Bill Buyer and Sam Seller are both dentist. Bill is relocating to be closer to h

Question

1. Bill Buyer and Sam Seller are both dentist. Bill is relocating to be closer to his aging parents and Sam would like to retire. Bill Buyer has agreed with Sam Seller to purchase Samâ€s orthodontics practice. Ever diligent, Bill has an attorney help draw up the agreement. However, both Bill and Sam rely on Sams own accounting records. The Attorney includes several clauses common in business sale transactions. One such clause provides Sam will pay Bill liquidated damages in the amount of $10,000 if Sam makes any material misrepresentation of the financial condition of the business. Four months after the sale Bill realizes that Sam overstated receivables by $15,000 in the final accounting before the sale. Bill would like to recoup this money. Is arbitration, negotiation, or mediation an option?

1. Bill Buyer and Sam Seller are both dentist. Bill is relocating to be closer to his aging parents and Sam would like to retire. Bill Buyer has agreed with Sam Seller to purchase Samâ€s orthodontics practice. Ever diligent, Bill has an attorney help draw up the agreement. However, both Bill and Sam rely on Sams own accounting records. The Attorney includes several clauses common in business sale transactions. One such clause provides Sam will pay Bill liquidated damages in the amount of $10,000 if Sam makes any material misrepresentation of the financial condition of the business. Four months after the sale Bill realizes that Sam overstated receivables by $15,000 in the final accounting before the sale. Bill would like to recoup this money. Is arbitration, negotiation, or mediation an option?

Explanation / Answer

Agreement provided that Sam will pay Bill liquidated damages in the amount of $10,000 if Sam makes any material misrepresentation of the financial condition of the business.

This litigation will amount to Arbitration because :-

1. Formal agreement is executed between both the parties.

2. Sam would like to bear $10,000 which is included in agreement not the $ 15,000.

3. Arbitration is like the court process as parties still provide testimony and give evidence similar to a trial but it is usually less formal.

4. Arbitrator will make the order like the court usually arbitrator appointed are odd in numbers like 3,5,7 & decision is made on the basis of majourity.

This situation does not include mediation because -

Meditian usually takes place in very informal manner where both the parties are first met each other than mediater will then meet with each party separately. The mediator discusses the dispute with them, and explores with each party possible ways to resolve it.

The main focus remains on the parties as they work towards a mutually beneficial solution. Most disputes are successfully resolved and often the parties will then enter into a written settlement agreement.

In mediation results can be controlled.

This situation does not include negotiation because it is mostly use for buying & selling. The two qualities that are used in this meeting are persuasion and influence. In negotiation generally 2 parties engage themselves into discussion & come across to mutual agreement.

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