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Differences between CISG and Article 2 of the Uniform Commercial Code (UCC)
Differences between CISG and Article 2 of the Uniform Commercial Code (UCC)
Introduction
The United Nations Convention on Contracts for the International Sale of Goods (CISG) is a charter that offers a uniform law in international sales. It allows traders to avoid the procedural stages in litigation cases where there is a conflict of laws and it is necessary to reconcile these different jurisdictions.
The Uniform Commercial Code (UCC) on the other hand is one of several uniform Acts that were promulgated in efforts to harmonize the law of sales and other commercial transactions in all the states of the United States of America. This is with the full knowledge that commercial dealings are prevalent well beyond the jurisdiction of one state. Article 2 of the UCC specifically deals with the sale of goods.
There are several differences between CISG and Article 2 of the UCC and each provides for what should be included in international contracts.
Applicability
It is true that the CISG does not apply to transactions that are purely domestic. Its scope is however quite significant. This is because in the United States, where international commercial transactions are involved, it replaces a major part of the UCC. While the CISG does not apply to purely domestic transactions, its scope is quite significant, given that it replaces a keystone of the code involving the sale of goods, Article 2.
One noteworthy difference between the UCC and the CISG is that while the UCC applies to both commercial and consumer transactions, the CISG excludes, specifically, consumer sales from its provisions. Also excluded from the CISG are the goods that have been purchased through auctions, aircrafts, ships, electricity, securities and contracts of service.
Formation of a Contract
The CISG is partly based on the traditions of common law but influences of civil and socialist law have found their way into it. This blend of laws has led to there being provisions and principles in it are very different from the provisions of the UCC. For instance, under the rules of common law, a contract is valid if it has the following elements: it is entered into by mutual assent; there is sufficient consideration; the parties making it have the legal capacity to enter into it; and if it is not an illegal contract or for an illegal purpose.
Therefore, a contract is generally void if any of the above elements are missing. The CISG on the other hand, provides for only the formation of the contract of sale and the rights of both the seller and the buyer arising from that contract. It is therefore not concerned with the validity of the contract as it is, unlike the UCC which provides for these under Article 2-201 to 2-205. So, factors such as where a person is induced into a contract fraudulently, lack of capacity to enter into a contract or where the domestic law prohibits the sale of goods of a specified nature are not provided for under the CISG. Additionally, the formation of a contract under the CISG does not require that consideration be present.
Offer and Acceptance
The provisions as to offer, invitation to treat, counter offer and acceptance are governed by article 14 – 22 of CISG and 2-206 to 2-210 of the UCC.
In international transactions, contracts can also be formed where there is an exchange of orders that are confirmed or accepted through the exchange of forms that have small print terms that are in themselves conflicting. The CISG provides that an acceptance that has modifications is as good as a counteroffer. Unless the offeror does not object and the modifications themselves do not fundamentally change the terms of the original offer.
Where the offeror has not objected verbally without delay, the terms, the CISG states, become those of the offer as modified by the acceptance. This therefore means that they will be binding unless the changes are so fundamental or objected to. Under both common and civil law, this is known as “battle of the forms.”
To some extent, the UCC is almost consistent with these provisions of the CISG. However, the UCC endeavors to maintain the original intention of the parties to the contract where it is agreed that only minor differences exist. It should be noted however, that this provision only applies as to between merchants and merchants and not merchants and consumers. Additionally, under the provisions of the UCC, a purported acceptance that contains additional terms or terms that are different and will fundamentally change the contract are considered to be counteroffers. This therefore means that there would be no contract unless the offeror now accepted all the terms that have been made in the counteroffer.
Other provisions differences also exist. For example, under the UCC, the law recognizes that when an offer has been made by mail, the time of acceptance is when the acceptance has been mailed. The CISG on the other hand takes a different position. Under the CISG, an offer is accepted only at the moment it is received.
Another fundamental difference between these two laws is that the CISG limits a party the contract’s ability to withdraw a contract that is irrevocable. The UCC on the other hand, provides that offers can generally be revoked as long as they have not yet been accepted.
The mode of acceptance also illustrates another major difference between the two set of laws. Generally, there is no contract until the offer has been accepted. On one hand the CISG provides that an acceptance as long as it takes any form of statement or action by the offeree that suggests he has intention to be bound to the contract, it will be good. On the other, common law provides that the mode for which the acceptance is made must be as specified by the offeror and if not specified, it must be in a mode that would, under those circumstances, be appropriate.
