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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Evertis Ltd and Fonar Ltd settle a dispute through mediation and sign a written settlement agreement. Later Fonar Ltd refuses to pay the agreed sum. What is Evertis Ltd's usual position?

Evertis Ltd may enforce the settlement agreement as a contract. Mediation itself produces no binding decision, but once the parties sign a settlement, it is an ordinary contract and a breach, such as non-payment, can be pursued through the courts.

  1. AIt must restart the mediation because the settlement has no legal force
  2. BIt may enforce the settlement agreement as a contractCorrect
  3. CIt may only seek a further mediator's opinion

Explanation

Although mediation itself is non-binding, a signed settlement agreement is a contract and can be enforced like any other contract if it meets contractual requirements. Option 0 wrongly says it has no force.

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