to arbitrate are not required to arbitrate any matters other than those they contractually agree to arbitrate.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

64) The decision handed down by an arbitrator in a hearing is called a(n) ________.

A) submission
B) award
C) verdict
D) judgment
E) summon

Answer: B

Explanation: The decision handed down by an arbitrator in a hearing is called an award. In most states, the arbitrator’s award must be in writing.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

65) Which of the following is not true of an award?

A) In most states, it must be in writing.
B) It is final on all issues submitted.
C) It is usually filed with the clerk of the appropriate court.
D) It is subject to judicial review on the merits of a decision.
E) It is valid as long as it settles the entire controversy and states which party is to pay.

Answer: D

Explanation: An award is not subject to judicial review on the merits of a decision. Only when fraud or other clearly inappropriate actions by an arbitrator can be shown is a court willing to reverse the award granted in a voluntary arbitration proceeding.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

66) Books-R-Us, Corp., a publisher, faces issues on various fronts like accounting discrepancies, false advertisement, and retailer relations. Books-R-Us wants to settle its disputes in a quick and cost-effective manner. Which of the following processes is Books-R-Us, Corp. most likely to choose?

A) Litigation
B) Mediation
C) Negotiation
D) Settlement
E) Arbitration

Answer: E

Explanation: Books-R-Us, Corp. is most likely to choose arbitration to settle the issues. The primary reason for the use of arbitration is the laudable goal of providing a relatively quick and inexpensive resolution of disputes. Arbitration also has the advantage of submitting many disputes to experts for solutions. In this case, Books-R-Us can resort to arbitration to deal with its multiple issues by availing itself of the expertise of arbitrators at costs lesser than those of litigation.

Difficulty: 3 Hard

Topic: Arbitration

Bloom’s: Apply

AACSB: Reflective Thinking

67) Which of the following statements is true of the Federal Arbitration Act?

A) It covers any arbitration clause in a contract that involves interstate commerce.
B) It allows state laws to prevent arbitration of disputes even if the disputing parties are engaged in or affect interstate commerce.
C) It strictly nullifies the right of the Equal Employment Opportunity Commission to litigate if an employee signed an arbitration clause.
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.

Answer: A

Explanation: The Federal Arbitration Act (FAA) covers any arbitration clause in a contract that involves interstate commerce. 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.”

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

68) The effect of the Federal Arbitration Act on state laws is that state laws ________.

A) see arbitration as a necessary prelude to litigation
B) always favor conciliation over arbitration
C) never consider an arbitrator’s award as legally binding and enforceable
D) strictly nullify the right of the Equal Employment Opportunity Commission to litigate if an employee signed an arbitration clause
E) cannot prevent arbitration of disputes if the disputing parties are engaged in interstate commerce

Answer: E

Explanation: The effect of the Federal Arbitration Act on state laws is that the state laws cannot prevent arbitration of disputes if the disputing parties are engaged in interstate commerce. The federal policy favoring arbitration frequently conflicts with state laws favoring litigation as the means to resolve a dispute.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

69) A particular state decrees that the parties to a divorce case involving a property dispute take up arbitration. Which of the following types of arbitration is depicted in this case?

A) Contract-based arbitration
B) Discretionary arbitration
C) Predispute arbitration
D) Mandatory arbitration
E) Precursor arbitration

Answer: D

Explanation: Mandatory arbitration is depicted in this case. Arbitration is required only in those cases in which a party has demanded a jury trial, as it can be assumed that a judge hearing a case is basically as efficient as an arbitrator.

Difficulty: 3 Hard

Topic: Arbitration

Bloom’s: Apply

AACSB: Reflective Thinking

70) ________ generally select arbitrators.

A) The trial court judges
B) Attorneys
C) The disputing parties
D) Appeals court judges
E) Counselors

Answer: C

Explanation: The disputing parties generally choose arbitrators. A provision in the agreement to arbitrate or in the statute that requires the arbitration describes how the arbitrator is selected.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

71) When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the allegations ________.

A) automatically nullify a panel’s opinion
B) normally do not affect 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) normally set off a new round of litigation

Answer: B

Explanation: When a losing party in an arbitration proceeding makes allegations of bias against an arbitrator, the allegations normally do not affect the results of arbitration. 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.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

72) ________ is the technique used in collective-bargaining contracts to settle grievances of employees against their employers.

