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Contract Translation

Updated: December 5, 2023
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As our world globalizes, contract translation has become an increasing need for businesses that engage in cross-border transactions. Transactions can be as small as signing a contract with a distributor in a foreign market or as large as acquiring of an international entity. Having a plan in place to handle this requirement is key to keeping transactions quick and costs low.

What is Contract Translation?

Contract translation is the act of translating a legal contract into a different language to be used between two parties that speak different languages that are engaged in a transaction. Legal translators will be provided with a source document, and translate the text into the target language so that the resulting document is a complete and accurate translation of the source document. Legal translators are often lawyers that are native in the target language, or professional translators with legal education.

Given the importance of languages and words used in legal contracts, it is especially important to make sure a translated contract has no vagueness or ambiguity in the foreign language. It is also important for translators to be familiar with local nuances in legal language to make sure the contract is saying what it is intended to say in another language.

Why is Contract Translation Important?

Contract translation is important because it often involves high-value business or personal documents where the translation need to be highly accurate. If translations are inaccurate, there is a risk for the at least one party in the transaction that could potentially have severe legal implications if the contract is ever disputed in court.

Because accuracy is critical in translating contracts, it is recommended to use highly trained legal translators like lawyers. There are translators that are also legal translation specialists, typically having some sort of legal training, but do not have formal legal qualifications to be able to identify potential issues in contracts being used in different markets.

Common Challenges Presented in Contract Translation

There are many challenges associated with translating contracts into different languages for use with international parties. Below are some top challenges to consider:

  • Language is not objective. Language is not objective and there are often not equivalent words across different languages. This can creates issues when a legal translator needs to translate a specific word that may carry a lot of meaning in a contract into another language.
  • Legal terminology and concepts vary. Not all legal terminology or concepts in one country may have equivalency in another country. This means, translators will need to understand what the legal concept means, and make sure their translation accurately reflects the intended term or concept in the contract.
  • Countries have different legal systems. There are different legal systems around the world. Common law and Civil law are the two most popular, but each country has their own version of them. For example, France’s legal system is Civil law and the United States’ legal system is common law. This differing legal system can mean contracts may not be applicable in a jurisdiction, and may need to be localized by an in-country lawyer.
  • Consistency in defined terms. Contracts typically have defined terms that are capitalized in the text. If a party has other legal documents translated into foreign languages, they will need to make sure these defined terms are translated consistently across their legal documents.
  • Subject matter expertise. Given the high-value nature of legal translations, having a translator with the right subject matter background is critically important. For example, if a company wants to translate their privacy policy into different languages, they will want to make sure they have a bilingual lawyer with a background in privacy and technology handle the translation to make sure the terms are accurate.

Benefits of Contract Translation

There are many benefits of contract translation that should be considered. While the service can appear to be expensive, the benefits that come along with it typically outweigh the costs.

Below are some benefits to consider:

  • Improving clarity and understanding. Translating a legal contract into the language a customer or other party can understand and read improves the experience for that other party. It also gives that party more clarity and understanding of the terms of the contract, so they can feel informed before executing the contract.
  • Reducing the risk of disputes. Everyone wants to reduce risks of disputes and translating a contract into a language the counter-party can read and interpret is a good way of doing that. This will give them the ability to read and interpret the terms of the contract for themselves, so they are informed and understand their obligations.
  • Improved decision making. When it comes to a party receiving a contract in a language they cannot read, hiring a legal translator to create a version they can read can help you make better decisions as it relates to signing the contract or trying to negotiate better terms.
  • Lower costs. For US businesses, translating a contract into English using a legal translator can save on foreign counsel fees, especially for lower value transactions. Getting the contract into a format someone on your legal team can read and understand is typically more cost effective then hiring a foreign law firm to review it.
  • Expanding into new markets. For businesses, contract translation can mean you’re expanding into new markets which can create new opportunities for revenue and profits. Some consumers in markets may not want to sign a contract they cannot understand, so translating it for them is a good way to secure new business.

Top Considerations for Contract Translation

As stated above, there are many challenges associated with translating legal contracts. It is important to find a lawyer or service provider that deeply understands these challenges and is well equipped to fulfil your objectives.

Below are top considerations:

  • Language pair and target market. When hiring a service provider to help you with a contract translation, you need to consider the language pair and target market. For example, if you want to translate your customer agreement into Spanish, will this be used in Mexico or Spain? These languages have differences, and countries also have different legal systems.
  • Selecting a qualified translator. When finding a qualified translator, you need to consider their subject matter expertise, their legal qualifications, whether they are native in the target language, and their past experience doing translations.
  • Communicating what the translation will be used for. It is important to communicate what the translation will be used for. This may impact how the translator completes the project. For example, if the translation is going to be used for internal review and redlines, you may want to have it formatted in a dual-column fashion so it is easy to match the redlines and update the source document.
  • Preserving the legal integrity of the contract. Contracts are intended to perform an action, so it is important that the translator you’re working with makes sure they are preserving the legal concepts correctly. If they do not, the contract may not do what it is intended to do.
  • Keeping defined terms consistent. Defined terms are important in legal contracts. If any other translations exist of your legal documents, you need to make sure you translate the defined terms consistently. Legal contracts can often point at other documents, and having different translations for the same defined term can create inconsistency.
  • Prevailing language clauses. Consider using a prevailing language clause when you can. This essentially says that one version of the contract will prevail in court if there is ever a dispute over the translation.

Why Do Businesses Translate Contracts?

Businesses translate contracts for a multitude of reasons and the list continues to grow. Employment contracts and employee handbooks can be translated to be used with their own workforce (i.e. translating legal contracts to Spanish for US Spanish speakers). Sales contracts can be translated to be used with international customers. Privacy Policies and Terms of Service agreements can be translated to be used with international users online. The list is long and continues to grow as our world gets more connected.

Types of Contract Translation Service Providers

There are different types of legal translation services to consider for your projects. Below is a list with commentary for each.

  • In-Country Lawyers and Law Firms. Many lawyers that are bilingual will routinely translate contracts for clients. While this may be a more expensive option in some cases, this is likely the highest quality work you can get. Hiring a lawyer that is native in the target language and in-country will make sure your translations are accurate and capture important legal concepts.
  • Online Marketplaces. Many online marketplaces have bilingual lawyers available for hire. These marketplaces will allow you to quickly find options for your project, and give you access to high-quality service providers.
  • Legal Translation Boutiques. There are legal translation boutique companies that specialize in contract translation. An example is ContractsCounsel. Similar to a general translation company in how they operate, they have a curated network of legal translation specialists to help clients with their work.
  • General Translation Companies. General translation agencies will typically support legal translation services. There is a risk in using them since they may leverage general translators in their network that may produce lower quality work product, but may also be the cheapest option.

Conclusion

In conclusion, contract translation is a service needed by any party involved in an international transaction. Accuracy and high-quality work is incredibly important to make sure parties are best protected and their obligations under the contract are completely understood.

When selecting a contract translation services provider, make sure to do your due diligence to find the best partner for your project. By posting a job on ContractsCounsel’s marketplace, you’ll be able to review proposals from qualified lawyers to handle your contract translation needs. We have built a network of international lawyers and US based lawyers with language skills that can help you with your work.

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