ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
Two companies, Alder Ltd and Birch Ltd, are in a dispute over a supply contract. Their directors meet directly, without any third party, to try to settle the matter by discussion and compromise. Which dispute resolution method are they using?
They are using negotiation. Negotiation is a process in which the parties discuss the dispute directly and try to reach a compromise themselves, without any neutral third party being involved to facilitate or to decide the outcome.
- ANegotiationCorrect
- BMediation
- CArbitration
- DLitigation
Explanation
Negotiation is direct discussion between the parties themselves, with no neutral third party. Mediation requires an independent mediator. Arbitration and litigation involve a third party who decides the outcome.
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