Business law Flashcards
What is arbitration?
This is an alternative means for dispute resolution out of court. Here, parties to the dispute invite private persons called arbitrators to resolve problems between them and pass a decision known as an arbitration award which they are to respect.
Advantages of arbitration
- Arbitrators are chosen by the parties to the dispute but before the court of law, parties can’t chose their judge.
- Arbitration is faster in achieving results than court action.
- Arbitration is cheaper compared to court action.
- arbitration avoids unnecessary publicity.
- parties before arbitrators choose the language in which the will be judged where as parties before a court do not decide the language of the court.
- Arbitration award is easily enforceable than court action.
Disadvantages of arbitration
- It may be subject to pressure from powerful law companies that may be hired by the parties.
- it has a disadvantage that there is no possibility of appeal against the decision of the arbitrators.
- It is not directly binding on the parties.
- Arbitrators are unable to enforce interlocutory measures. This is a measure that the court forces when the judgment is still going on. and the parties can take an advantage on it to appeal
Arbitration Agreement
Article 3 of the law of arbitration states that the arbitration agreement must always be in writing. this agreement is different from the main agreement that led to the dispute. if parties to the dispute do not agree that their matter is solve by way of arbitration, arbitrators will have no authority over the matter.
Arbitration Tribunal
Unlike modern law courts in Cameroon which have well-constructed court halls, an arbitration tribunal does not have a specific building where it judges a matter. any place where arbitrators sit to judge a matter is referred to an arbitration tribunal.
The arbitration tribunal maybe permanent or temporal. It is competent to hear social and civil matters referred to by parties, but is does not have powers to hear criminal matters.
Duties of the arbitration Tribunal
- it is required to act fairly and impartially between parties.
- it is required to adopt procedures suitable for the circumstances of each case.
- it is required to pass an impartial arbitration award based on the facts presented by the parties.
Composition of the arbitration tribunal
Each party to the dispute will appoint one arbitrator and the third arbitrator will be appointed by the two arbitrators. He will automatically become the Umpire or president of the court.
Article 6 of the Uniform Act states that arbitrators must be awarded in writing and where one party fails to appoint his own arbitrator for more than a month when asked, then the other party will be ask to appoint the two arbitrators.
Procedures before the arbitration tribunal
Parties before the arbitration tribunal are required to go through the following procedures and processes;
- Parties will have reasonable time to defend their case before the arbitrators. the law requires the arbitrators to give the parties reasonable time within which to present their defense.
- Arbitrators must fix a deadline within which the case has to be resolved and it must not be more than 6 months.
- The trial before the arbitration tribunal should be a secrete and should not be open to the public. Members of the public are not allowed to weakness proceedings before the arbitration tribunal.
Other pacific or peaceful ways of dispute resolution out of court
- Mediation:
This is a form of dispute resolution with a third party called the mediator who goes between the parties with disputes and assists them in negotiating a settlement.
The mediator uses various techniques to bring the parties to the negotiating table.
The role of the mediator is to bring the parties to negotiate and agree but he does not force them to agree.
Merits or advantages of mediation:
- It is cheaper than court action
- it is confidential and convenient to parties unlike court judgments which are open to a public audience
- the parties have control over the solution to the dispute.
- parties easily comply to the mediated solution since it was mutually agreed upon by them.
- the parties are guided and supported throughout the process.
- Conciliation
This is a form of dispute resolution in which a third party called the conciliator meets with the parties separately in an attempt to resolve their differences. it is different from mediation in the sense that, the conciliator meets with the parties separately and hardly brings them to sit on the negotiating table.
The conciliator proposes a solution to the dispute after meeting with each of the parties but does not force them to adopt a solution. - Reconciliation:
Unlike mediation and conciliation, there is no middle man in the case of reconciliation. this is a situation where the two parties on their own decide to bury their differences and become friends again. Maybe by one party apologizing to the other.
Arbitration Award
Although arbitration awards always grant damages against the judgment debtor, in main jurisdictions, arbitration awards can have a wide range of remedies that can form part of the award. these include;
1. Payment of a sum of money by the judgment debtor to the judgment creditor.
2. in some jurisdictions, the tribunal may have powers to
- issue injunctions,
- order specific performance
- order the rectification or cancellation of a document.
