Chapter 3
Alternative and Online
Dispute Resolution
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
1. Few civil lawsuits are settled before trial.
2. Litigation is the process of resolving a dispute through the court system.
3. In mediation, the mediator proposes a solution and makes a decision resolving
the dispute.
4. A mini-trial is a private proceeding in which each party’s attorney argues the
party’s case before the other party.
5. Facilitation is adversarial in nature.
6. In arbitration, the third party’s decision may be legally binding or nonbinding.
7. A submission occurs when one of the parties to arbitration agrees to give up
his or her claims.
8. Most states do not enforce agreements to arbitrate disputes between private
parties.
9. A compulsory arbitration in a consumer contract may be unconscionable.
10. An arbitrator’s award will not be set aside simply because the arbitrator let only
one side argue its case.
11. An arbitrator’s fact-findings and legal conclusions are normally final.
12. An arbitrator’s award may be set aside if the arbitrator accepted a bribe.
13. A court’s review of an arbitrator’s award may be restricted.
14. Mandatory arbitration clauses in employment contracts are generally
enforceable.
15. A choice-of-law clause designates the jurisdiction for the litigation of disputes
arising under a contract.
16. The verdict in a summary jury trial is not binding.
17. The goal of mediation is to work out a resolution that benefits both sides to a
dispute.
18. Some cities use online dispute resolution as a means of resolving claims
against them.
19. International treaties never stipulate arbitration for resolving disputes.
20. The United States will not enforce a foreign court’s decision.
MULTIPLE-CHOICE QUESTIONS
1. Milo files a suit against Otis. At the trial, each party’s attorney presents the
party’s case before a judge who hears the dispute and renders a legally binding
decision. This is
a. a mini-trial.
b. a summary jury trial.
c. litigation.
d. not a legitimate form of dispute resolution.
2. Donatello files a suit against Erasmus. Before going to trial, the parties meet,
with their attorneys to represent them, to try to resolve their dispute without the
involvement of a third party. This is
a. arbitration.
b. mediation.
c. negotiation.
d. not a legitimate form of dispute resolution.
3. Lorena files a suit against Milton. Before going to trial, the parties, with their
attorneys, meet to try to resolve their dispute. A third party suggests or
proposes a resolution, which the parties may or may not decide to adopt. This
is
a. arbitration.
b. mediation.
c. negotiation.
d. not a legitimate form of dispute resolution.
4. Bean House Coffees and Java Distributors, Inc., have a long-standing business
relationship that they would like to continue. For this reason, they may prefer to
settle any dispute between them through facilitation because
a. the case will be heard by a mini-jury.
b. the dispute will eventually go to trial.
c. the process is not adversarial.
d. the resolution of the dispute will be decided an expert.
5. The least expensive method of resolving a dispute between Ronald and Sharon
may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
Fact Pattern 3-1 (Questions 6–7 apply)
Morsels Restaurant, Inc., and Nature Foods Corporation dispute a term in their
contract.
6. Refer to Fact Pattern 3-1. A faster settlement of the dispute between Morsels
and Nature may be reached through
a. arbitration because the case will be heard by a mini-jury.
b. litigation because few disputes actually go to trial.
c. mediation because the parties can minimize the procedural rules.
d. negotiation because the dispute will be resolved by an expert.
7. Refer to Fact Pattern 3-1. Oona, a third party, resolves the dispute between
Morsels and Nature. In most states, Oona must issue an award or decision in
writing
a. if the resolution involved arbitration.
b. if the resolution involved mediation.
c. if the resolution involved negotiation.
d. under no circumstances
8. Fair Trade Company and Good Shipping. Inc., have their dispute resolved in
arbitration. The arbitrator meets with Fair’s representative to discuss the
dispute outside the presence of Good’s representative, before determining the
award. If this meeting substantially prejudiced Good’s rights, a court will most
likely
a. do nothing.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside the award.
9. EZ Assembly, Inc., and Factory Outlet Stores have their dispute resolved in
arbitration. The arbitrator makes a mistake in a conclusion of law. This is a
ground for a court to
a. do nothing.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside the award.
10. Orson files a suit against Portia. Before going to trial, the parties meet, with
their attorneys to represent them, to present their dispute to a third party who is
not a judge but who imposes a resolution on the parties. This is
a. arbitration.
b. mediation.
c. negotiation.
d. not a legitimate form of dispute resolution.
