Utah General Contractors - Business and Law Practice Exam

Which dispute resolution method employs a neutral party to provide a binding decision?

1. Mediation

2. Arbitration

3. Negotiation

4. Litigation

The correct answer is: Arbitration

The answer is arbitration because it involves a neutral third party known as an arbitrator, who is empowered to make a binding decision on the dispute at hand. This process is typically more formal than mediation and offers a way for parties to resolve their differences outside of the court system. The arbitrator reviews the evidence presented by both parties and then issues a decision, which can generally be enforced in a court of law if necessary. Mediation, on the other hand, focuses on facilitating communication between parties to reach a voluntary agreement without imposing a decision. Negotiation is a direct discussion between the parties themselves to reach an agreement, and it does not involve a neutral third party. Litigation involves taking a dispute to court where a judge or jury renders a decision, but this is not done through a neutral party in the same binding capacity as an arbitrator.