The issue of language in international contracts

Branching into the overseas market can be exciting, but it can also be fraught with new kinds of uncertainty, particularly where contracts are concerned.

So, let’s talk about one of the most important questions that you have to decide before you can even start writing a contract: What language do you want it in?

Many international businesses commonly use English-language contracts, but that’s not always the best option — for several reasons:

1. The contract may not be valid in the home country of the other business. China and Indonesia, for example, have both held that contracts not in their country’s native languages are invalid.
2. The contract may include a lot of “boilerplate” clauses that create confusion or conflicts within the contract itself.
3. The florid language used in some English-language contracts can contain terms of art that are specific to English, and therefore, are particularly confusing to non-English speakers.
4. One party may genuinely not understand what they are agreeing to under the terms of the contract if it isn’t translated into their native language first.
5. The process of translating a contract into more than one language after a dispute arises could lead to mistakes or new disputes over a word’s shade of meaning.

There are, naturally, ways that you can minimize the risks of working through an international contract. For example, you might be able to negotiate an agreement over any dispute that will put the case into an English-speaking court or neutral arbitration.

International business contracts take significant experience to get right. If your business is growing and starting to make connections overseas, it may be time to find out more about how an attorney can help.