After the settlement of the dispute by means of arbitration, the award must indicate the following;
i. The name of the arbitrators
ii. the place where the arbitrators sat and judge the matter
iii. The name of parties who appeared before the tribunal
iv. Name of counsel (Lawyers) if any.
v. States the facts presented by each of the parties.
vi. State the decision of arbitrators.
Instances where the court might intervene in cases of arbitration
Although arbitration is an out of court dispute resolution method, the court may sometimes be invited to assist in the process. such situations are;
- Courts can intervene to appoint arbitrators when the parties are unable to do so.
- To terminate the mandate of arbitrators where it has been proven that they are bias
- To set aside an arbitral award
- to render an exequatur in order to make the arbitral award binding on the parties.
- intervene to compel the production of evidence before the tribunal
- compel witnesses to appear before the arbitration tribunal.
What is a Negotiable instrument
This is a signed document used either to substitute money or to extend payment of a debt. it is a document guaranteeing the payment of a specific amount of money either on demand or on a fixed date. Negotiable instruments are highly used today because they make business transactions quicker, safer and more efficient.
What are the Types of negotiable instruments
- Promissory notes and certificate of deposit:
A promissory note is a written document issued by one person promising to pay another person a certain sum of money on a specific date. it must be unconditional and state a fixed sum of money.A certificate of deposit on the other hand is a specialized form of promissory note issued by a bank acknowledging the reception of money and promises to pay on demand. - Bill of Exchange:
This is an unconditional order in writing requiring the person to whom it is addressed to pay at a fixed date a certain sum of money to an identified person.
There must be 3 parties to a bill of exchange namely; the drawer, the drawee and the payee.
With the drawer being the person who issues a bill of exchange ordering a drawee to pay a certain sum of money to a beneficiary known as the payee. - Cheque:
this is an unconditional order in writing by the customer of a commercial bank ordering the bank to pay a specific sum of money to an identified person either on demand or on a fixed date.
For it to be acceptable as a negotiable instrument, it must be unconditional, carrying a specific sum of money payable to the identified person or the bearer.
Types of Cheque
- Crossed Cheque:
This is a cheque with two parallel lines drawn across it from left to right. the implication of crossing a cheque is so that the cheque should not be catched over the counter.
There are two ways of crossing a cheque;
- General crossing
Here, 2 parallel lines are drawn across the face of the cheque with nothing written in between the crossing.
- Specially crossed:
Here, if a statement is written between the 2 parallel lines drawn across the face of the cheque, then the cheque is referred to as a cross cheque. - Certified cheque:
This is a cheque that the bank guarantees payment on submission. It is established by the customer and taken to the bank to certify that the customer has sufficient credits in his account and the bank will be willing to disburse the funds whenever requested. - Stale Cheque:
This is a cheque that has not been catch for more than 6 months from the day that it was issued. By law, a cheque that is issued for more than 6 months cannot be catch. Do everything to catch an issued cheque before 6 months because after 6 months, no bank will accept the cheque - Cashier’s Cheque:
this is cheque drawn by a bank on its own funds, payable to a person specified in the cheque. anybody can by a cashier’s cheque irrespective of whether he or she has an account in the bank or not. - Travelers Cheque:
This is a popular type of cashier’s cheque issued by a bank on its own funds. it is issued primarily to tourist. It is issued in different units of the requested currency. It has two spaces of signature, the buyers of the cheque signs on one space in the bank and the other space is signed when it is being issued to a third party.
What are the conditions for a cheque to bounce
- Insufficient funds:
The cheque will bounce if the account holder does not have enough money in their bank account to cover the amount written on the cheque. - Account closed:
if the account on drawn on the check has been closed by the account holder, then the cheque will bounce. - Stale cheque
- Payment stopped: if the account holder request the bank to stop payment on a cheque before it is presented, the bank will not honor the cheque.
- Frozen account: If the bank has blocked or frozen the account due to legal or administrative reasons. in this case, the cheque will bounce.