A) Facilitation
B) Litigation
C) Conciliation
D) Mediation
E) Arbitration

Answer: E

Explanation: Arbitration is the technique used in collective-bargaining contracts to settle grievances of employees against their employers. Arbitration is able to resolve disputes arising out of labor contracts without resorting to judicial intervention.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

73) An arbitrator’s award must ________.

A) be desirable to both the disputing parties to be legally binding and enforceable
B) set forth the findings of fact under any circumstance
C) set forth the specific credentials of the arbitrator
D) give a disclosure of findings and the reasons if an arbitration agreement so requires
E) define the scope of the arbitrator’s powers

Answer: D

Explanation: An arbitrator’s award must give a disclosure of findings and the reasons if an arbitration agreement 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.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

74) Arbitrators are individuals who ________.

A) are generally selected by a trial court judge.
B) are responsible for issuing opinions that are often not binding on the disputing parties.
C) must be licensed by the American Arbitration Association.
D) should be disinterested in the financial effect of a decision.
E) are not approached by the disputing parties to resolve the parties’ grievances.

Answer: D

Explanation: Arbitrators are individuals who should be disinterested in any financial effect of a decision. They should be neutral regarding the issues presented in a dispute.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

75) ________ frame the issues to be resolved and define the scope of an arbitrator’s powers.

A) Municipal court judges
B) District court judges
C) The disputing parties
D) Mediators
E) Focus groups

Answer: C

Explanation: The disputing parties frame the issues to be resolved and define the scope of an arbitrator’s powers. The parties are generally bound by the resulting award.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

76) The ________ of the U.S. Constitution are often used to set aside state laws that deny arbitration of a certain dispute.

A) Takings Clause and the Establishment Clause
B) Bill of Rights and the Twelfth Amendment
C) Commerce Clause and the Supremacy Clause
D) Third and the Fourth Amendments
E) Due Process Clause and the Takings Clause

Answer: C

Explanation: 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. The federal policy favoring arbitration frequently conflicts with state laws favoring litigation as the means to resolve a dispute.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

77) Unlike mandatory arbitration, voluntary arbitration is ________.

A) based on parties’ agreement after dispute arises or on contract clause before dispute arises
B) unconstitutional in most states
C) coercive because it provides an unfair advantage to the party creating the contract
D) time consuming and expensive when compared to litigation
E) impractical because agreements are too difficult to reach in early contract negotiations

Answer: A

Explanation: Unlike mandatory arbitration, voluntary arbitration is based on parties’ agreement after dispute arises or on contract clause before dispute arises. The award in voluntary arbitration is final with no judicial review, unless a party can prove that the arbitrator engaged in fraudulent, arbitrary, or other inappropriate actions.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

78) Which of the following statements most accurately describes a post-dispute arbitration agreement?

A) A method of negotiation that involves the exchange of offers so that a middle ground can be reached.
B) A clause regarding arbitration that is usually agreed to by parties prior to a dispute arising.
C) A form of resolving a dispute that is required by a statute.
D) A clause regarding arbitration that is signed when parties are already in dispute and decide that arbitration is better than litigation.
E) A form of alternative dispute resolution in which a third-party attempts to help the disputing parties reach a settlement.

Answer: D

Explanation: Postdispute arbitration agreements are defined as clauses regarding arbitration signed when parties already in dispute decide that arbitration is better than litigation. A predispute arbitration is a wiser and ultimately a more efficient approach to alternative dispute resolution than a postdispute agreement.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

79) Jim Corp. and Bartle Inc., two parties involved in a spice trade contract, enter into a dispute because of conflicting interests. They are unable to agree to arbitrate and opt for settlement through litigation. This scenario indicates that to settle disputes, Jim Corp. and Bartle Inc. are most likely to have included ________.

A) the Supremacy Clause in their business contract
B) an involuntary arbitration clause in their business contract
C) a postdispute arbitration agreement in their business contract
D) a predispute arbitration clause in their business contract
E) the Commerce Clause in their business contract

Answer: C

Explanation: This scenario indicates that to settle disputes, Jim Corp. and Bartle Inc. are most likely to have included a postdispute arbitration agreement in their business contract. An obvious disadvantage to relying on such an agreement is that disputing parties may not be able to find the common ground to agree to arbitrate.

