International business: you need more than just a handshake

Business once was done with just a handshake, a symbol of trust. In the international market—and really any market—it is far better today to have a strong contract.

For global markets, a contract could be based on local law like those of Wisconsin, or more likely New York whose laws are most commonly used and recognized in multi-jurisdictional transactions. But most international contracts follow the United Nations Convention on Contracts for the International Sale of Goods (CISG).

Attorney Greg Bonney said Brazil, India, South Africa and the United Kingdom are some major trading partners that have not ratified the CISG. And some nations that have signed on may have indicated reservations—which mean they have rejected certain aspects of the CISG.

One of the biggest differences between law in the United States and under CISG is when the contract is considered accepted and in force. In the U.S., a modification does not typically affect the entire contract. Under the CISG, if one party makes even a small change, it is considered a counteroffer. Both parties must then specifically agree to the new terms before there is a valid contract.

For more information on international business contracts, contact us at 608-784-5678.