Contract language is critical to the successful execution of commercial transactions. For international transactions, there are additional challenges to consider when the languages of the parties to the contract differ. Depending on the countries involved and the type of contract, many laws for language translation may apply, including the CISG.
The United Nations Convention on Contracts for the International Sale of Good (CISG) has been adopted by the United States to regulate certain international sales contracts since 1988. To be subject to the CISG, the sales contract must be between two or more countries that are contracting states (in 2020, there were 94 countries), and it must be between two businesses.
Direct sales to consumers are not included in the CISG. The full text of the CISG is available on the United National Commission on International Trade Law website. While the law doesn’t expressly call out rules for language translation, several provisions, such as Articles 8 and 9, describe situations impacted by accurate legal translation.
Article 8 most specifically provides requirements that will impact language translation. According to these statements, both signatories must understand the contract. There is an additional responsibility for translation for those portions where one party would not necessarily understand the intent of the provision, for example, aspects unique to the type of contract involved.
(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.
(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.
(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.
While this provision is a bit more nebulous, it implies that the languages or translation methods used for the contract are established between the parties involved.
(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.
(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.
Another important note about the CISG:
According to Article 6, if the CISG applies to a contractual agreement, there is still an ability for the parties to agree to one signatory’s domestic law instead. However, for this to be effective, the contract must affirmatively opt-out of the CISG. For example, if the agreement intends to follow the laws of the United States, the contract must expressly opt-out of the CISG. This is important where local laws indicate which contract language is the one that will be enforced. Without a proper opt-out provision, the CISG, not the local laws, will prevail in case of an issue regarding the translation.
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