Difficulty: 3 Hard

Topic: Arbitration

Bloom’s: Apply

AACSB: Reflective Thinking

80) Which of the following statements is true of voluntary arbitration?

A) Submission is required by statute.
B) The court will conduct a de novo hearing when reviewing the arbitration reward.
C) The procedure is associated with a court’s supervision, and discovery is usually done.
D) The quality of the outcome is considerably affected when compared to mandatory arbitration.
E) The procedure is not tied to a court and is not bound by rules of evidence.

Answer: E

Explanation: In voluntary arbitration, the procedure is not tied to a court and is not bound by rules of evidence. The award is final with no judicial review, unless a party can prove that the arbitrator engaged in fraudulent, arbitrary, or other inappropriate actions.

Difficulty: 2 Medium

Topic: Arbitration

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.

Bloom’s: Understand

AACSB: Analytical Thinking

81) Jane is deprived of her alimony from Ben as he is reluctant to make a settlement. Which of the following statutes is most likely to be applicable in this case?

A) Contract-based arbitration statute
B) Temporary arbitration statute
C) Postdispute arbitration statute
D) Mandatory arbitration statute
E) Predispute arbitration statute

Answer: D

Explanation: Mandatory arbitration statute is most likely to be applicable in this case. It covers only a few types of cases. A typical statute might apply the procedure to claims exclusively for money of a small amount, such as those for less than $15,000, not including interest and costs.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Apply

AACSB: Reflective Thinking

82) Ryan and Rick enter into a business agreement to assemble and sell a monthly product subscription box for sports enthusiasts. A dispute arises over their partnership agreement. Ryan decides to file a lawsuit against Rick. In the middle of litigation, both Ryan and Rick decide that arbitration would be better and enter into an arbitration agreement. Which of the following statements is true of this situation?

A) This case is an example of a mandatory arbitration agreement.
B) This case is an example of a predispute arbitration clause.
C) This case is an example of a caucus arbitration clause.
D) This case is an example of a court-required arbitration clause.
E) This case is an example of a postdispute arbitration agreement.

Answer: E

Explanation: This case is an example of a postdispute arbitration clause. A postdispute arbitration clause is one that is entered into after parties are already in litigation and determine that arbitration would better resolve their dispute.

Difficulty: 3 Hard

Topic: Arbitration

Bloom’s: Apply

AACSB: Reflective Thinking

83) In the context of alternative dispute resolution, mediators ________.

A) can impose a binding solution on all disputing parties
B) typically use the principles of interest-based negotiations
C) must meet the licensing requirements for their decisions to be used in court if a dispute proceeds to litigation
D) typically help parties prepare for litigation
E) act as a necessary precursor to arbitration

Answer: B

Explanation: Typically, mediators use the principles of interest-based negotiations. A mediator cannot impose a binding solution on the disputing parties.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

84) Which of the following statements is true of arbitration procedures?

A) All types of arbitration procedures are voluntary and cannot be forced on the disputing parties.
B) Mandatory arbitration is a more effective alternative to litigation than a voluntary arbitration.
C) Generally, the award resulting from the voluntary arbitration procedure is final.
D) If an arbitrator made erroneous rulings during a hearing, the award can be set aside.
E) An arbitrator’s award is binding on the parties only if there was no error of law on the part of the arbitrator.

Answer: C

Explanation: Generally, the award resulting from the voluntary arbitration procedure is final. The arbitrator’s findings on questions of both fact and law are conclusive.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

85) Mediators and arbitrators are similar because they both ________.

A) must be disinterested third parties
B) must be licensed to practice dispute resolution methods
C) must always have cases assigned by the court of appeals
D) must operate in federal courts instead of local ones
E) must be interested third parties

Answer: A

Explanation: Both mediators and arbitrators should be unbiased and disinterested third parties to a dispute.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

86) Which of the following statements is true of mediation?

A) Mediation uses mediators who tend to be more experienced in the field than arbitrators; their decisions are less likely to be erroneous.
B) The disputing parties do not have control over the mediation process, reducing preparation time.
C) Mediation is typically more expensive than litigation and arbitration.
D) The outcome of a mediation process is legally binding on the disputing parties and is enforceable.
E) A trial judge can require the disputing parties to submit to the mediation process before a complaint can be litigated formally.

