As the vice president for sales of a company that manufactures and sells commercial carpet, you notice an alarming increase in the number of customers filing complaints with your company service representatives. Of particular importance is the number of complaints that involve claims in excess of $10,000. Because these large dollar amounts can lead to lawsuits being filed, you want to investigate what is causing the increase in complaints and how your company can be processing these complaints to avoid burdensome litigation.

Question

1. What steps should you take to discover, in the most accurate and efficient manner, the reasons customers are filing complaints?
2. What is the distinction between mediation and arbitration?
3. Should your company's sales contracts include a clause that requires the parties to attempt resolution of the dispute by mediation? By arbitration? By some other mechanisms?
4. If your company's sales contracts did include a dispute resolution (other than litigation) clause, when can the courts still be used?

Answer 1

Answer:

Alternative dispute resolution (ADR) comprises a variety of techniques that are designed to resolve conflicts without pursuing legal action. Executing them does not always work for every conflict, but it is a favorable alternative to more costly and traditional methods of resolution.

Mediation and Arbitration.

The most accurate method in determining the customers' reasons for filling complaints is to create a focus group that can be used in the determination of the specifics behind each complaint. These groups will be necessary for providing a more targeted complaint which would be easier and simple to deal with.

The difference between arbitration and mediation lies in the nature of the solution. In mediation, the mediator is a disinterested and an unbiased third party who helps the disagreeing parties to find a solution which is not binding. On the other hand, in arbitration, the problem is arbitrated by a qualified person, foe instance a retired judge or attorney and the solution found is binding.

The company should include a clause which mandates all issues be resolved by alternative dispute resolution methods, and in case they don't work out, then litigation can be used. This helps address the issues a less costly way than litigation.

Litigation may be used if mandatory dispute resolution methods fail to result in an agreement that is satisfactory to both parties or concludes with an award which does not satisfy both parties as a matter of law.