The Need for Good Contract Translations, and What Were You Thinking?

China moral hazards

The other day I was emphasizing to a new client the importance of having one of my law firm’s international lawyers translate the contract we would be writing for this company and why we could not agree to let someone with the client do this translation. I then told her of a recent example that highlights why we are so obsessive with contract translations.

United States company contracts with Chinese company to have the Chinese company make product for the United States company. United States company tells Chinese company it is absolutely critical the product be delivered by August so as to be in the stores for the Christmas season. United States company calls my law firm in September asking for our help in forcing the Chinese company “to live up to the contract.”

United States company sends me the contract, written in both English and in Chinese, and it says the following:

  • Chinese language controls.
  • English language version says product must be delivered by August 10.
  • Chinese language version essentially says “Chinese manufacturer will do its best to deliver the product by August 10, but if circumstances prevent it from meeting that date, its only requirement is to try to get the product out as quickly as it can.”

So I review the contract and then I ask the American company whether it knew that only the Chinese language version was relevant. One company said it knew this and the other said it did not. The company that knew only the Chinese language version was relevant told me it had used someone in their company who speaks Chinese to review the Chinese language version and she “must have missed” the difference regarding the delivery dates.

Bottom Line:  If you are going to agree to a Chinese language contract, you have no excuse for not knowing what it says. Oh, and this admonition applies to at least some extent pretty much everywhere in the world.

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