Answer: E

Explanation: 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.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

87) Unlike an arbitrator, a mediator ________.

A) is not a neutral party
B) can only be appointed by the Supreme Court
C) cannot impose a binding solution on the disputing parties
D) can impose a binding solution only on any one of the disputing parties
E) cannot be chosen by the disputing parties

Answer: C

Explanation: Unlike an arbitrator, a mediator cannot impose a binding solution on the disputing 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.

Difficulty: 2 Medium

Topic: Arbitration; Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

88) ________ occurs when a trial judge requires the disputing parties to submit to the mediation process before a complaint can be litigated formally.

A) Submission
B) Party-directed mediation
C) Evaluative mediation
D) Med-Arb
E) Court-annexed mediation

Answer: E

Explanation: 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 court-annexed mediation as one means of controlling the heavy caseload faced by courts.

Difficulty: 1 Easy

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

89) Which of the following statements represents a reason why parties would choose to mediate a dispute rather than litigate it?

A) Mediation is more costly than litigation, and attorneys like to refer cases to mediation to increase their fees.
B) Mediation is more time consuming than litigation, and the parties choose to mediate when they want to prolong their dispute.
C) Judicial oversight of a mediation is higher than it is in litigation.
D) Mediation generally results in an award that benefits one party and punishes another.
E) Mediation is less costly and time consuming than litigation and allows parties to negotiate in a result that might benefit both parties.

Answer: E

Explanation: Parties can agree to mediate a dispute as an alternative to litigation. Mediation is growing in popularity because it is more cost and time effective than litigation. It also has less oversight from the legal and judicial system, and it allows the parties to negotiate a more interest-based result.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

90) Which of the following statements is true of caucuses in dispute resolution?

A) They are sometimes used by mediators to make the mediation processes more productive.
B) They only occur when mandated by a court order.
C) They involve negotiations between the disputing parties without a mediator and in the presence of their attorneys.
D) They are illegal because they are considered ex parte
E) They are synonymous with de novo

Answer: A

Explanation: Caucuses are sometimes used by mediators to make the mediation processes more productive. Especially during these caucuses, the mediator must win the trust and confidence of each party to the dispute.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

91) Which of the following occurs when a mediator and one party meet privately during a mediation session?

A) caucus
B) annex
C) meeting of the minds
D) focus group
E) convocation

Answer: A

Explanation: A caucus in mediation occurs when a mediator meets privately with one party during a mediation session. 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.

Difficulty: 1 Easy

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

92) Which of the following is one of the primary reasons for the increase in the number of mediations?

A) The disputing parties in the mediation process retain control over when to settle.
B) Outcomes of mediations are legally binding.
C) The mediators in the mediation process are selected by the Supreme Court.
D) Lawyers play a more active role in the mediation process when compared to arbitration.
E) The mediation process involves a mediator and only one of the disputing parties.

Answer: A

Explanation: One of the primary reasons for the increase in the number of mediations is that the disputing parties retain control over when to settle and when to continue disputing. Another reason mediation is growing in popularity relates to the cost savings compared to litigation and even arbitration.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

93) The final step to a successful mediation is ________.

A) submitting any conclusions to a judge for judicial approval prior to implementation
B) the writing and signing of the agreement by the disputing parties
C) providing all evidence obtained during the mediation to the parties’ attorneys for use in the next phase of litigation
D) submitting the signed agreements to focus groups for approval
E) turning the results over to an arbitrator as a submission for arbitration

Answer: B

Explanation: The final step to a successful mediation is the writing of the agreement and the signing of the agreement by the disputing parties. Through the good judgment and experience of a mediator, the differences between the parties hopefully will be resolved and a common agreement can be produced.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

94) What is the first step in a mediation that a mediator will generally follow?

A) The mediator will caucus with the parties to determine their positions.
B) The mediator will sit back and allow the parties to immediately air their grievances.
C) The mediator will make an introduction and provide an explanation of the mediation process.
D) The mediator will make an introduction and provide his view of the dispute.
E) The mediator will make a decision for the parties and allow them to discuss the decision.

Answer: C

Explanation: Mediation is relatively informal process and is controlled mostly by the disputing parties. However, the mediator will usually follow some basic procedures to have greater success in the mediation. The first step taken by the mediator is to make an introduction and provide and explanation of the process. The parties will then move into their opening statements.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

95) When the disputing parties agree to resolve all matters of contention that they can and agree to arbitrate the unresolved matters, they are said to be using an alternative dispute resolution technique known as ________.

