Alternative Dispute Resolutions: Arbitration Clause
Saundra Stewart
Kaplan University
LS311-01: Business Law 1
Professor James Starcher
May 1, 2012

Disputes, disagreements, differing opinions, and arguments, what do they all have in common? They all involve two persons or groups that have different ideas that are in conflict with the other. When these differences arise we as a civilized society usually are able to work out some solution that may work to the benefit of both parties. This process of resolving these conflicts is called Dispute Resolution.
There are three basic categories of Dispute Resolution that are often used: 1) Negotiation; 2) Mediation; And 3) Arbitration. Negotiation is the process where the two parties will …show more content…
(Miller, 2012, p. 64) One other school of thought that falls under the Duty Based Ethics would be the Principle of Rights Theory. Under this theory is the basis that the individuals’ rights are supreme and your actions and decisions have to be justified in regards to how they impact on the individuals rights. (Miller, 2012, p. 64)
The case that we have been asked to review is Baker V Osborne Development Corp... This was a case that was tried in the California Courts. The basics of the case are that Thomas Baker purchased a home from Osborne Development Corporation. Osborne had purchased warranties for the homes through Home Builders Warranty. Osborne Development Corporation paid a fee and signed paperwork that stated that their signature to the agreement included a Binding Arbitration Agreement. Home Builders Warranty issued warranty booklets to all of the new home owners and it included a statement that provided for all claims, disputes, and controversies between the Builder, The warrant Insurer, and Home Buyers Warranty shall be submitted for arbitration. (Kaplan University, 2012)
The question that we have been asked is “Would the new homeowners be bound by the arbitration agreement, or could they sue the builder Osborne, in court?”
The courts have