Question

Fred of Fred’s Fabulous TV and Stereo Emporium and Sue of Sue’s Electronic Supply have been doing business with one another for over 10 years. Initially Fred was quite happy with the relationship and found Sue’s service to be excellent. Over the past year and a half, however, shipments form Sue’s Electronic Supply have been late with increasing, and alarming, frequency. Fred has spoken to Sue about this, and while the problem was solved for a short time, it has recently begun to be a problem again. On the other hand, Sue’s prices are the lowest that Fred has managed to find.

From Sue’s perspective, the relationship also began as prosperous. Recently, however, Fred has hired a new accounts payable clerk, who regularly misses the due dates for payment and sends the money late. Sue also has suppliers and finds this inconvenient and that her relationships with her suppliers are deteriorating. As was the case with Fred, Sue has called and spoken to the clerk, which improved things briefly, but they shortly reverted to late payments.

Last week Fred ordered a shipment of TVs and DVD players from sue in preparation for a sale that he was having this past Saturday. He advertised the sale in the newspapers and on television and had clowns and an elephant on hand. The shipment of merchandise did not arrive on time and Fred was forced to give rain-checks to his customers. He believes that he lost significant business. When he called Sue, she told him that she was still waiting for payment from the last shipment, which was overdue, and was not at all sympathetic.

In light of the foregoing, and assuming that direct negotiation between the parties has not been successful, answer the following questions:

(a)        List, and explain, the dispute resolution mechanisms available to Sue and Fred and provide three advantages and disadvantages for each (please explain your answers thoroughly).

(b)        If you were advising Fred as to how to proceed, which one of the available mechanisms would you suggest he select and why and which ones would you reject, and why?

Answer 1

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Dispute resolution Mechanisms

1. Mediation

Objective - The objective of mediation is for an impartial outsider to enable disputants to come to agreement all alone.

Advantage : An expert mediator works with the clashing sides to explore the interests fundamental their positions, No pressure on either side, Ability for disputants to vent their emotions and completely explore their complaints, less costly than litigation.

Disadvantage : Time taking, mediation often fails due to extreme demands from both ends, appeals in the court of law post mediation is possible.

2. Arbitration

Objective - In arbitration, an unbiased outsider fills in as a judge who is in charge of settling the dispute.

Advantage : The arbitrator tunes in as each side contends its case and displays important proof, at that point renders a coupling choice, Direct face off between the disputants, less costly than litigation, no appeals in the court of law post arbitration

Disadvantages: Use of lawyers in arbitration can often lead to failure of negotiation, tedious process, issues may get elevated or heated up in argument between the disputants

3. Litigation

Objective - Common litigation regularly includes a respondent going head to head against an offended party before either a judge or a judge and jury.

Advantage : The judge or the jury is in charge of gauging the proof and making a decision. Information passed on in hearings and preliminaries as a rule enters the general population record. Decision is binding in nature.

Disadvantages: Costly process, tedious in nature and may lead to reputation damage for the business.

B)

If I were advising Fred as to how to proceed, I would advise him to move forward with Arbitration and reject mediation and litigation. Here, Sue would be able to explain to Fred with proofs on why the shipments were delayed from his end. He could show the proofs for the payment data from accounts payable clerk, who regularly misses the due dates for payment and sends the money late. Sue could make Fred understand his part of the business where has suppliers to be paid on time and how actions of the accounts payable clerk has led to Sue straining her relationship with her suppliers.Fred could then ponder on the actions of the accounts payable clerk and how it had been indirectly affecting his business.

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