A) judicial review
B) judicial activism
C) submission
D) Med-Arb
E) a caucus

Answer: D

Explanation: When the disputing parties agree to resolve all matters of contention that they can and agree to arbitrate the unresolved matters, they are said to be using an alternative dispute resolution technique known as Med-Arb. The opportunities to use mediation in beneficial ways are limited only by the creativity of the parties involved.

Difficulty: 1 Easy

Topic: Mediation

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.

Bloom’s: Remember

AACSB: Analytical Thinking

96) Judicial review of the awards of voluntary arbitration can correct ________.

A) the outcome when both the disputing parties are dissatisfied with it
B) the erroneous rulings made by an arbitrator during the hearing
C) fraudulent or arbitrary actions by an arbitrator
D) erroneous findings of facts from the evidence by an arbitrator
E) the outcome even if one of the disputing parties is dissatisfied with it

Answer: C

Explanation: Judicial review can correct fraudulent or arbitrary actions by an arbitrator. Further, courts of review are sometimes called upon to set aside an award when the decision is allegedly against public policy.

Difficulty: 2 Medium

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Understand

AACSB: Analytical Thinking

97) In the context of judicial review of voluntary arbitration, error of law renders an arbitration award void only when ________

A) both disputing parties are dissatisfied with it
B) it violates a positive mandate of the law
C) the arbitrator reaches erroneous findings of fact from an evidence
D) it results in a huge financial loss for either of the disputing parties
E) the arbitrator misunderstands the law

Answer: B

Explanation: Error of law renders an arbitration award void only when it violates a positive mandate of the law. 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.

Difficulty: 2 Medium

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Understand

AACSB: Analytical Thinking

98) Mandatory arbitration can be constitutional if ________.

A) the disputing parties include a contract clause for arbitration in the agreement before dispute arises
B) licensed arbitrators preside over all proceedings
C) all disputing parties agree in advance to be bound by the arbitration award
D) fair procedures are provided by the legislature and ultimate judicial review is available
E) it is bound by the Supremacy Clause and the Commerce Clause of the U.S. Constitution

Answer: D

Explanation: Mandatory arbitration can be constitutional if fair procedures are provided by the legislature and ultimate judicial review is available. Statutorily mandated arbitration requires a higher level of judicial review of an award.

Difficulty: 2 Medium

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Understand

AACSB: Analytical Thinking

99) Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes as against the constitutional challenges where a dissatisfied party can ________.

A) appeal against an award directly to the state Supreme Court
B) appeal against an award directly to the U.S. Supreme Court
C) reject an award and seek a review in the appropriate trial court
D) sue the arbitrator involved in the procedure
E) ignore the disputed award as it is not legally binding

Answer: C

Difficulty: 2 Medium

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Understand

AACSB: Analytical Thinking

100) When arbitration is pursuant to state statute, ________.

A) the statute determines what grounds may be used to challenge an award in court
B) the statute of the state where the dispute is first submitted prevails in the case of a dispute involving interstate commerce
C) a disputing party may choose to have provisions of the Federal Arbitration Act 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

Answer: A

Explanation: 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.

Difficulty: 2 Medium

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Understand

AACSB: Analytical Thinking

101) In the context of judicial review of mandatory arbitration, 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 disputing parties 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

Answer: B

Explanation: In the context of judicial review of mandatory arbitration, de novo review means that the court tries the issues anew as if no arbitration occurred. Courts throughout the United States have uniformly upheld mandatory arbitration statutory schemes as against the constitutional challenges where a dissatisfied party can reject the arbitrator’s award and seek a de novo judicial review of that award.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

102) According to subsection (c) of the Federal Arbitration Act, which of the following actions constitutes misconduct on the part of an arbitrator that justifies vacating an arbitration award?

A) Accepting gifts from a party during the proceedings
B) Misunderstanding the law
C) Conducting a caucus with a party to the proceedings even if the other party consents to it
D) Making erroneous rulings during a hearing
E) Reaching erroneous findings of fact from an evidence

Answer: A

Explanation: According to subsection (c) of the Federal Arbitration Act, accepting gifts from a party to the proceedings constitutes misconduct on the part of an arbitrator that justifies vacating an arbitration award. An award may likewise be set aside on the basis of procedural error if an arbitrator denies a reasonable request for postponement of a hearing.

