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Case 1

Imagine that you are a tent manufacturer. Your supplier of tent fabric
routinely supplies you with appropriate water-resistant fabric to construct
your tents, so that you can produce your products and bring them to market.
After many years of a good working relationship, your fabric supplier
delivered nonconforming goods. Specifically, the fabric delivered was not
water-resistant, despite your need for water-resistant fabric to produce your
tents. However, on your notifying the supplier of the problem, the supplier
denied that the fabric was nonconforming to your order. You refused to pay
for the goods. The fabric supplier insisted on payment before future delivery
of any additional fabric. Without water-resistant fabric, you cannot continue
to produce your tents.
How you will proceed to resolve this dispute? What benefits will you get from
your litigation method? What are your considerations in selecting a particular
method of litigation?

Imagine that after negotiating with your fabric supplier, the following facts
emerged: The fabric supplier believed that it sent the correct fabric to you,
because one of your new employees inadvertently ordered the wrong fabric.
You reviewed your business records and determined that this allegation was
true.
With the changing situation do you still believe that your decision was right?
Or there were some other options by which you could easily escape the
embarrassment and hard feelings that have been caused from your decision?
1.

Case

Summary

(based

on

personal

understanding)

2. The decision of action to be taken (describe the decision in


relation

to

the

case)

3. State the advantages/disadvantage s of the action taken (in


relation

to

the

case)

summary = my supplier of tent fabric with whom I maintain a


good business relationship for several years now, delivers faulty
goods that do not adhere to the requirements of fabric that have
been maintained and followed until now. The supplier knows and
has always complied with the guideline to provide water-resistant
fabric to my company. Upon negotiation, the supplier denies the
allegation that he failed to respect the guidelines for the fabric
mentioned by an employee, who happens to be new in the
company. The supplier now demands payment for the goods.
However, without water-resistant fabric I am unable to produce
the

tents.

The question before me is whether I should pay my supplier for


what was not his own fault and continue to maintain a good
business relationship with him, or deny payment and save my
company

from

loss.

2. To maintain a good working relationship with my current


supplier is a bigger consideration for my company in the longterm than to save short-term losses in production: to get a new
supplier would mean higher switching costs because I dont know
if I would be able to find a new supplier fairly fast who would
provide me the same fabric with the same quality, same quantity
and in the same procedure that my current supplier has been
doing for so many years. Whether the new supplier would be
reliable and big enough to handle my orders is uncertain. I may
also have to pay penalty for termination of contract. There could
be many other immediate costs for changing suppliers that were
related to interaction with the old supplier, such as, discount
programs,

friendly

environment,

his

specific

knowledge/experience with the products. It may also hurt my


reputation because my current supplier may warn other supplying

companies of the negligence of my employees and the losses I


made him suffer due to no grave negligence of his own.
Therefore, it will be wise for me to maintain my relation with my
current supplier instead of choosing high switching costs, which
will cost the company both financially and relationally. Since
negotiation was tried and failed, it will be the best option to go for
mediation in this case to help secure the a bargain with the
supplier at minimum cost on both sides as well as rebuild the
weakened

business

relation.

3. The biggest advantage of a mediation procedure in this case


would be an judge/mediator chosen by both parties would preside
over the facts of the dispute and facilitate the proceedings that
will lead to a satisfactory compromise. Since the mistake and hard
feelings towards the supplier caused were initiated from my side
without proper investigation in the beginning of the events, there
will be greater weight on me to negotiate and strike a deal with
the supplier that will cut down losses for both parties. The
consideration is to see that the supplier gets his payment and that
my company does not suffer a huge loss for the wrong fabric
goods. Another advantage is that this will be relatively more
confidential than an arbitration process would be. Moreover, not
anymore discovery or investigation is required in this case as the
facts are pretty much clear. Therefore, the only issue left is to
restore relations with the supplier and reduce the loss on the
companys part. A voluntary settlement would be easier to reach
with effective communication, unlike in an arbitration where the
arbitrator makes the decision and it is binding upon the parties to
accept

the

award.

