The Legal Environment of Business, 8e (Kubasek)
Chapter 4 Alternative Tools of Dispute Resolution
1) Which of the following statements is true of alternative dispute resolution?
A) Parties using alternative dispute resolution are likely to face adverse publicity.
B) Alternative dispute resolution is generally more expensive than litigation.
C) Alternative dispute resolution generally leads to loss of confidentiality and trade secrets.
D) Alternative dispute resolution methods are less time-consuming, and the formal-hearing times
and places can be set to accommodate the parties.
2) Which of the following is a characteristic of alternative dispute resolution?
A) They generally consume more time than litigations.
B) The person presiding over the resolution process is assigned by a court.
C) The presiding person is more likely to be familiar with the subject matter of the dispute than a
judge would be.
D) The formal hearing times cannot be changed to accommodate the parties involved.
3) Which of the following statements is true about negotiation and settlement?
A) It is a formal ADR method that delivers a verdict.
B) Most lawyers attempt negotiation before taking a case to trial.
C) It involves an independent or neutral third party.
D) It is mandatory for both the parties to be represented by a lawyer.
4) Which of the following alternative dispute resolution methods does not involve a neutral third
person?
A) negotiation and settlement
B) early neutral case evaluation
C) minitrial
D) mediation
5) The process of negotiation and settlement differs from arbitration in that ________.
A) the process of negotiation takes place in a much more formal setting than in arbitration
B) representation by legal counsel is not mandatory in negotiation, unlike in arbitration
C) no neutral third party is involved in the negotiation process, unlike in arbitration
D) the proceedings of negotiation preserves confidentiality, whereas arbitration must be recorded
for review
6) Atlos Inc. is the primary customer of the raw materials provided by Arcturis Inc. Atlos is
unhappy about the previous batch of materials supplied, which has led to a dispute between the
two corporations. But, in spite of their dispute, the two companies prefer to continue doing
business. Hence, they wish to resolve the dispute in an informal manner without a neutral third
party. Which of the following dispute resolution methods is likely to work best for them?
A) negotiation and settlement
B) early neutral case evaluation
C) arbitration
D) mediation
7) Resolving a dispute through alternative dispute resolution sets a precedent for future cases.
8) Successful negotiation of a settlement requires each party to give up something in exchange
for getting something from the other party.
9) Lawyers generally avoid negotiation and settlement as a method of dispute resolution.
10) Mediation is a process by which the parties to a dispute come together informally, either with
or without their lawyers, and attempt to resolve their dispute. No independent or neutral third
party is involved.
11) In ________, the neutral third party makes no final decision.
A) mediation
B) arbitration
C) private trials
D) summary jury trials
12) Under the National Labor Relations Act, before engaging in an economic strike to achieve
better wages, hours, or working conditions under a new collective bargaining agreement, a union
must first contact the ________ and attempt to ________ contract demands.
A) FMCS; mediate
B) FTC; mediate
C) FMCS; arbitrate
D) FTC; arbitrate
13) Which of the following statements is true of mediation?
A) A mediator is appointed by a court.
B) The proceedings of mediation can be used in litigations.
C) Mediation is more time-consuming and expensive than litigation.
D) Mediation is used increasingly to resolve insurance claim disputes and commercial contract
problems.
14) Which of the following is true of a mediator?
A) A mediator should arrive at a final decision.
B) A mediator can be obtained from the local bar association.
C) A person who does not have a background in law is generally preferred as a mediator.
D) If the mediator is not from a governmental organization, the agreement signed during
mediation is not valid.
15) Which of the following is a reason to use mediation to resolve environmental disputes?
A) It is the most adversarial ADR method.
B) It can easily accommodate multiple parties.
C) The proceedings of mediation are confidential.
D) The agreement reached in mediation is not legally binding.
16) Which of the following is the least adversarial of the formal methods of dispute resolution?
A) mediation
B) arbitration
C) private trial
D) summary jury trial
17) In ________, the neutral third party attempts to help the parties draft agreements.