Difficulty: 2 Medium

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Understand

AACSB: Analytical Thinking

103) Briefly discuss how conflicts can be productive.

Answer: Conflict exists whenever there are two or more points of view. Conflicts are not always negative; they are ubiquitous and can be productive. Indeed, they can stimulate significant thoughts and produce great discoveries. Most people perceive conflict as bad and try to avoid it. This is because of the fact that conflict leads to disputes. Conflict results in a dispute when it is coupled with a claim that is rejected. It may be more beneficial to everyone involved to have the conflict become a dispute so the parties involved can more easily express their emotions. Such expressions may lead to an earlier resolution between the parties.

Difficulty: 2 Medium

Topic: Conflicts and Negotiation

Learning Objective: 05-01 To understand why disputing parties seek alternatives to the litigation process as methods to resolve their differences.

Bloom’s: Understand

AACSB: Analytical Thinking

104) Briefly discuss the approach to negotiation described in the book Getting to Yes by Roger Fisher, William Ury, and Bruce Patton, which discusses the seven elements of negotiation. What is the focus of the book, and how do the authors hope to change the focus of negotiation through it?

Answer: When compared to positional bargaining, a better approach to negotiating among disputing parties has been described as principled, interest-based negotiations in the book Getting to Yes by Roger Fisher, William Ury, and Bruce Patton. These authors present seven elements that should become the focus of negotiators. The seven elements are 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. However, 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 interest-based approach can foster more amiable, and less contentious, negotiations. When the parties take time to address each other’s concerns and focus on their interests, they may find that positional, adversarial negotiation is counter-productive.

Difficulty: 1 Easy

Topic: Conflicts and Negotiation

Learning Objective: 05-02 To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.

Bloom’s: Remember

AACSB: Analytical Thinking

105) In the context of dispute resolution, what is a focus group and why and when can it be used?

Answer: Recognizing that a jury’s function is to determine the facts, 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 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. Sometimes, issues are tested without introducing evidence. Lawyers argue the case on the basis of assumed facts to the mock jury for a few hours, and this jury returns a verdict. The verdicts often cause plaintiffs to take a more realistic view of the damages to which they think they are entitled. This reality test helps disputing parties to engage in more meaningful negotiations.

Difficulty: 1 Easy

Topic: Alternative Dispute Resolution (ADR) Systems

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

106) Discuss the importance of arbitration in labor relations disputes.

Answer: 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 alternative dispute resolution (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 helps the parties avoid the expense of litigation and 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.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

107) In the context of alternative dispute resolution, briefly discuss the two forms of agreements to voluntarily arbitrate disputes.

Answer: Agreements to voluntarily arbitrate come in two basic forms. One is known as the predispute arbitration clause. Such clauses commonly appear in business contracts. In essence, the contracting parties show good judgment in understanding that conflicts exist, conflicts give rise to disputes, and disputes are better resolved through arbitration rather than by litigating. People view including an arbitration clause in the contract as an indication that bad things will happen. These people may need to use a postdispute arbitration agreement. Such agreements arise when parties already in dispute decide that arbitration is better than litigation. A predispute arbitration is the wiser and ultimately more efficient approach to alternative dispute resolution than the postdispute agreement. An obvious disadvantage to relying on the latter approach is that disputing parties may not be able to find the common ground to agree to arbitrate.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

108) One of the advantages of arbitration is the ability to submit disputes to experts. What are some examples of how experts can be used in an arbitration?

Answer: Many different types of disputes can be submitted to experts during an arbitration, resulting in various useful functions of these experts. For example, if the issue involves deciding 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. Appraisers can be used to resolve disputes about the value of real estate, medical doctors can be used to resolve health care disputes, and academicians can be used to resolve issues within their area of expertise. This use of experts is especially important in labor-management relations.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

109) What are the advantages of using an expert rather than a judge as an arbitrator?

Answer: One reason why arbitration is frequently preferred to litigation is the use of an expert to resolve the dispute. Appraisers can be used to resolve disputes about the value of real estate, medical doctors can be used to resolve health care disputes, and academicians can be used to resolve 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 effect 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 as an expert because the judge cannot be as informed as the expert arbitrator.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

110) What are the benefits and difficulties of choosing a panel of three arbitrators over a single arbitrator?

