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Questions 5–9 are based on the following... Questions 5–9…

Customer Question
Questions 5–9 are based on...
Questions 5–9 are based on the following...
Questions 5–9 are based on the following set of facts.
ABC Corporation has been making gaskets for engines manufactured by DEF Corporation
for several decades. Their gasket-manufacturing contract includes a binding arbitration
clause. But the two companies have had a very good working relationshipover the years
and have been able to resolve any problems without using arbitration.
DEF is the largest employer in your state. ABC is much smaller, but is world-renowned for
the quality of its gaskets. Unfortunately, ABC is experiencing serious business difficulties
this year. Mudslides in the small African country from which they import their raw materials,
their CEO’s expensive divorce, and irregularities in recent stock offerings have all
resulted in manufacturing disruption. ABC is very far behind on its commitments to DEF.
DEF is losing money every day it has to wait for ABC’s parts and wants to settle this matter
quickly. DEF has come to your law firm for advice.
5. DEF’s CEO is very angry about the problems with ABC and wants to sue immediately. Your
supervising attorney, Mr. Smith, explains that
A. since ABC isn’t following the terms of the contract, DEF doesn’t have to either.
B. DEF is the injured party and can ignore the arbitration clause if it wants to.
C. a good attorney will follow the client’s wishes.
D. under the terms of state law, as well as the Federal Arbitration Act, courts will uphold
an arbitration clause in a contract and require the parties to arbitrate.
6. DEF agrees to arbitrate the dispute. ABC’s president has a neighbor who used to work in
the same industry as DEF and ABC and is a retired judge. ABC wants the former judge to
serve as arbitrator for this dispute. DEF will
A. object, pointing out that the contract requires that the parties use an arbitrator
suggested by the American Arbitration Association.
B. agree, believing that the neighbor’s industry expertise and judicial experience will serve
both parties equally well.
C. object, because they think that the retired judge has a conflict of interest.
D. agree, because ABC’s president is a good friend and has had a rough time.
7. As a paralegal assigned to this case, your most important task will be to
A. organize the case documents, because formal rules of evidence aren’t used in an
arbitration hearing.
B. investigate the facts that lead to ABC’s manufacturing difficulties, since those problems
are at the heart of the dispute.
C. communicate efficiently with the arbitration agency, since everyone needs to know the
logistical details of the arbitration.
D. research damage awards in recent cases, so that your supervising attorney will know
how much money to ask for in the award.
94 Examination
8. In spite of the difficulties that ABC
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