Posted: February 5th, 2019
LAW531 LAW/531 WEEK 1 QUIZ
1. When parties agree in advance to adhere to an arbitratorâs decision and award, it is known as binding arbitration appealable arbitrator discretion mediation
2. Which of the following is true of a corporation? Corporation shareholders are subject to unlimited personal liability.
Corporation owners are only taxed once on earnings.
A corporation terminates upon the death of an owner.
A corporation is a separate legal entity.
3. Martha started a flower shop as a sole
proprietor. After 1 year, she was forced to close the shop because business was
so bad. At that time, the business assets totaled $50,000, but the business
liabilities totaled $125,000. Which of the following statements is true?
Marthaâs business creditors can collect only the $50,000 of business assets.
Marthaâs business creditors can collect only the $50,000 now, but if Martha
ever goes into business again, they can get the assets of the new business.
Once Martha terminates the sole proprietorship, she is no longer liable for
Martha is personally liable for the additional $75,000 owed to business
4. Which of the following is true of The Federal
It permits an appeal for all arbitration awards.
It provides that arbitration agreements are valid, irrevocable, and
It governs all types of alternative dispute resolution.
It applies only to breach of contract disputes.
5. Which of the following is true about the choice
of business entity for an entrepreneur?
The choice is determined solely by whether the primary business is
services or goods.
The choice takes into account many factors, including finding an option that
has all the characteristics desired.
The choice is determined by the Internal Revenue Service based on all the
facts and circumstances.
The choice is determined solely by the amount of capital invested.
6. Which of the following is true regarding
If a settlement agreement is not reached in mediation, then the parties
hire a new mediator.
A mediator does not make a decision or an award.
A settlement agreement is never reached with a mediator.
Was created by the Federal Mediation Act of 1925.
7. Which of the following is true in the creation of
a general partnership?
The business name must have the names of all the partners.
The business name cannot be a fictitious name.
The name selected cannot indicate that it is a corporation.
The business cannot operate under a trade name.
8. Which form of alternative dispute resolution
occurs when the parties choose an impartial third party to hear and decide
9. The Black Squirrel limited partnership has been
in operation for many years, but has recently fallen on hard times. The
partners have decided to dissolve, although there are few assets remaining in
the partnership. Shortly after the partnership filed its certificate of limited
partnership, the partners had the foresight to incorporate into their
partnership agreement a provision that, in the event of dissolution, the assets
would be distributed in payment of claims first to limited partners, then to
general partners, then to creditors. Hilda is a limited partner and feels
relieved that she will receive at least a portion of her capital. Henry, one of
the general partners, said that this provision is void and unenforceable. Which
of the following best describes this situation?
The distribution, as called for in the agreement, would be enforceable
if it had been included in any filings related to the limited partnership.
The distribution of assets in the event of dissolution is one of the few
provisions where the Revised Uniform Limited Partnership Act does not allow
The provision placing the partners ahead of creditors is not enforceable,
but the priority of limited partners over general partners is enforceable.
The provision placing limited partners ahead of general partners is
unenforceable, thus all partners would be on an equal footing and ahead of
10. What is the effect of having a corporation as
the general partner of a limited partnership?
The liability of the corporate general partner will be limited to the
amount of its assets.
The limited liability of the corporation will result in the limited partners
having greater liability than they would otherwise.
Each shareholder of the corporation will be treated as a limited partner of
the limited partnership.
Each shareholder of the corporation will be treated as a general partner of
the limited partnership.
11. Which type of business formation is typically
reserved for professionals such as accountants, lawyers, and doctors?
Limited Liability Partnership (LLP)
Limited Liability Company (LLC)
12. Which of the following is true of arbitration?
One party usually drops the case.
A resolution may or may not be reached.
A judicial referee makes recommendations to the parties.
Parties can introduce evidence to support their case.
13. Which of the following is one of the major
purposes of a settlement conference?
To contest the local court rules
To facilitate the settlement of a case
To conduct discovery for a case
To structure a settlement payment schedule
14. George has served Mary with a complaint alleging
breach of contract. Mary has never been sued before and as such, she seeks your
advice on what to do with the complaint. You advise that she
answer Georgeâs complaint but do not provide any affirmative defenses
that George can use against her
answer Georgeâs complaint by admitting or denying the allegations George has
asserted against her
write a letter to the judge saying that George is mistaken
should not respond to Georgeâs complaint as an answer implies an admission
15. Fred and Ginger are general partners in a
business. They decide to purchase a building for the partnership. Ginger will
put up the money for the building, and Fred will complete the remodeling. While
inspecting the building, Fred is informed that the building is packed full of
asbestos. He fails to tell Ginger of the presence of the substance. They buy
the building and go into business. During the remodeling of the building,
people from the neighborhood begin complaining about the dust from the
building. Some of them even threaten to sue. Who is liable?
Fred is liable because he was put on notice of the presence of the
substance. Ginger is not liable because she did not have actual knowledge.
Both Ginger and Fred are liable, regardless of the circumstances, by virtue
of the fact that they are partners.
Neither Ginger nor Fred are liable personally, nor is the partnership, as
they did not put the substance in the building.
