Fact Pattern 3-2
Ellen contracts with James to be her stockbroker, making stock trades for Ellen's account. Ellen need not pre-approve the trades that James makes, only trades for more than $20,000. Ellen and James include a clause stating "that in case of any disputes arising out of this contract; the dispute shall be arbitrated using the rules of the New York Stock Exchange."
Ellen learns that since signing her contract with James, he has routinely been making trades worth more than $20,000 without her permission, and losing money.
-Refer to Fact Pattern 3-2. If Ellen and James were to mediate their dispute, rather than arbitrate (assume this is ok), what would they need to do?
A) select a mutually agreed upon mediator
B) present their dispute to a court
C) get a court to select an arbitrator
D) nothing besides sitting down together
E) prepare a brief for consideration of a panel

Question

Quizplus · Accepted Answer

If Ellen and James were to mediate their dispute, they would need to select a mutually agreed upon mediator. Mediation involves a neutral third party helping the parties to come to a negotiated resolution, while arbitration involves a neutral third party making a binding decision. The clause in the contract specifies that disputes must be handled through arbitration, but if both parties agree, they can choose to use mediation instead.

Fact Pattern 3-2 Ellen Contracts with James to Be Her Stockbroker, Making Stock