Contract Interpretation Can Hinge on Translation

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When your company does business with a foreign firm, the translation of any documents written in a foreign language can be important and even pivotal in deciding which party prevails. A 2007 Illinois case, P.H. International Trading Company, d.b.a. Hana K.  v. Christia Confezioni, S.p.A., is illustrative of this. The parties were an American and a US firm, which often communicated in Italian, although the purchase agreement was written in English. The dispute regarded the automatic renewal of the 5-year contract. That part of the agreement read:

This Agreement shall remain in force for other periods of five years, running from the date on which it is executed and, on its expiry, shall be tacitly renewed for a further five years, excepting for any notice to the contrary provided by one of the parties hereto, to be communicated, at least six months prior to the expiry of the five-year period. (emphasis added)

When the Italian company (the defendant) decided not to renew the contract, it sent a letter in which it wrote “non si intende che il contratto si rinova automaticamente.” The notice of non-renewal didn’t arrive in a timely manner, according to the plaintiff, but whether it did or not hinged upon the translation of this phrase. Plaintiff translated this phrase to say “the Agreement itself, is not intended to be automatically renewed” and claimed that this did not express a clear intent to avoid the automatic renewal, while the defendant likely said that the phrase translated into “we do not intend to renew the Agreement” (this isn’t clear in the court decision). In any case, the court rejected the plaintiff’s argument and found that the defendant had advised the plaintiff in a timely manner that it didn’t want to renew the contract.

What is the lesson to be learned from this case? Here, the plaintiffs learned a costly lesson. If possible and if the contract provides that a U.S. court will be the forum for any disputes, write all contracts and communication in English, even if the other parties speaks Italian (which is the case here). Translations can be interpreted in different way. Here, the court agreed with the Defendant’s interpretation, but it could just as easily agree with the interpretation provided by opposing party.

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