Arbitration is also more publicized and runs like a trial, and is


more

well

suited

for

contract-related

disagreements.

disadvantage to mediation could be an impartial mediator and an

unsettled agreement between the parties, which may lead to


formal litigation.
KE1.
Case 2
You work for a lawyer in Fayetteville who has a general practice. The lawyer
asks for your help in dealing with a lawsuit recently filed against a business
client, Kilpatrick's Engineering Systems (KES). The plaintiff is Schultz Beer
Co., a micro-brewery begun by a new resident who retired to the area from
Milwaukee.
Schultz claims a breach of contract by KES, which supplied Schultz with a
water filtration system. The system did not work as anticipated because of
the presence in the water of small pieces of debris, such as bottle caps.
Schultz claims that KES representatives were aware of the condition of the
water, and KES says they were not. Without getting into technicalities, the
lawyer explains that the case involves difficult factual issues as well as legal
issues on which the law is not clear. She says that she cannot get a good
idea of the litigation risks to KES until there is further investigation and
discovery.
Schultz claims that it suffered losses exceeding $50,000 as a result of the
breach, and is asking for that amount in its complaint.
KES has been in business in Fayetteville for more than 20 years. This is the
fifth complaint it has received about one of its systems in the past five years.
(The other complaints were resolved without formal suit or an attorney's
involvement, but Kilpatrick and Schultz wound up in a shouting match when
they tried to discuss the problems with the filtration system.) KES believes
that it did nothing wrong and does not want to be seen as a "soft touch" by
either Schultz or the community. On the other hand, it is concerned about its
reputation.

The plaintiff's lawyer has written to your boss and proposed the use of
binding arbitration. Since your boss knows you took an ADR course in law
school, she asks you to write a memorandum covering the nature and
advantages and disadvantages of various ADR procedures in the context of
this case.
Please prepare the memorandum, discussing (a) binding arbitration, (b)
mediation, and (c) court-annexed, non- binding, arbitration (recently adopted
in the state courts pursuant to the work of the ADR Commission and
applicable to cases alleging damages of less than $100,000). In addition to
describing the pros and cons of these mechanisms, please list other
information you believe would be needed from the client to fully respond to
the partner's request.
You need not follow any special memorandum format, but be sure to
organize your answer in parts (a), (b), and (c)in accordance with the format
of the question.

Case 3
A partner in your law firm has come to you for advice involving her
representation of a 32-year old professional basketball player injured in a
serious automobile accident where he tore his Achilles heel. There is a good
chance that he will never be able to play professional basketball again, and
his rehabilitation will take many months. At the time of this accident, the
player was making Taka5,000,000.00 a year and would be a free agent at the
end of the season where he might be able to command taka10,000,000.00 a
year. Although the player was a passenger at the time of the accident, he
had given the driver some marijuana, and they were both smoking it at the
time of the accident. Fortunately, no arrests were made, and the player
thinks no one knew about the marijuana. The player is looking for

taka500,000 for medical expenses, taka100,000,000 in lost future earnings,


and taka20,000,000 for pain and suffering. The partner tells you that the
liability is reasonably certain since the player was a passenger, but there is a
question about damages because the player had an earlier Achilles heel
injury in college that had been repaired. There is also the question of
contributory negligence since the player had supplied the marijuana to the
driver.
Although there has been some discovery, the defendant has not yet learned
of the marijuana use, but the partner thinks it is only a matter of time that
the defendant will discover this.
Although the trial is not scheduled to start for at least six months, the
partner fears that the defendant is on the verge of discovering the marijuana
use and that his will substantially diminish the recovery. The partner tells you
that the defendant's lawyer called today and proposed submitting the case
to some form of alternative dispute resolution. The partner tells you that she
does not know much about ADR. She asks you do some research and prepare
and fax a memorandum to her that will help her decide how to respond to
the defense lawyer's proposal. Specifically she asks you to deal with the
following questions:
What 3 ADR methods would you recommend, pointing out the advantages
and disadvantages of each method?
Which method would you recommend trying first stating the reasons for that
recommendation?
Further investigation may lead to the discovery of marijuana = favors N
But since the player is asking for a big sum of money = the stakes are high, medical records need to
be presented, good evidence required
Arbitration seems suitable for big claim = simplified rules of claim and limited discovery; award is
final and binding
It will still be a private dispute resolution = the parties will consent to submit an agreement