Alternate Dispute Resolution, or ADR, is a method that is used to settle disputes outside of the courtroom. This movement to use ADR began in the 1970’s and has surged ahead since. While there are many reasons to use this process, the biggest of these is the cost efficiently that it presents. (Frey, 2003) Through the avenues this method presented, it has helped lessen the case load on actual courtrooms and allowed more hastier trials. In the end, this helped the judicial system save money and time. Another reason this process was implemented was because it was a way to negate conflict that could arise out of traditional judgments. The United States courtrooms are of adversarial nature, which in the end defines a “loser” and a “winner.” By keeping these kinds of disputes out of the courtroom, this was eliminated. With the reasons why this process exists being defined, next we will discuss the many forms of ADR.
While there are many avenues that can be used during ADR, the most common forms used are mediation, arbitration, and negotiation. (Alternate Dispute Resolutions, n.d.) The first two of these utilize a third party to help solve the dispute, but the third party plays a different role in each scenario. The final avenue, negotiation, is only between the two disputing parties. Negotiation is typically the first of these used, followed by mediation and arbitration. Reasons for this order is because of cost associated and the legality of each method.
Since negotiation is only between the two parties, it is the most cost effective. Along with that, this process is voluntary and not legally binding. (Negotiation, n.d.) To solve a dispute while using this method will save each party money and stress. But if this process does not work, the parties can choose to use mediation or arbitration as their next step, with most ending up in mediation. This option is not as cheap as negotiation, but not as expensive as arbitration.
During the usage of mediation, the parties agree to meet under a supervising individual called a mediator. This individual is hired by the parties to help them solve the dispute at hand but does not have a direct say so on the outcome of the meeting. (Staff, 2019) Most important thing to remember about mediation is that is not legally binding, therefore any agreements made cannot be legally enforced. Again, if the parties cannot agree during this stage, next to be sought would be arbitration.
Most commonly this is the final step because of the cost associated with it and that it can be legally binding in most situations. (What is Arbitration? n.d.) The biggest difference between this and mediation is that the third party involved makes the decision based on the facts presented. Also, this method cares less about emotions and is focused more so on the law.
When applying ADR to the situation presented between Katrin and Leo, the best option to settle their dispute would be mediation. In mediation, they could air their grievances, while working on an agreement. And to achieve this peacefully, the supervision of a mediator is extremely helpful. Not all mediators have a specific background in law, but at the same time, an individual serving as a mediator should have some knowledge of the situation at hand.
From a legal standpoint, this case is considered a breach of contract. This is because the elements of a contract were made when Katrin signed the invoice for the purchase of the items from Leo. With there being an offer made and an acceptance of that offer, it essentially formed a valid contract. (U.C.C. § 2-206) The issues of the contract made between these parties is the vagueness of the language used and the miscommunication orally.
In this scenario, Katrin could seek legal remedies for the breach of contract against Leo. To achieve this, she would have to show evidence that Leo broke the contract and that it caused damages to her or her business. Since he did not deliver the kind of vodka she asked for and when it was delivered, it was late, Katrin made the decision to give all the liquor for free to keep the customers from leaving. This shows that because of Leo’s actions and failures, she lost money.
As the defendant in this situation, Leo also has some options. First avenue that could be explored is that legally, he has a chance to make the situation right or “whole.” In order to do this, he could offer to give Katrin the correct vodka and glasses. But on the other hand, Leo could do nothing and not be in the wrong. This is because she accepted the non-conforming goods that where delivered, instead of sending them back because it was wrong. (UCC § 2-602)
In this scenario, a mediator would recognize that while these two had a legally binding contract, it was not under the terms that Katrin believed it to be. This is all because of the contract that she signed and accepted. While oral contracts can be enforced, those in writing will hold much more weight in a legal sense. The contract that was signed was for ten cases of vodka and 300 vodka glasses. Never does it mention a specific kind of vodka or glassware. Although, she communicated that she wanted a certain liquor, she failed to get this in writing and she also accepted the goods.
If these parties decided to try mediation before going to court or another avenue, it would be important for them to understand that they may have to sacrifice somethings in order to come to an agreement. For example, Katrin would have to come off her position that she is not going to give Leo any money and Leo would have negotiate this amount. But if he was to stick to his guns and demand $2100, Katrin would more than likely tell him he is not going to get it. Another reason this meeting is important for both parties to come to an agreement in, is because of the relationship between the two. If an amicable decision is made, it could possibly lead to their friendship being repaired.
Alternate Dispute Resolutions, (n.d.) Retrieved from https://www.law.cornell.edu/wex/alternative_dispute_resolution
Frey, A. M. (2003) Alternate Methods of Dispute Resolution. Retrieved from https://purdueuniversityglobal.vitalsource.com/#/books/1111505209/cfi/6/2!/4/2@0:65.4
Negotiation, (n.d.) Retrieved from https://www.law.cornell.edu/wex/negotiation
Staff, P. (2019) The Mediation Process and Dispute Resolution. Retrieved from https://www.pon.harvard.edu/daily/mediation/dispute-resolution-how-mediation-unfolds/
UCC § 2-206. Retrieved from https://www.law.cornell.edu/ucc/2/2-206
UCC § 2-602 Retrieved from https://www.law.cornell.edu/ucc/2/2-602
What is Arbitration? (n.d.) Retrieved from https://www.wipo.int/amc/en/arbitration/what-is-arb.html