Answer: 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. Because such evidence usually is difficult to obtain, allegations of bias normally do not affect the results of arbitration.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

111) Briefly discuss arbitral awards and their relation to the courts.

Answer: 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 a 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

112) How has the Federal Arbitration Act impacted the courts’ view of arbitration, and are there any negative ramifications to this?

Answer: The reenactment of the Federal Arbitration Act (FAA) in 1947 helped to change the perceptions of arbitration. At that time, courts began to encourage the use of arbitration as an alternative to litigation. The FAA changed public policy perceptions of arbitration and how states can regulate its use. The U.S. Supreme Court, through its decisions, gives strong support to the use of arbitration. State laws cannot prevent arbitration of disputes if the parties are engaged in or affect interstate commerce. 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. The increased favor of arbitration in the courts has had some negative ramifications. For example, the policy of the courts to enforce arbitration agreements in the class-action identity theft cases involving Wells Fargo limited the ability of customers to recover in a class action and expose the wrongdoing in a public forum. Because the arbitration was so private, the identity theft was able to continue.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

113) Briefly state the types of cases that come under statutorily mandated arbitration and the procedure followed.

Answer: Mandatory arbitration statutes cover only a few types of cases. A typical statute might apply the procedure to claims exclusively for money of a small amount, such as those for less than $15,000, not including interest and costs. Some statutes require arbitration of specific subject matter, like issues arising out of divorces. Arbitration is required only in those cases in which a party has demanded a jury trial, as it can be assumed that a judge hearing a case is basically as efficient as an arbitrator. Mandatory arbitration, while requiring substantially less time than litigation, does not necessarily provide speedy justice. The usual procedure for a claim filed in court that is covered by the mandatory arbitration law is to place the claim in the arbitration track at the time of filing. At this point, the date and time of hearing are assigned, typically eight months from the date of filing.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

114) What do the two cases presented, Rent-A-Center, Inc. v. Antonio Jones and 14 Penn Plaza, LLC. v. Pyett, reveal about how businesses and the Supreme Court view arbitration?

Answer: Both of the cases presented, Rent-A-Center, Inc. v. Antonio Jones and 14 Penn Plaza, LLC. v. Pyett, concern issues of enforceability of arbitration agreements utilized by business entities. In both cases, the Supreme Court found in favor of the arbitration agreements by upholding them or finding them enforceable. From this, we can understand that it is common for businesses to utilize arbitration clauses or agreements to direct dispute resolution towards arbitration and not litigation. This has been an increasing trend for various types of business contracts, most likely because arbitration is viewed as more cost-effective and better at dealing with dispute resolution than litigation. The two cases are also illustrative of the Supreme Court’s strong support of the use of arbitration in settling commercial disputes.

Difficulty: 3 Hard

Topic: Arbitration

Bloom’s: Apply

AACSB: Reflective Thinking

115) Discuss how arbitrators are selected and compensated for mandatory arbitration proceedings.

Answer: 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.

Difficulty: 1 Easy

Topic: Arbitration

Bloom’s: Remember

AACSB: Analytical Thinking

116) Briefly explain how mandatory and voluntary arbitration are similar and how they are different.

Answer: In voluntary arbitration, submission is based on the parties’ agreement to arbitrate after dispute arises or on contract clause before dispute arises. In mandatory arbitration, submission is required by state statute. The procedures involved in voluntary arbitration are quick, informal, often with no discovery, and not bound by rules of evidence. The procedure in mandatory arbitration is associated with a court’s supervision; discovery usually is done, and many states require arbitrators to follow the formal rules of evidence. In voluntary arbitration, the award is final with no judicial review, unless a party can prove that the arbitrator engaged in fraudulent, arbitrary, or other inappropriate actions. For mandatory arbitration, the court will conduct a de novo hearing as if the arbitration process had not occurred.

Difficulty: 2 Medium

Topic: Arbitration

Bloom’s: Understand

AACSB: Analytical Thinking

117) Discuss the advantages of mediation over litigation and arbitration.

