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

Kandor Ltd is considering ADR rather than court proceedings to resolve a dispute with a long-standing customer, Pellam Co. Which of the following is a recognised advantage of ADR over litigation in this situation?

A recognised advantage is that ADR is normally private and less adversarial, which helps preserve the commercial relationship between the parties. It does not create precedent, is generally less formal than court, and enforceability depends on the agreement or award.

  1. ACourt judgments from ADR create binding precedent for later cases
  2. BProceedings are normally private, helping preserve the commercial relationshipCorrect
  3. CThe outcome is always legally enforceable without any agreement between the parties
  4. DProcedural rules are always more formal than in court

Explanation

ADR is typically private and less adversarial, so it helps preserve business relationships and confidentiality. ADR outcomes do not create binding precedent, they are not always enforceable without agreement or award, and ADR is usually less formal than court procedure.

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