Obligations of the Seller and Passing of Risk
The provisions as to the delivery of goods, quality, quantity and description of goods are under article 35 of the CISG and 2-301 to 2-328 of the UCC. The provisions as to the passing of risk are in article 67 of the CISG and 2-401 to 2-403 of the UCC.
There is always an imposed duty of the seller or supplier as to the quality and fitness of the goods or services supplied.The CISG provides that the buyer must examine the goods as soon as it is practically possible and bring to the sellers attentions any lack of conformity with the requirements he had. If there be any defect, the buyer must notify the seller within reasonable time after delivery has been made or at least within two years.
Where the buyer fails to examine the goods or complain about them, he forfeits the right to reject them or claim damages or a reduction in price. It should be noted that the notice must be sufficient enough to specify the defects that are being complained of. Under the UCC, the same provisions apply although the duration of time is relatively shorter. It thus allows the buyer to refuse delivery of goods that are defective or that do not conform to the order.
Breach and Damages for Breach
Article 71-73 of the CISG and article 2-601 to 2-616 of the UCC provide for breach of the contract for sale, while article 74-77 of the CISG and 2-701 to 2-710 of the UCC provides for damages.
The CISG allows the buyer to sue for the breach of contract. However, this right is very limited. Where the contract has been fundamentally breached, the buyer may reject goods and require that substitute goods be delivered. However, the result of the breach must be of such a contractual detriment that it will substantially deprive him of the goods. Additionally, it allows the seller to correct performance as long as there is no unreasonable delay or inconvenience the buyer. The buyer may also avoid the contract if even after notification in reasonable time; the seller still does not perform. The CISG also affords the seller protections from a potential financial incapacity of the buyer. He may, after sending a notice, suspend the delivery of the goods or prevent their release if it is apparent that the buyer may be unable to pay. He must however deliver if there has been an assurance to pay.
Under the UCC on the other hand, a buyer has the right to terminate a contract as long as a condition has been breached. This is regardless of the fact that it may be a minor breach. In addition, the seller has no right to withhold delivery whatsoever simply because he is afraid that the buyer may not pay, unless this is expressly provided for in the contract.
References
United Nations Convention on Contracts for the International Sale of Goods (1980) [CISG]. 52 Federal Register 6262, 6264-6280 (March 2, 1987); United States Code Annotated, Title 15, Appendix (Supp. 1987).
The American Law Institute and the National Conference of Commissioners on Uniform State Laws (1998) .Uniform Commercial Code Article 2 – Sales.
step 3 Identify Mission, Vision, Values, and Goals (2)
PROJECT 2 STEP 3
step 3: Identify Mission, Vision, Values, and Goals
Now that you’ve identified the key facts about your organization, turn your attention to your organization’s mission, vision, values, and goals. Taken together, these elements can help drive organizational decisions, positively impact employee performance, and influence many of the other organizational components you’ll be examining for this report.
The mission, vision, values, and goals should be reviewed periodically to determine whether adjustments are needed in light of key environmental factors or changes in the organization’s performance or capacity.
Follow the steps below to analyze your organization’s mission, vision, values, and goals:
Find your organization’s mission and look at whether and how it has changed over time. If it has changed, what process changed it?
Analyze the extent to which your organization’s mission (1) is well understood, (2) continues to inform key decisions, and (3) is well aligned with what the organization is actually doing.
If your organization does not have a formal mission statement, read deducing a mission.
Analyze your organization’s vision and core values. Consider whether the vision and core values are in alignment with and supportive of the organization’s mission. Are the vision and core values widely understood and accepted within the organization?
If you cannot find formal statements about your organization’s vision or core values, read Deducing Vision and Core Values.
Next, determine whether your organization practices strategic goal setting. Analyze whether these goals are explained clearly and whether they make sense given the organization’s mission, vision, and values. In other words, look for alignment of mission, mission, values, and goals.
mission, vision, values, and goals=
Mission and vision both relate to an organization’s purpose and are typically communicated in some written form. Mission and vision are statements from the organization that answer questions about who the organization is, what it values, and where it’s going. A study by the consulting firm Bain and Company reports that 90 percent of the 500 firms surveyed issue some form of mission and vision statements (Bart & Baetz, 1998). Moreover, firms with a clearly communicated, widely understood, and collectively shared mission and vision have been shown to perform better than those without them, with the caveat that these statements related to effectiveness only when strategy, goals, and objectives were aligned with them as well (Bart, Bontis, & Taggar, 2001).
