Part One: Recommendation on Whether to Sue
The probability of Winning or Losing
The chances of winning the instant case are relatively high for Solar Co. Inc. The Company hired a public relations company seeking to improve its reputation. Due to the express undoing of XYC, Solar Co. ended up having its reputation damaged instead of improved. However, the wording of the termination clause in the contract between the two parties is a major determinant on whether the company wins or loses (Prescott & Spier, 2016).
Amount of Money to be Won or Lost
If Solar wins, it stands to win special liquidated damages amounting to US$ 200,000. It can also win general damages which will be assessed by the court and will most likely be above the liquidated damages. Finally, if Solar Co, can prove extreme negligence on the part of XYZ, aggravated damages can be awarded and can go into millions of dollars depending on the net worth of XYZ (Goldberg, 2018). If the case is lost, Solar Co. will only be bound to pay the costs of the suit for XYZ and also lose its own incurred costs.
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Lawyers’ Fees and other Costs of Litigation
Lawyers’ fees and costs of the suit will always be high and may run into hundreds of thousands of dollars. However, if the case is won, the losing party is bound to reimburse costs.
Loss of Time by Managers and other Personnel
Court cases are expensive processes in terms of time. Time will be lost through deportation and also during the hearing (Prescott & Spier, 2016). If the trial happens in a distance from Solar Co. offices, traveling to and from the court will also take a lot of time. The defendant can also apply delaying tactics costing the Sola Co. more time.
Long-term Effects
Every time an agreement that was entered into mutually results in a court case, the reputation of the litigants will be adversely affected. Further, rules of procedure allow parties to a suit to dig up unrelated issues and use them in court. The reputation of the two parties will defectively be adversely affected and the relationship between them will be destroyed almost irreconcilable (Prescott & Spier, 2016).
Prejudgment Interest
As the case pends determination, a prejudgment interest set a prevailing Federal Reserve’s Interest Rate applies (Prescott & Spier, 2016). The rate is exponentially low which adversely affects the claimant.
Aggravation and Psychological Costs
Court cases, no matter how good the outcome is never a good experience for any of the parties, more so corporations that are in business. There is always the risk of aggravation, more so when parties try to attack each other’s character. Parties involve also suffer psychologically due to the process itself and the probable outcomes (Prescott & Spier, 2016).
The unpredictability of the Legal System and the Possibility of Error
Most legal cases are heard and determined by juries made up of lay people resulting in a very unpredictable process. There instances where outcomes of a case are completely different from any expert predictions (Greene, 2016). An error by any of the parties involved, including the jury can also create adverse ramification for litigants.
Secondary Factors
Solar Co. is a company that has a reputation problem having been involved in a number of disputes one of which led to a negative verdict. Conversely, XYZ is PR firm whos even Solar Co. relied on to repair their reputation. Verdicts in jury trials can be based on how members of the jury feel about the parties (Greene, 2016).
Recommendation
There is a slim chance for a massive win and a likelihood of a small win but at great risk in terms of reputation of even court costs and related expenses. It would be much better if the matter was settled amicably or in the very least through arbitration. If XYZ is adamant, however, Solar should pursue litigation.
If the recommendation was being given to XYZ Inc., the advice would be to do all it takes and have the matter end up in court. Whereas there are still chances of winning, the only risk that Solar faces are that of paying court costs. In the unlikely but possible event that XYZ is found liable to pay aggravated damages, the outcome may even ruin the company.
Part Two: Arbitration Memo
To: The CEO, Solar Co. Inc.
From:
Date
Subject: Procedure for Arbitration and Enforceability
Arbitration generally and also in the USA is considered as a means of alternative dispute resolution while litigation is the main means of dispute resolution. These means that arbitration is a choice that parties to a suit can agree on but cannot be compelled towards it (Colvin, 2019).
The Arbitration Procedure
When parties opt for arbitration, they then either agree on an arbitrator or agree on a third party who will appoint an arbitrator for them (Colvin, 2019). Normally the third party may be a professional organization of arbitrators or other professional organizations. The parties will then present their perspective cases to the arbitrator just as they would do a court but without both the formalities and extreme adversarial approaches employed in court. After hearing both parties, the arbitrator will arrive at a decision which is binding on both parties. The decision of the arbitrator cannot be vacated by a court of law except in extreme cases, such as if the arbitrator broke the law or exceeded the set mandate.
Ensuring Disputes are Solved through Arbitration
Under civil law, arbitration clauses in agreements are binding and any party that executed an agreement with an express arbitration clause is bound to solve disputes through arbitration (Colvin, 2019). If Solar Co. wants to solve all its disputed through arbitration, it is advisable to ensure that all contract with third parties, subcontractors, and even employees have a sound arbitration clause.
Enforcement under the Federal Arbitration Act
Arbitrators merely decide disputes but lack the means to enforce their determination. However, under the Federal Arbitration Act, civil courts have been given the mandate to enforce decisions made through mutually agreed upon arbitration process (Schwartz, 2016). The party seeking to enforce the decision of an arbitrator can move the court which will then issue orders just as in the enforcement of other court orders. Such orders include a writ of execution, garnishment, or lien. The Federal Arbitration Act, therefore, ensures that arbitration decisions have the force of law.
References
Colvin, A. J. (2019). The Metastisization of Mandatory Arbitration. Chi.-Kent L. Rev. , 94 , 3.
Goldberg, V. P. (2018). Consequential Damages and Exclusion Clauses. Colombia Law and Economics Working Paper. 582.
Greene, E. (2016). Psychological issues in civil trials. In Jury Psychology: Social Aspects of Trial Processes (pp. 205-228). Routledge.
Prescott, J. J., & Spier, K. E. (2016). A comprehensive theory of civil settlement. NYUL Rev. , 91 , 59.
Schwartz, D. S. (2016). Justice Scalia's Jiggery-Pokery in Federal Arbitration Law. Minn. L. Rev. Headnotes , 101 , 75.