A) neutral case evaluation
B) arbitration
C) litigation
D) mediation
18) Satarn, Inc. often does business with Scorpeo, Inc. Recently, the two corporations had a
minor dispute. However, they wish to continue doing business with one another for which their
relationship should be preserved. They came to an agreement that whatever transpires during the
resolution process should be confidential. Which of the following dispute resolution methods
should they choose?
A) litigation
B) mediation
C) arbitration
D) summary jury trials
19) Mediation differs from arbitration in that ________.
A) a mediator makes no final decision, whereas an arbitrator provides a decision for the parties
B) whatever transpires during mediation can be used as evidence in court, but the proceedings of
arbitration remain confidential
C) mediation offers lesser potential for creative solutions than arbitration
D) a mediator is appointed by a court, whereas an arbitrator is chosen by the disputants
20) Andrew is a mediator with a dispute resolution firm. He has been selected to mediate a
dispute between two corporations. Which of the following statements is true of his powers?
A) Andrew can reach a judgment that will be binding on both parties.
B) Andrew can make a final decision that will be used as evidence by a court.
C) Andrew can help the disputants draft an agreement that will be binding.
D) Andrew can deliver a binding judgment only if the parties do not reach an agreement.
21) Gemeni, Inc. has acquired land adjacent to a forest region to construct a manufacturing plant.
This has led to a dispute with the land owners of that region. Gemeni also expects various
environmental groups to become involved in the dispute. If it wants to have a good relationship
with these parties, which of the following methods of dispute resolution should it choose?
A) private trial
B) litigation
C) arbitration
D) mediation
22) The Federal Mediation and Conciliation Service provides early neutral case evaluation.
23) Mediators decide the terms of agreements.
24) Critics of mediation argue that it creates an impression of equality even when none exists.
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25) State the criticisms of mediation.
26) ________ is the resolution of a dispute by a neutral third party outside the judicial setting.
A) Mediation
B) Negotiation
C) Early neutral case evaluation
D) Arbitration
27) The arbitrator’s decision is called the ________.
A) award
B) certification
C) order
D) verdict
28) If their contract contains no binding arbitration clause, the parties may secure arbitration by
entering into a ________ agreement.
A) remission
B) subrogation
C) submission
D) protestation
29) Usually, a submission agreement will specify all but which of the following conditions?
A) how the arbitrator will be selected
B) the nature of the dispute
C) whether a mediator will render a preliminary judgment
D) any constraints on the arbitrator’s authority to remedy the dispute
30) Usually, a submission agreement will specify all but which of the following conditions?
A) whether a mock jury will render a post-arbitration verdict
B) the place where the arbitration will take place
C) a time by which the arbitration must be scheduled
D) any constraints on the arbitrator’s authority to remedy the dispute
31) A contract of ________ prohibits a consumer from meaningfully negotiating the inclusion
and terms of a mandatory arbitration clause in a consumer purchase contract.
A) dilution
B) omission
C) regression
D) adhesion
32) Which of the following is not a canon of the Arbitrator’s Code of Ethics?
A) An arbitrator will uphold the integrity and fairness of the arbitration process.
B) If the arbitrator has an interest or relationship that is likely to affect his or her impartiality or
that might create an appearance of partiality or bias, it must be disclosed.
C) An arbitrator, in communicating with the parties, should avoid impropriety or the appearance
of it.
D) An arbitrator will research the parties involved in the dispute and the nature of the dispute
prior to the arbitration hearing in order to reach preliminary notions regarding the relative
strengths and weaknesses of each party’s case.
33) Which of the following statements is true about arbitration?
A) Arbitration is less efficient than litigation.
B) An official record of the arbitration hearing is always made to check for discrepancies.
C) An arbitrator can question the witness for information.
D) A legal counsel is required in arbitration.
34) Which of the following statements is true about an award in arbitration?
A) An arbitrator’s decision is called an award only if monetary compensation is given.
B) An arbitrator must cite precedents for the award.
C) An award does not have to state any findings of fact or conclusions of law.
D) An arbitrator strictly applies a rule of law while arriving at a decision.
35) Which of the following best defines arbitration briefs?
A) They are written arguments from both parties.
B) They are official records of proceedings of the case.
C) They are documents providing reasons for a decision.
