Certified Professional Public Buyer (CPPB) Practice Test

What does litigation involve in the context of contracts?

1. A negotiation between parties

2. A process of arbitration

3. A legal dispute in court

4. A method of mediation

The correct answer is: A legal dispute in court

Litigation in the context of contracts refers specifically to the process of resolving a legal dispute through the court system. This typically occurs when one party believes that another has breached the terms of a contract, leading to a formal legal action. In litigation, the issues are presented before a judge, and a decision is rendered based on the application of the law to the facts of the case. This process is distinct from other forms of dispute resolution, such as negotiation, arbitration, or mediation. Negotiation involves informal discussions between parties to reach a mutually acceptable resolution without involving the court. Arbitration is a more formal process where a neutral third party makes a binding decision, while mediation seeks to facilitate a resolution through a mediator, but does not result in a binding decision unless agreed upon by both parties. Each of these alternatives has its own procedures and implications, which are different from the litigation process.