Bad Contract Translations Make for Bad Times

China MOU LOI

Your contract with your Chinese co-party is your key to a successful China venture and your lifeboat should the business relationship go awry. That being the case, I am always amazed how often people essentially ignore the translation of their contract. A recent China Daily article, aptly entitled, Translation errors cause disputes over contract terms, highlights the frequency and the sort of legal problems that can arise from bad translations.

Last year, for instance, the Shanghai Maritime Court heard a case instigated by obvious translation goofs (“drydocking” mistranslated as “tank washing” and “domestic service” misinterpreted as “domestic flights”) that a bilingual translator with even a basic familiarity with the contract’s subject matter would have caught immediately. Jin Xiaofeng, Judge of the Shanghai Maritime Court, explains: “There are loads of translation agencies in Shanghai and in the nation, but the quality is varied and professional translators that have expertise in a particular aspect are scarce.”

My law firm’s international lawyers have certainly seen their share of translation disasters over the years, including some that were clearly deliberate. My favorite (which I have seen at least a half dozen times) is to do an English language contract that says “A” and a Chinese (or some other) language contract that says “not A.”  The Chinese language contract then makes clear that in any dispute the Chinese language version of the contract will prevail. The American party thinks it just signed a contract that says “A” but in reality it just signed a contract that says “not A.”

We have twice dealt with situations where a company came to us believing its China joint venture agreement required the joint venture entity use our client as its exclusive distributor of the Joint Venture’s products outside China, but the contract actually made our client the exclusive distributor of the Chinese joint venture partner’s products (not the joint venture itself). The problem in both cases was that the Chinese company joint venture partner was not making a product in which our client company had any interest. Then there are the countless times a word like “must” is changed to “may.”

Bottom line: Good legal translators are rare. When it comes to selecting a translator for your contract, insist on experience and specialization. The best solution — by far — is a truly bilingual attorney who works just for you.

We welcome your best “lost in translation” horror stories.