D) They are documents detailing the financial statements of both parties.
36) Which of the following provides sufficient grounds to set aside an arbitrator’s award?
A) The parties were not represented by attorneys.
B) The arbitrator did not cite any conclusions of law in the award.
C) The arbitrator refused to postpone the hearing despite sufficient cause.
D) The arbitrator did not request arbitration briefs before providing a decision.
37) Which of the following statements is true of a submission agreement?
A) It is a binding clause in a contract mandating all disputes to be settled by arbitration.
B) It specifies the nature of the dispute and how the arbitrator will be selected.
C) It is an agreement stating that both parties agree to abide by the mediator’s decision.
D) It is an agreement provided in court stating how contract disputes are to be settled.
38) Which of the following is true of a binding arbitration clause?
A) The parties that have drawn up the contract can choose the arbitrator.
B) The parties that have agreed on this clause can resolve their disputes in a federal court.
C) It cannot be included in a collective bargaining agreement.
D) It usually indicates that both parties agree to be bound by the arbitrator’s award.
39) A(n) ________ agreement is a separate agreement providing that a specific dispute be
resolved through arbitration.
A) escrow
B) submission
C) binding
D) unanimous consent
40) Which of the following statements is true of an arbitrator?
A) An arbitrator must have a background in law.
B) An arbitrator is usually assigned by a court.
C) An arbitrator has no say on the substantive and procedural rules to be followed.
D) An arbitrator’s decision is called an award.
41) Which of the following is a difference between arbitration and litigation?
A) Arbitration is conducted in a judicial setting, whereas litigation is not.
B) A judge’s decision is more likely to be a compromise than an arbitrator’s decision.
C) The prehearing discovery phase is longer in arbitration than in litigation.
D) An arbitrator takes a more active role in questioning a witness than would a judge.
42) Alice and Mary are the two parties in a dispute. They have recently gone through the process
of mediation, but Alice is unhappy with the results and wants to go through arbitration. Which of
the following statements is true of this scenario?
A) The parties decide whether to allow what transpired during mediation to be permitted as
evidence in arbitration.
B) The mediator of this dispute must become the arbitrator as well.
C) Mary can select the arbitrator if Alice wants to go through arbitration.
D) The arbitrator can provide a decision that is binding on both Alice and Mary.
43) Which of the following statements is true of the National Consumer Arbitration Program?
A) The arbitrator can award punitive damages.
B) It can only hear cases that have been dismissed from court.
C) Arbitration through this program is more expensive than a lawsuit in court.
D) Arbitrators cannot award damages beyond the value of the product in question.
44) Which of the following is a problem associated with arbitration?
A) The arbitrators are chosen based on the demographics of the disputants.
B) Allegations of race, sex, and age discrimination cannot be annexed to arbitration.
C) Arbitration allows industries to hide its disputes from the public.
D) Disputes involving intellectual property rights cannot be resolved through arbitration.
45) An arbitrator’s decision is called an award only if monetary compensation is ordered.
46) There is a prehearing discovery phase in arbitration.
47) An arbitrator’s decision is much more likely to be a compromise than a decision handed
down by a court.
48) More than 95 percent of the collective bargaining agreements in force today have some
provision for early neutral case evaluation.
49) Both federal and state courts must defer to arbitration if the contract in dispute contains a
binding arbitration clause.
50) An arbitrator’s award may be set aside if the arbitrator exceeded his or her authority in
making the award.
51) In some U.S. states, disputes involving less than a certain amount of money automatically go
to arbitration.
52) The American Arbitration Association (AAA) is a private, nonprofit organization.
53) In some states, public employees must submit collective bargaining disputes to binding
arbitration.
54) The Equal Employment Opportunity Commission (EEOC) can seek remedies in
discrimination cases, even when a binding arbitration agreement exists to settle all employment-
related disputes.
55) According to the National Consumer Arbitration Program, arbitrators can award damages for
personal injuries suffered as a result of a defective product.
56) According to Section 10 of the Federal Arbitration Act, what are the four grounds on which
an arbitrator’s award may be set aside?
57) What is a submission agreement, and what conditions are usually specified in such an
agreement?