A mission statement communicates the organization’s reason for being, and details how it aims to serve its key stakeholders. Customers, employees, and investors are the stakeholders most often emphasized, but other stakeholders, like government or communities (relating to social or environmental impact), can also be discussed. Mission statements are often longer than vision statements. Sometimes, mission statements also include a summation of the firm’s values, or beliefs in which the organization is emotionally invested. The Starbucks mission statement, for example, has described four guiding principles that also communicate the organization’s values (Starbucks, n.d.):
creating a culture of warmth and belonging, where everyone is welcome.
acting with courage, challenging the status quo and finding new ways to grow our company and each other.
being present, connecting with transparency, dignity and respect.
delivering our very best in all we do, holding ourselves accountable for results.
A vision statement, in contrast, is a future-oriented declaration of the organization’s purpose and aspirations. The mission statement lays out the organization’s “purpose for being,” and the vision statement then says, “based on that purpose, this is what we want to become.” Strategy should be directly based on the organization’s vision, since the strategy is intended to achieve the vision and thereby satisfy the organization’s mission. Typically, vision statements are brief. Sometimes the vision statement is also captured in a short tag line, such as Toyota’s “Let’s Go Places” statement that appears in most communications to customers, suppliers, and employees. Similarly, Wal-Mart’s tag-line version of its vision statement is “Save money. Live better.”
Any casual tour of business or organization websites will expose you to the range of forms that mission and vision statements can take. To reiterate, mission statements are longer than vision statements, often because they convey the organization’s core values. Mission statements answer the questions, Who are we? and What does our organization value? Vision statements typically take the form of relatively brief, future-oriented statements and answer the question, Where is this organization going? Increasingly, organizations also add a values statement, which either reaffirms or states outright the organization’s values that might not be evident in the mission or vision statements.
Roles Played by Mission and Vision
Mission and vision statements play three critical roles: (1) communicate the purpose of the organization to stakeholders, (2) inform strategy development, and (3) develop the measurable goals and objectives by which to gauge the success of the organization’s strategy. These interdependent, cascading roles, and the relationships among them, are summarized in the figure below.
Key Roles of Mission and Vision
First, mission and vision provide a vehicle for communicating an organization’s purpose and values to all key stakeholders. Stakeholders are those key parties who have some influence over the organization or stake in its future, including employees, customers, investors, suppliers, and institutions such as governments. Typically, these statements are widely circulated and discussed often so that their meaning is broadly understood, shared, and internalized. The better employees understand an organization’s purpose, through its mission and vision, the more able they will be to understand the strategy and its implementation.
Second, mission and vision create a target for strategy development. One criterion of a good strategy is how well it helps the firm achieve its mission and vision. To better understand the relationship among mission, vision, and strategy, it is sometimes helpful to visualize them collectively as a funnel. At the broadest part of the funnel, you find the inputs into the mission statement. Toward the narrower part of the funnel, you find the vision statement, which has distilled the mission in a way that it can guide the development of strategy. In the narrowest part of the funnel, you find the strategy—it is clear and explicit about what the firm will do, and not do, to achieve the vision.
Vision statements also provide a bridge between the mission and the strategy. In that sense, the best vision statements create a tension and restlessness with regard to the status quo. They foster a spirit of continuous innovation and improvement. London Business School professors Gary Hamel and C. K. Prahalad (1993) describe this tense relationship between vision and strategy as stretch and ambition. Indeed, in a study of CNN, British Airways, and Sony, they found that these firms displaced competitors with stronger reputations and deeper pockets through their ambition to stretch their organizations in more innovative ways.
Step 2 Establish Key Organizational Facts
PROJECT 2 STEP 2
Step 2: Establish Key Organizational Facts
To start, write a brief overview description creating an organizational fact sheet of your organization, including the following information:
when it was established and by whom
legal forms of organization and tax status
its current CEO
its industry or industries
its size
its general purpose
Typically, such overviews in a report of this size are no more than one page (approximately 250 to 300 words).
Remember to apply the perspective of an outside consultant to your analysis. Be as objective as possible. Also, consider the audience for this report: key stakeholders including, board members, new employees, and anyone else who would benefit from this overview.
creating an organizational fact sheet= Creating an Organizational Fact Sheet
Fact sheets vary depending upon the organization and intended audience. For the purposes of this project, your fact sheet should be a one-page overview of important information any new or prospective employee or board member would find helpful. You should adapt the fact sheet you create to fit your specific organization.
Organizations in the nonprofit sector use varyinglanguage and approaches to share similar important types of information. To see an example, you can look for the Facts section or About section on the website of the American Red Cross or United Way.
