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Management and Organizational Studies 2275A/B Lecture Notes - Small Claims Court, Traffic Collision, Punitive Damages

Management and Organizational Studies
Course Code
MOS 2275A/B
Philip King

of 9
Business Law Chapters 4 & 28
Chapter 4: Dispute Resolution
Business Law in Practice
The Motor Vehicle Accident delivery truck collision
- Report incident and possible injuries to insurer
- If properly covered; insurance will deal with damage to vehicles and
legal claims made by the injured parties
- Must provide insurer with immediate complete and accurate info
- If insurance thinks injured parties are looking for more compensation
than needed; it may resist payment
- Insurance premiums will probably increase
- Minimal involvement of legal system as long as insurance company
pays the claim
The Bylaw Change changed bylaw for waste disposal; environmental
handling fee imposed on electronic equipment at purchase; electronic waste
banned from landfills
- Could contact municipality prior to the change of the bylaw
- Little change of successfully challenging the bylaw in court
- Could consider asking for an amendment or exception
- Little possibility that a legal dispute will arise from this matter
- Disposing of customers old office supplies will have an extra cost now;
they could stop accepting it and risk customer dissatisfaction
- May have to pass environmental fees to customers with increased
The Delinquent Customer Failed to pay account due to financial difficulty
- May indicate failure in credit procedures
- Can either; give opportunity to recover; accept less than full amount;
write of debt; or take steps to be paid (selling debt to collection
agency, suing, or filing a claim)
- If debt is not large it is wise to avoid legal dispute
The Dissatisfied Customer not paying account b/c they feel service is
- Customer may claim compensation
- Long term relationship is in jeopardy
- Look at contract to determine liability
- May have commercial liability insurance (must immediately notify)
- Is a legal dispute (refusing to pay and criticizing the goods and
The Damaged Goods shipment is damaged; supplier not taking
- Cannot be sold (unless discounted)
- Review contract
- May develop into legal dispute
The Problem Employee
- Internal matter
- Risk management plan would specify consequences
- Legal dispute if employee is fired with no termination pay
Resolving Disputes through Negotiation
Clarification of the Situation
- Determine nature and extent
- Contact both sides
- Set priorities
- Determine when legal advice is required
- Objective is to resolve as quickly as possible
- Relationships not be seriously harmed
- Informal and inexpensive
- Not governed by technical rules
- Preferable to judges resolution
- Majority of disputes solved through negotiation
- If insured must allow insurer to conduct negotiations
The Negotiation Process
- Success depends on:
1. Willingness of parties to compromise
2. Nature and significance of dispute
3. Priority given to resolution
4. Effectiveness of those involved
- Parties choose their own negotiators (employees lawyers etc.)
When Negotiations Fail
- No party is prepared to compromise further
- Choose to concede and cut losses or risk the expenditure of more
money and time
- Look at what is in the best interests of the organization long term
To Proceed or not to Proceed with a Legal Dispute
- What steps are available? How long will they take?
- Can the business devote the resources necessary?
- Will it affect the reputation?
- Is the relationship with the other side valuable?
- Will the relationship be harmed?
- Likely cost?
- Does the other side have assets to pay the claim?
Alternative Dispute Resolution
- Mediator helps parties to reach their own compromise
- Helps clarify the other point of view
- Refrains from evaluating, judging, or deciding the outcome
- Arbitrator is more formal
- Hears both sides
- Makes definite ruling after considering both submissions
- Ruling is binding (means that the decision is final and can be enforced
in the court)
- Often arbitration results from a term in the contract
No mandatory qualifications for ADR practitioners
ADR is popular for international disputed because there is not international
legal system/courts
Suitability of ADR is affected by the nature of the relationship between the
parties and the circumstances
Likely to be successful if:
- Interested in achieving compromise
- Wish to maintain commercial relationship
- Quick resolution in ongoing transaction
- Dispute is complicated (would be expensive)
- If It is a private matter
ADR Sources
- When dispute resolution is included in contract
- Can agree on ADR at any time
- Can be used for customers to submit and resolve complaints
Does not always resolve problem
The Litigation Process
Can harm relationships
No guarantee of success
Investment of money, time and commitment
Can drain resources
Source of stress
Slow, expensive and risky
Legal foundation and outcome of the claim governed by legal rules in
common and statute law
Class Action lawsuit launched by one person representing a larger group
whose members have similar claims against the defendant
Limitation Period the time period specified by legislation for commencing
legal action (ex action based on breach of contract must start within 6 years)
Commercial Litigation (civil)
- Costs are borne by litigants
- Recovery of compensation comes from losing party
- Only involvement of government is the provision of the administrative
structure, court facilities, judges etc.
- No government funding for litigants (exception of legal aid in
divorce/custody suits)
Business will either start lawsuit as plaintiff or be sued as defendant