QUESTION: 21

Verity Fashion is a clothing manufacturer and has an order to create 10,000 pairs of flipflops for a retailer for the summer. The order was placed over the phone in February. The order has been completed and has been boxed up ready for delivery. The retailer calls Verity Fashion in June and says that the order is no longer required.
What action can Verity Fashion take?

sue for damages as the flip flops have already been made and this incurred costs
nothing- there is no written contract in place
subcontract the manufacturing of the flipflops to a third party
claim on insurance

Answer(s): A

Explanation:

Verity can sue for damages. The order was placed over the phone meaning that there was a verbal contract in place. Contracts do not need to be written to be enforceable so option 2 is incorrect. There is no termination clause mentioned in the question so you can assume that there isn't one. This means that the retailer is committing a breach of the verbal contract by cancelling the order. Verity could therefore apply for damages. (Whether or not they'd be awarded is a different matter!). This question tests your understanding of when contracts can be terminated and remedies for breaches. See p. 134.

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QUESTION: 22

Which of the following is not a form of ADR (Alternative Dispute Resolution)?

mediation
negotiation
arbitration
conciliation

Answer(s): B

Explanation:

Negotiation isn't an alternative dispute resolution because it's supposed to be the 'default' dispute resolution- the one you automatically do when a problem occurs. Only if negotiation fails should you turn to ADR. P. 142

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QUESTION: 23

Franky B's is a popular restaurant chain which is seeking a resolution to a conflict it has with its supplier of Fried Chicken. It is looking for a dispute resolution that does not involve the court but in which an expert third party will make a binding decision.
Which is the most suitable dispute resolution method for Franky B's?

litigation
adjudication
conciliation
mediation

Answer(s): B

Explanation:

This is Adjudication. The other answers are incorrect- litigation involves the court. Conciliation and mediation do not provide binding decisions. P. 143

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QUESTION: 24

Perry is seeking a resolution to a conflict he has with his supplier. He wants a third party to make a binding and legally enforceable decision and wants the issue to remain confidential. He is considering litigation. Is this the best solution for Perry?

yes- litigation is the most appropriate for his requirements
no- Perry should try mediation
no- Perry should try Adjudication
no - Perry should try Conciliation

Answer(s): C

Explanation:

Perry should try adjudication. Litigation is public so there would be no confidentiality. Out of the four options only adjudication would provide Perry with what he needs; a binding decision which is confidential. See p.146 for more information on litigation.

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