11. HoneyBee Foods, Inc., in Illinois, and Jelly Roll Pastries, in Kentucky consent
to have their dispute resolved in arbitration according to the law of Illinois. This
is a ground for a court to
a. compel arbitration.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside any award.
12. Service Employees International Union and Timberline Products, Inc., have
their dispute resolved in arbitration. The arbitrator arbitrates issues that the
parties did not agree to submit to arbitration. This is a ground for a court to
a. none of the choices.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside the award.
13. First Community Credit Union and General Hydraulics. Inc., have their dispute
resolved in arbitration. Before determining the award, the arbitrator meets with
First Community’s representative to discuss the dispute without General
Hydraulics’ representative being present. If this meeting substantially
prejudices General Hydraulics’ rights, a court will most likely
a. compel arbitration.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside any award.
14. Transnational Corporation and United Shipping, Inc., agree to a contract that
includes an arbitration clause. If a dispute arises, a court having jurisdiction may
a. monitor any arbitration until it concludes.
b. order an arbitrator to rule in a particular way.
c. order a party to bring the dispute to court.
d. order a party to submit to arbitration.
15. Lucille files a suit against Murray. They meet, and each party’s attorney argues
the party’s case before a judge and jury. The jury presents an advisory verdict,
after which the judge meets with the parties to encourage them to settle their
dispute. This is
a. a mini-trial.
b. a summary jury trial.
c. early neutral case evaluation.
d. not a legitimate form of dispute resolution.
16. O’Reilly files a suit against Petrarch. They meet, and each party’s attorney ar-
gues the party’s case before a judge and jury. The jury presents an advisory
verdict, after which the judge meets with the parties to encourage them to settle
their dispute. This is
a. a mini-trial.
b. a summary jury trial.
c. court-ordered arbitration.
d. early neutral case evaluation.
17. To resolve a dispute, Ripley in South Dakota and Tyler in Utah utilize Virtual
Solution, a nonbinding online dispute resolution (ODR) service. This limits
these parties’ recourse to the courts
a. not at all.
b. until the ODR service has issued a decision.
c. with respect to any dispute arising between them.
d. with respect to this dispute only.
18. To resolve a dispute in nonbinding arbitration, Alyson in Baltimore and Chuck
in Denver utilize E-Resolve, an online dispute resolution (ODR) service. This
limits these parties’ recourse to the courts
a. not at all.
b. until the ODR service has issued a decision.
c. with respect to any dispute arising between them.
d. with respect to this dispute only.
19. Transcontinental Tours, a U.S. firm, and Victoria Hotels, Ltd., a Canadian firm,
enter into a contract that does not have a forum-selection or choice-of-law
clause. Litigation between Transcontinental and Victoria over a dispute
involving this contract may occur in
a. Canada only.
b. Canada or the United States, but not both.
c. Canada, the United States, or both.
d. the United States only.
20. A clause in a contract between Tall Timber Corporation, a U.S. firm, and Wang
Woods, Ltd., a Japanese firm, specifies that disputes over the contract will be
adjudicated in the United States. This is
a. a domestic-dispute clause.
b. a forum-selection clause.
c. an adjudication clause.
d. an arbitration clause.
ESSAY QUESTIONS
1. Simplex Corporation agrees to deliver a certain grade of silicon to TruTools
Company. When the silicon arrives, TruTools claims that it is an inferior grade.
The parties submit their dispute to Uri, an arbitrator who is an expert in the
silicon industry. Who sets the rules for an arbitration proceeding? Are these
rules likely to be less restrictive or more restrictive than the rules governing a
court proceeding? Why?
2. Nolan contracts with Onsite Games, Inc., to deliver a quantity of video and
computer games to Nolan’s Play+Trade Game Store. At the time for delivery—
just before the beginning of the annual gift-giving season—they disagree over
the number, the price, and the quality of the games. Nolan files a suit against
Onsite in a state court. The state requires that the dispute be submitted to
court-annexed arbitration. What is the difference between voluntary arbitration
12 TEST BANK—UNIT ONE: THE FOUNDATIONS
and court-annexed arbitration? If the dispute is not resolved, or if either party
disagrees with the decision of the arbitrator, will a court hear the case? Explain.