Ginger is liable because she is the one who purchased the building. Fred is
not liable, even though he had actual knowledge, because he did not purchase
16. There are two general partners, each of whom
contributes $5,000 in capital to a limited partnership. There are two limited
partners, each of whom contributes $20,000. The total amount of capital
contributed is $50,000. The limited partnership agreement does not stipulate
how profits and losses are to be allocated. Assume that the limited partnership
makes $300,000 in profits. Under the Revised Uniform Limited Partnership
Act (RULPA), how much would each partner receive?
Each general partner would receive $50,000, and each limited partner would
Each general partner would receive $30,000, and each limited partner would
Each general partner would receive $120,000, and each limited partner would
All partners would receive $75,000, regardless of whether he or she is a
general or limited partner.
Alternative dispute resolution (ADR) refers to processes outside of litigation that help parties resolve disputes in a peaceful manner. With rising litigation costs and crowded court dockets, ADR methods like arbitration, mediation, and negotiation have grown in popularity in recent decades. This article will explore three main ADR methods – arbitration, mediation, and negotiation – and discuss their key characteristics, advantages, and limitations.
Arbitration is a private adjudicative process where disputing parties present evidence to a neutral third party, known as an arbitrator, who then issues a binding decision, known as an award. Arbitration is a more streamlined alternative to litigation that allows parties greater control and flexibility over process and outcome (American Bar Association, 2023).
Some key aspects of arbitration include:
Parties must have previously agreed to binding arbitration through a pre-dispute arbitration clause or post-dispute arbitration agreement. Arbitration cannot be compelled without consent (Federal Arbitration Act, 1925).
Arbitrators are typically subject matter experts selected by the parties. Hearings are more informal than court trials, with relaxed rules of evidence and procedure (American Arbitration Association, 2022).
Arbitration awards are final and binding, with only narrow grounds for appeal under the Federal Arbitration Act and state arbitration statutes (Federal Arbitration Act, 1925; California Arbitration Act, 2021).
Arbitration is usually faster and less expensive than litigation. However, costs can escalate with complex cases or multiple hearing sessions (American Arbitration Association, 2022).
Privacy and confidentiality are advantages as arbitration proceedings and awards are not made part of public court records (American Arbitration Association, 2022).
In summary, arbitration provides an adjudicated resolution with finality, while allowing greater flexibility, subject matter expertise, and privacy compared to litigation. However, the binding nature means arbitration awards cannot be appealed except under limited statutory grounds.
Mediation is a voluntary facilitated negotiation process where a neutral third party, the mediator, helps disputing parties communicate and explore resolutions themselves (American Bar Association, 2023). It differs from arbitration in the following key ways:
The mediator has no authority to impose a resolution but facilitates communication and helps parties find mutually agreeable solutions (American Bar Association, 2023).
Mediation focuses on the underlying interests, emotions, and business realities driving the dispute, to find a “win-win” outcome the parties design themselves (Riskin et al., 2014).
Mediation preserves ongoing relationships as the parties control the outcome and solution, unlike adjudicated processes (Riskin et al., 2014).
Settlement agreements reached in mediation are enforceable as contracts but mediation is non-binding so an impasse does not end the dispute (American Bar Association, 2023).
Mediation is usually quicker and less expensive than arbitration or litigation due to its voluntary and facilitative nature (Riskin et al., 2014).
In summary, mediation empowers parties to craft customized resolutions addressing interests rather than legal rights alone. However, the voluntary nature means mediation may not end a dispute if no agreement is reached.
Negotiation is the most basic form of ADR where parties communicate directly to resolve disputes themselves, without a third party neutral (Cohen, 2023). Some key aspects of direct negotiation include:
No third party is involved so parties have full control over process and outcome within legal bounds (Cohen, 2023).
Flexibility to consider a wide range of issues and solutions tailored to the dispute (Cohen, 2023).
Usually the fastest and least expensive ADR method as no third party fees are involved (Cohen, 2023).
However, emotional, psychological, and power dynamics can impede objective evaluation and resolution between opposing disputants (Cohen, 2023; Riskin et al., 2014).
An impasse leaves disputes unresolved without third party intervention like mediation or binding determination like arbitration (Cohen, 2023).
In summary, negotiation provides maximum autonomy but emotional and strategic barriers may inhibit resolution between opposing parties without a neutral facilitator. A skilled mediator can help overcome such barriers in mediated negotiations.
In conclusion, arbitration, mediation, and negotiation are the three primary ADR methods that offer cost-effective, timely alternatives to litigation for resolving disputes. The choice depends on each dispute’s circumstances and the parties’ preferences regarding process, control, finality, and preservation of ongoing relationships. ADR continues growing in use as parties increasingly favor private, flexible options over public litigation.
American Arbitration Association. (2022). The handbook for arbitration advocacy. Juris Publishing.
American Bar Association. (2023). Guide to dispute resolution. ABA Publishing.
California Arbitration Act. (2021). California Code of Civil Procedure, §§ 1280-1294.2.
Cohen, H. (2023). You can negotiate anything. Bantam.
Federal Arbitration Act. (1925). 9 U.S.C. §§ 1–16.
Riskin, L. L., Westbrook, J., Guthrie, C., Reuben, R., Robbennolt, J., & Welsh, N. A. (2014). Dispute resolution and lawyers. West Academic Publishing.
I hope this overview of alternative dispute resolution methods is helpful for your research needs. Please let me know if you need any clarification or have additional questions.