If you scan the Internet for organizational fact sheets, you will find many different templates and examples. You will also find that different types of organizations use different labels for the areas on their websites where they share information. Corporations sometimes use an About page to share information of general interest to all stakeholders and then create a one-page fact sheet targeted primarily at investors. To see examples, search the corporate website of companies like Exxon Mobil or IBM.
Those who work in large government departments may find many different fact sheets. For example , if you search the About section one the US State Department website, you will probably find yourself on a page intended as a starting place for people interested in a career. If you work for a small or new business that does not yet have a fact sheet, you might find the toolkit for small- and medium-size enterprises on the International Monetary Fund’s website helpful.
Fact sheets typically provide information that can be independently verified (i.e., facts), while About pages convey something about the organization’s intended purpose and areas of focus. In it’s simpliest form, a fact sheet focuses primarily on presenting key facts about the organization, but it might also link to the organization’s mission, vision, values, and strategy.
Below are examples of information you may wish to include in a one-page fact sheet:
name of organization
location
when organization was created
legal status
focus
purpose, products, or services
size (i.e., number of employees)
leadership (i.e., CEO and members of the executive leadership team)
mission and vision
other important facts appropriate for your organizational type
legal forms of organization = Legal Forms of Organization
An organization may operate in one of several sectors, which determines its legal form of organization. The following questions can help clarify what legal form of organization a company or initiative has.
Which sector is your organization operating in: private, public (i.e., government), or nonprofit?
If private, review Law in Business (Varner, 2007), located in the Resources section below, to determine which of the following best describes your organization:
proprietorship
partnership
corporation
If public (government), which of the following best describes your organization:
federal
state
local
If a nonprofit organization see A Nonprofit Organization (Dicke, 2011), located in the Resources section below. This article provides some general information about the sector and can help you determine its tax status. Many organizations will likely qualify as a 501(c)(3), which is the most common type of nonprofit. If you have an interest in learning more, you might want to explore some of the websites that provide useful information about this sector. One example is the Urban Institute’s National Center for Charitable Statistics (NCCS), which provides information and research about the sector. Another potentially useful resource is the Charity Navigator, which helps contributors understand the different types of 501(c) organizations and their status for tax purposes. Of course, another very useful source is the IRS website. If, for example, you work for a trade or professional association—a 501(c)(6)—you could search the IRS site for the term business leagues.
outside consultant = Developing a Consultant’s Perspective
When examining an organization you know well, one of the challenges is achieving sufficient distance to ensure you are being as objective as possible. It can be helpful to think about what you would expect of an outside consultant if one were hired by your organization. Then imagine yourself in that role, assuming those same responsibilities and needing to meet the same expectations. This is what is meant by developing a consultant’s perspective.
We expect consultants to have the expert knowledge required to address a particular project or task. We also expect and need consultants to be skilled at recognizing how their own experiences, beliefs, and values, as well as those of others, can influence thinking and decisions. When thinking about situations at work, it is typical for us to have ideas about why they are as they are and, sometimes, how they might be made better. When a consultant is brought in to look at the same situation he or she may have some good preliminary ideas thanks to expert knowledge, but will need to conduct a careful investigation before reaching any conclusions or recommendations. This is what you will want to do for this project. In other words, you will need to develop the required expertise and make every effort to ensure your approach, findings, conclusions, and recommendations are sound and supportable.
To achieve sufficient distance it can be helpful to imagine that you are a consultant for another organization that is similar to yours but that you do not know. In addition, actually write down your beginning assumptions, ideas, and possible biases, and then figure out what you can do to avoid being influenced by them. Depending upon the situation, you might imagine what would happen if the organization accepted your initial hunches, analysis, or recommendations and the situation was made worse. In other words, take the time to imagine the harm you might do if your initial ideas are wrong, and then take the necessary steps to limit this possible outcome. Discussing any issues or concerns with your professor is also important.
stakeholders=
Stakeholders
There are many individuals and groups who have a stake in what an organization does and in how well it does it. Stakeholder theory proposes that organizational performance relies on recognition and inclusion of key stakeholders in the organization’s major decisions. The need to manage stakeholders effectively is an important responsibility and potential challenge for leaders and managers (Fassin, 2012; Loi, 2016).
Read the article Stakeholder located in the resources section below for more about what a stakeholder is and why this is important to recognize all stakeholders.
References
Fassin, Y. (2012). Stakeholder management, reciprocity and stakeholder responsibility. Journal of Business Ethics, 109(1), 83–96. doi:10.1007/s10551-012-1381-8
Loi, T. H. (2016). Stakeholder management: A case of its related capability and performance. Management