Bermuda's small business owners who need to negotiate an international contract to buy or sell goods, but who want to avoid lawyer's fees, should check out Paction, an online application launched by the International Chamber of Commerce (ICC).

Paction, at www.modelcontracts.com, is a web-based application that enables buyer and seller to prepare, negotiate and complete contracts for the international sale and purchase of goods.

The software keeps track of every stage of the negotiation. The contracting is based on ICC's model international sale contract.

ICC's partner in the venture is the London-based Allagraf, which came up with the concept and designed the software.

The online application is geared towards the small trader.

Contracting parties can print out the contract once its negotiated online, sign it and exchange it in the traditional manner - or they can sign the contracts online, using a digital ID of their choice.

For example Bermuda-based businesses may want to use local digital authority QuoVadis. But that is up to both parties.

The parties may also choose the jurisdiction under which they want disputes settled. "Paction can accept certificates issued by any certification authority that issues X.509 v.3 certificates - the common industry standard," spokesperson Ake Nilson told me by e-mail.

"We leave it to the counterparties to determine whether they are happy enough with the quality of the identification offered by each certificate authority - it would be hard for us to arbitrate as to what would be a sufficient level of security for any given counterparty.

The jurisdiction of the contract can be selected by the parties. The default rule follows the Vienna Convention, so it would be the jurisdiction of the seller's country, unless the parties agree otherwise."

Contracts will also be stored online for reference in disputes.

On the Paction site you can run through a model demonstration to determine if the model contract suits the kind of deal you want to do with someone overseas.

To prepare a draft contract you first provide your counterparty's e-mail address.

Your proposed contract will then be made available to them. If the user has a digital certificate, which guarantees their identity, then no further action will be necessary and the contract negotiation can start.

If the user does not have a digital identity, then the proposer needs to set a keyword and satisfy themselves about the identity of the other party before releasing the keyword to them.

The ICC proposes that this identification and exchange of the keyword be done by phone. Your counterparty can either accept your draft, or edit the draft and return a counteroffer. When you receive the counteroffer, you will be able to see the differences highlighted on the draft.

The negotiation process can be carried on until you agree on a mutually acceptable wording.

The software allows time limits to be set on acceptance of the contract.

Once the time limit is reached the contract is automatically withdrawn by Paction and both parties are notified. While an offer is pending the party making the offer can withdraw the offer at any time.

Paction offers online help throughout the process, but I was not able to test out how good the online help was in the demonstration I completed online.

You are not bound to complete the contract online. Since completing an online contract is still a new area for most businesses and for the courts, I suggest you go the way you're comfortable with - the traditional method.

The costs? Paction charges a one time registration fee of ?75 (about US$109). Each contract costs ?10 to set up for the person offering the first draft, and ?10 for the counterparty, if they are registered with Paction.

This fee covers any number of changes to the draft contract, the storage of the final contract online, and all preceding drafts, and e-mail based support.

The counterparty is only charged if they either edit the contract offered to make a counter-offer, or if they accept the contract. Sounds like a good deal.

If anyone uses Paction, can you e-mail me to tell me if it was easy to use, and whether it was useful?

The ICC only launched the service last week, so it would be interesting to see whether this takes off for small businesses looking to save on costs.

Tech Tattle deals with topics relating to technology. Contact Ahmed at editoroffshoreon.com