Answer: The basic advantage of mediation over litigation and arbitration is that the disputing parties retain full control over the resolution (or lack thereof) of their controversy. Through retaining this control, the parties can decide how much time and effort to put into the mediation process. The fact that mediation is party driven and does not involve even an informal presentation of evidence makes the process much more efficient than other alternative dispute resolution systems. If parties are making progress toward a settlement, the mediation can be continued and perhaps expanded to involve a possible agreement on other potential disputes. When the mediation is not aiding the parties, any of them can stop the process by simply stating that they will not participate further.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

118) What are the typical steps in a mediation process?

Answer: The typical steps in a mediation process are (a) a mediator makes an introduction and explains the mediation, (b) parties make their opening statements, (c) there is an exchange between parties (dialogue or negotiation), (d) possible options are brainstormed, and (e) an agreement is written and signed. If necessary, caucuses are arranged during the process at the mediator’s discretion.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

119) What is a caucus? How is it used in mediation?

Answer: Sometimes, a mediator may decide that the mediation 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.

Difficulty: 1 Easy

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

120) 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?

Answer: Students’ answers should address the flexibility of alternative dispute resolution (ADR) systems, and discuss how creative companies can keep lawsuits out of the media by forcing consumers to mediate or arbitrate before going to litigation. The Magnuson-Moss Warranty Act is an example of a law that encourages the disputing parties to be creative in using ADR systems. This law does not deny consumers the right to sue, nor does it compel a compromise solution. It simply allows a manufacturer to require mediation, for instance, before the complaining consumer can litigate.

Difficulty: 2 Medium

Topic: Mediation

Bloom’s: Understand

AACSB: Analytical Thinking

121) Explain the alternative dispute resolution (ADR) technique of Med-Arb.

Answer: One of the more popular variations has given rise to what some people are calling an additional ADR technique. This variation involves the mediation of a dispute. The parties resolve all matters of contention that they can and they agree to arbitrate the unresolved matters. This variation is known as Med-Arb. The opportunities to use mediation in beneficial ways are limited only by the creativity of the parties involved.

Difficulty: 1 Easy

Topic: Mediation

Bloom’s: Remember

AACSB: Analytical Thinking

122) What is the role of judicial review in voluntary/contract-based arbitration awards?

Answer: Generally, the award resulting from a voluntary arbitration procedure is final. 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. 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. Judicial review can correct fraudulent or arbitrary actions by an arbitrator or when the decision is clearly contrary to public policy.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

123) What are some of the constitutional challenges to mandatory arbitration?

Answer: 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 (a) deprive one of property and liberty of contract without due process of law, (b) violate the litigant’s Seventh Amendment right to a jury trial or the state’s constitutional access to courts’ provisions, and (c) result in the unconstitutional delegation of legislative or judicial power in violation of state constitutional separation-of-powers provisions.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

124) What are the four grounds that section 10 of the Federal Arbitration Act provides for vacating an arbitration award?

Answer: Section 10 of the Federal Arbitration Act provides that an arbitration award may be vacated or set aside on any one of four grounds: (a) where the award was procured by corruption, fraud, or other undue means; (b) where the arbitrators were obviously partial or corrupt; (c) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy or by engaging in any other misbehavior by which the rights of any party have been prejudiced; and (d) where 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.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

125) What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the vacating of an arbitrator’s award.

Answer: Subsection (c) of the Federal Arbitration Act covers arbitral misconduct. The concept of arbitral “misconduct” does not lend itself to a precise definition. Among the actions found to constitute such misconduct on the part of an arbitrator that justify vacating an arbitration award are the following: (a) participation in communications with a party or a witness without the knowledge or consent of the other party, (b) receipt of evidence as to a material fact without notice to a party, (c) holding hearings or deliberations in the absence of a member of the arbitration panel or rendering an award without consulting a panel member, (d) undertaking an independent investigation into a material matter after the close of hearings and without notice to the parties, and (e) accepting gifts or other hospitality from a party during the proceedings.

Difficulty: 1 Easy

Topic: Arbitration

Learning Objective: 05-05 To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.

Bloom’s: Remember

AACSB: Analytical Thinking

The Legal and Regulatory Environment of Business Marisa Pagnattaro 18e - Test Bank

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Current Medical Diagnosis and Treatment 2019 58th Edition

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Bates’ Guide To Physical Examination And History Taking 12th Edition

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The Legal and Regulatory Environment of Business Marisa Pagnattaro 18e - Test Bank

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