3 Things About Foreign Language Contracts

By Michael Jones (michael.jones@tsiglobalconsulting.com)

In American business culture, contracts are essential to getting work done.  Our strong judicial system affords these contracts the legitimacy needed for them to be enforced, and our no-nonsense way of working with other American companies means that contracts are ideal for ensuring compliance.  However, this way of thinking is not shared by all companies around the world.  During TSI’s many years of experience abroad, we’ve found 3 important things to know about foreign contracts that your business needs to be aware of.

Perhaps the most important difference is in how enforceable or even used contracts are in other countries.  In some countries (Russia is a prime example), limited enforcement by the government along with corruption, bribery, and other unscrupulous factors have made contracts unreliable ways of doing business.  In others (such as Japan), contracts are simply not well liked: asking a business partner to sign a complicated contract shows that you do not trust them to do a good job, and can hinder future business in that country.  In both cases, you may find that building a strong relationship with your foreign partner in these types of countries will serve you better than trying to enforce a contract.

Another thing that we at TSI have noticed during our international business operations is that the process of creating a contract can be hindered depending on the language that a contract is written in.  English is one of the best languages in the world to write a contract: despite frequently turning into “legal-ese,” English is usually capable of being direct and comprehensible in its writing style.  Not so for other languages.  For example, the Indonesian language is missing several key phrases that are commonly used in contracts.  With Japanese, the direct translations for contracts from English make no sense, and even the somewhat-similar Spanish cannot express the specifics of a contract.  The lesson here is to always take extra time when creating a contract in a foreign language, so that the intent is the same across the board and will not be misinterpreted by your partners.

Lastly, even if you manage to get a contract with the same intent in both English and the language of the foreign company that you are working with, there is still the problem of minute details that are added in or taken out of the foreign contract.  In some cases, companies will purposely mistranslate key parts of the contract while leaving the English version intact.  This can be very hard to notice, and can lead to trouble since following an inaccurate contract could lead to the hefty fines of breaking it.  For this reason, it is advisable that you have someone familiar with legal translation help write both documents.

Please call TSI Global Consulting at 210-757-0618 for a consultation if you desire to draw up a contract with a foreign partner.  We can help put you into contact with the right people, both in-country and at home in the U.S., so that your business can succeed.

Share via emailShare on FacebookShare on Twitter

Testimonials