CHAPTER 6
DISPUTE RESOLUTION
DAVIDSON, KNOWLES & FORSYTHE
Business Law: Cases and Principles
in the Legal Environment (8th Ed.)
BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
DISPUTE RESOLUTION

Introduction.
– Chapter discusses questions:
 What is done?
 Why it is done?
 How it all ties together within the
workings of the judicial system in a
civil suit?
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
COSTS OF LITIGATION

Before pursuing litigation, an individual or
business should consider the costs.
 There are direct and indirect costs.
 Amount of fees vary depending on the type
of litigation.
 Parties should consider alternate dispute
resolution.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
CLIENT’S INTERVIEW
WITH A LAWYER

Consult your local bar association to refer you to an
attorney.
 Once having an attorney ask him/her questions.
– Including payment terms.
– Opportunities to negotiate or arbitrate a
settlement.
 Discuss, read, and sign the client-attorney contract.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
INVESTIGATION OF THE FACTS

Lawyer gathers information concerning the
case.
 Once all the information is in the file, the
preliminary investigation is finished.
 Lawyer determines if there is basis for a
suit.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
NEGOTIATION OF A SETTLEMENT

Letter of notice is sent to the defendant.
 Defendant negotiates a settlement with the
plaintiff.
 Plaintiff can accept or reject the settlement.
 If plaintiff rejects settlement can initiate a
suit by filing a complaint before the statute
of limitation expires.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
A CIVIL SUIT

Filing the Suit.
 Pretrial Proceedings.
 The Trial.
 Post-Trial Proceedings.
 A Comment on Finality.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
A CIVIL SUIT

Filing the Suit:
– Complaint should be definite and contain
sufficient information for the defendant to
understand the nature of the litigation.
– The defendant is served with a copy of the
complaint.
– If defendant does not answer the complaint, the
court will enter a default judgement. Defendant
files an answer, trial process begins.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
A CIVIL SUIT

Pretrial Proceedings:
– Depositions.
– Interrogations.
– Production of Documents and Things.
– Physical or Mental Examination.
– Request for Admission.
– The Result of Discovery.
– Pretrial Conferences.
– Demurrer.
– Motion to Dismiss.
– Motion for a Summary Judgment.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
A CIVIL SUIT

The Trial:
– Jury Selection.
– Removal of Judges.
– Opening Statements.
– Direct Examination.
– Expert Witnesses.
– Cross-examination.
– Motion for a Directed Verdict.
– Closing Arguments.
– The Verdict.
– Judgment.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
A CIVIL SUIT

Post-Trial Proceedings:
– Motion for a New Trial.
– Appeal.

A Comment on Finality:
– All appeals have been exhausted.
– The court issues a final judgement.
– The subject matter of the lawsuit is finally
decided between both parties.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
NEED FOR ALTERNATIVES
TO A CIVIL SUIT

Lawsuits are expensive and timeconsuming.
 Businesses may prefer an alternative form
of dispute resolution.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
ADR





ADR: Methods of resolving disputes other than
traditional litigation.
Involves various alternatives.
Allowing parties to settle legal disputes without
courts.
Generally voluntary, but often written into
contract language.
Legislatures and some courts require ADR
procedures for settling differences.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
ADR: BENEFITS

Lessens burden of judicial system.
 Quicker and less expensive than litigation.
 May help businesses avoid becoming
adversaries.
 Encourages partnering and building better
business relationships.
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BUSINESS LAW: Cases & Principles
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ADR: OPTIONS

Negotiation.
 Mediation.
 Arbitration.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
NEGOTIATION





Earliest and simplest form of ADR.
Involves discussion and resolution of controversy.
Requires parties to recognize logic in handling
dispute without resorting to the courts.
Demands compromise and finding common
ground.
Parties must be willing to negotiate.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
MEDIATION

Involves the use of a third party.
 Helps parties reach mutually acceptable
resolution to dispute.
 Listens and coaches parties in finding
compromise.
 Usually involves an impartial third party
without financial or professional ties to the
parties to the dispute.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
MEDIATION METHODS

Caucusing: mediator meets with each party
to the dispute separately.
 Shuttle Mediation: parties to the dispute are
physically separated and mediator runs
messages between them.
 Confidentiality critical for mediation
methods to succeed.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
MEDIATION

Standards of Conduct:
– Model standards of conduct for mediators has
been drafted.
– Standards are non-binding.
– Standards concentrate on the similarities
between the approaches.

Compensation:
– No hard-and-fast rule regarding the
compensation of mediators.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
ARBITRATION





Out of court procedure for settling dispute.
Dispute submitted to one or more neutral parties
referred to as an arbitrator.
Arbitrator’s decision is binding and is called an
award.
Parties can not appeal arbitrator’s decision.
Should party fail to comply with award, other
party files petition with court seeking
enforcement.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
ARBITRATION

Controls on Arbitration:
– States have developed their own individual
approaches and laws to address arbitration
issues.
– Federal Arbitration Act covers all transactions
involving interstate commerce.
– EEOC v. Waffle House (2002).
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
ARBITRATION

Statutory Coverage:
– Arbitration is not exclusively applied to state-law
issues.
– Arbitration is applicable at state, national, and
international levels.
– Statutory law is clarified by judicial interpretation at all
levels.
– Federal Arbitration Act provides federal guidelines to
follow.
– At the international level, arbitration regulated by UN
Convention on Recognition and Enforcement of
Arbitral Awards.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
ARBITRATION

Organizations:
– Numerous organizations which support
arbitration and provide forum for arbitration to
occur and the arbitrator.
– These include American Arbitration
Association, Judicial Arbitration and Mediation
Services, Federal Mediation and Conciliation
Board, and the International Chamber of
Commerce.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
MINITRIAL

Procedure to settle dispute between
companies.
 Informal, out-of-court procedure.
 Conducted by neutral advisor.
 Involves shortened case presentation.
 Senior executives from both parties dispute,
who try to reach mutually agreeable
settlement.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
RENT-A-JUDGE TRIAL





Procedure entails parties to dispute hiring a judge.
Judge hears their case and renders judgment.
Quicker and less expensive than normal trial.
Proceedings are private and do not become part of
the public record.
Typically decisions made through this alternative
can be appealed to public appellate courts.
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BUSINESS LAW: Cases & Principles
Davidson • Knowles • Forsythe 8th Ed.
SMALL CLAIMS COURT

Relatively quick and inexpensive way of
resolving small legal disputes.
 Do not utilize legalese and standard rules of
evidence.
 Public courts with limited subject matter
jurisdiction
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