Future Business Leaders of America (FBLA) Business Law Practice Exam

What does alternative dispute resolution (ADR) entail?

1. A method for resolving disputes through litigation

2. A process to resolve disagreements outside the courtroom

3. A formal procedure involving judges and juries

4. A type of legal arbitration mandated by court

The correct answer is: A process to resolve disagreements outside the courtroom

Alternative dispute resolution (ADR) is a broad term that encompasses various methods used to resolve disputes without resorting to litigation in a courtroom. The essence of ADR is to provide parties involved in a conflict with alternatives to the traditional legal process, which can be time-consuming, costly, and adversarial. The correct answer highlights that ADR processes, such as mediation and arbitration, take place outside of the courtroom setting. These methods can be less formal, allowing for more flexibility and often a more amicable resolution compared to litigation. Mediation involves a neutral third party who helps the disputing parties find a mutually satisfactory solution, while arbitration involves a neutral third party making a binding decision after hearing both sides. The other options involve processes that are characteristic of litigation, which is conducted in a courtroom setting with judges, juries, and formal procedures, unlike ADR which seeks to resolve issues through negotiation and compromise in a potentially less confrontational environment. Understanding the concept of ADR is essential for recognizing the variety of ways disputes can be settled outside the formal legal system.