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Bilingual contracts – what should you consider?
As a continuation of my article on whether it’s ok to sign contracts in English in Austria, I would like to address some issues I’ve found to be common with bilingual contracts. Especially when these contracts were written by German native speakers. I use these points as a checklist when drafting contracts myself to ensure I avoid these pitfalls. So here are my observations and suggested solutions:
  • Inaccurate translation of specific legal terms
The law is an exact discipline. Therefore, be very careful when attempting to translate very specific legal terms from one language to another. A sloppy translation could completely change the intended meaning. To avoid this, if you are having trouble finding an accurate translation for a particular term, I suggest the following: choose a translation that is as close as possible to the original term and add the original language word in parentheses. This will definitely help in interpreting your contract. Example: “Gewerbesrechter executive director” can be translated into English as “managing director according to trade law”. However, since this term is perhaps less common, one could quote “managing director according to trade law” in the English-language part of a contract in order to facilitate subsequent interpretation of the contract.
  • “War” of language versions
It is important to determine which language version should be decisive in the event of differences in the various versions of the contract. Imagine that one party insists on the meaning in the German language version, while the other party relies on a (possibly slightly different) meaning in the English language version. A common solution to this would be to explicitly state which language version should prevail, while the other is for translation purposes only. Example of such a clarification with German as the predominant language: (German version:) “Only the German text of the contract is binding, the English translation is for information purposes only.” // (English version:) Only the German version of this contract shall be legally binding, the English translation serves information purposes only.”
  • Pay attention to digits and amounts
The use of commas and periods when specifying amounts differs in German and English. If you swap them, you can unintentionally make one party very happy and leave the other very upset. Example: One hundred thousand euros is written EUR 100,000.00 in German and EUR 100,000.00 in English. Another common method of avoiding ambiguity in contracts is to state the amount again in words after the digits, as in this example (now only relating to the German language version): “EUR 250,000.00 (in words: two hundred and fifty thousand EUR)”.
  • What is the best way to say that one or all parties have an obligation to do sth?
When contracts in German want to say something along the lines of “Party A is obligated to do XYZ”, translating them into English can be a bit tricky. While using the English terms “obligate” or “oblige” (as in “Party A is obliged/obligated to do XYZ”) would not be the best choice (depending on where in the English-speaking world you are), consensus seems about insisting the use of “shall” (such as “Party A shall do XYZ”) as a commonly accepted option.
  • The laws of which country should regulate everything?
If you have a bilingual contract, possibly even with parties in different countries, there may be some confusion as to which country’s laws govern the entire agreement. In any case, avoid disputes because each party will assert the applicability of the laws of their own home country because it is more convenient for them or simply more familiar. A clarification clause goes a long way towards avoiding such potentially nerve-wracking situations. Example: (German language version:) This contract is subject to Austrian law” // (English language version:) “This Agreement is governed by and constructed in accordance with the laws of Austria.” These are some of the tips I would recommend when drafting bilingual contracts (German/English). Of course, there is much more to consider in order to create a document that is reliable for everyone involved. Contact me anytime to review your contract documents.
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