English as a Contract Language

Melanie Gassler-Tischlinger and Georg Huber explain in an article published in the magazine “Tiroler Wirtschaft”, issue of 28 May 2020, what companies should take into consideration when dealing with contracts in English.

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English as a Contract Language

In our legal system, but also in most other legal systems around the world, the principle of private autonomy applies. This means that the contracting parties can determine not only the content of a contract, but also the language in which they draft the contract. There are only a few exceptions to this rule, such as in a few countries (e.g. Indonesia), or for certain types of consumer contracts.

In practice, English is the preferred language in international trade. Even between contracting parties with the same mother tongue, e.g. Austrian and German companies,  contracts are often drafted in English. One reason for this is that English is the corporate language in many larger companies.

This dominance of English – which one could also call the lingua franca, i.e. the common language of international trade – is a result of various influencing factors. One of these factors is probably that English is often the lowest common linguistic denominator for the contracting parties and their legal representatives. Another is probably the perception that English is (supposedly) an easy language to learn and speak. This feeling is most likely based on the fact that there is only one grammatical gender in English and that the conjugation of verbs does not usually cause any difficulties.

As a result, non-native English speakers (NNES) often tend to overestimate their linguistic abilities and language skills. This particularly rings true for people who have a language as their mother tongue that is related to English, e.g. German or Italian. However, English, at least when it goes beyond everyday communication, is anything but simple and contains numerous pitfalls and sources of error.

The most common sources of error are the following:

•  The lack of linguistic and legal competence of NNES
•  The vagueness and ambiguity of terms
•  The general impossibility of precise translations
•  The impossibility of precise translations of legal terms

English terms in everyday language often have several meanings or there are several English terms for a particular German term. Anyone who has ever looked for a translation in an encyclopaedia, whether in printed form or digitally, has experienced this. Almost always, several English terms are offered for the German word one is looking for, however usually only one or a few of the terms are in fact correct. In order to choose the right one, a lot of language experience and knowledge of how the terms are used in practice is necessary.

NNSE also tend to use so-called false friends. These are terms that sound similar in two languages but have different meanings. Examples include eventually and “eventuell”, or actually and “aktuell” . This group of errors also includes the tendency to confuse similar sounding terms, e.g. economic with economical, loose with lose, or principle with principal.

Similarly, there is a tendency to use Anglicisms incorrectly: “handy” instead of mobile phone or “beamer” instead of (data) projector, “smoking” instead of tuxedo, or “public viewing” instead of public screening (in the USA, this means the public viewing of deceased persons).

British and American terms are also often confused. As is the case for Germany and Austria, the principle of “two countries divided by a common language” applies. Examples are autumn (GB) and fall (US), or football (GB) and soccer (US). The spelling of individual words is also often different, e.g. favourable (GB) and favorable (US) or centre (GB) and center (US).

In addition to these general sources of error, there are also those based on the incorrect use of legal terminology when drawing up contracts. The use of legal terms is based on legal tradition. English law has traditionally developed from case law, whereas our legal system is much more statute-based, i.e. it has been shaped by written legislation. This can also be seen in the language and meaning of legal terms. Austrian and German law is characterised by a dogmatic abstractness which tends to systematically break down the law into general principles. It was developed to a large extent by university professors and lawmakers who were always in search of generally valid principles.

English law and related legal systems, on the other hand, were developed by judges and lawyers, i.e. practitioners who were more concerned with the individual case, rather than with the big picture. Many legal terms that exist in German do not exist at all in English and cannot be properly paraphrased either (e.g. the concept of a legal transaction does not exist in English legal language or legal doctrine).

Often, legal terms have different meanings when they are translated and cannot be translated precisely. For example, the Austrian concept of error, i.e. the legally significant misconception of reality, is not synonymous with “error” or “mistake” in English. If such imprecisely translated legal terms are used in contracts, they may be attributed a meaning that they do not have. At best, the terms achieve an approximation of what is meant.

The consequence is that the contracting parties have a different understanding of the meaning of a term and thus interpret the contract differently. A judge must then decide on the correct interpretation. Note that his/her decision will usually also be influenced by the legal system to which he/she himself is familiar with.

The problem of interpretation is probably less likely to arise if both parties to the contract belong to the same legal system and use the same language, because in such a case, they may have the same (wrong) idea of the meaning of a term. However, it can become a larger problem if contracts are concluded between native speakers and NNES or between NNES speaking different languages.

Typical sources of error in legal terminology are the following:

•  Similar but not identical terms are used (e.g. construe and construct).
•  Terms have a different meaning in everyday language than in legal terminology (e.g. shall = must).
•  Legal terms may have several meanings and are often misused (e.g. crown = crown, state, Commonwealth or monarch).
• English contracts often use double synonyms, i.e. words with the same meaning are often put in sequence (e.g. terms and conditions). This phenomenon – to put it in a nutshell – is due to the history of language. NNES are then often tempted to translate each individual word separately, although they  have the same meaning.
• Many English legal terms are indefinite and often not as clearly defined as their German counterparts, e.g. best efforts.
• Punctuation (commas, semicolons, etc.) is not subject to strict rules, but is rather applied by feeling. This can result in ambiguities or distortions of meaning (Don’t! Stop! or Don’t stop!).
• In the individual legal systems of common law (e.g. GB, USA, Australia), different legal terms (e.g. best efforts and best endeavours) are used.
• Often, standard clauses from English contracts (sample contracts) are used, which simply do not fit to our legal system. They were designed for the English-speaking world, not for continental Europe. Anyone who has ever been confronted with extensive English or American contracts in the M&A or financial sector can tell you a thing or two about them.

Therefore, apply caution when using English as the language of a contract. In the worst case, the parties may end up agreeing on exactly the opposite of what they intended to agree on, or at least create considerable interpretation problems.

How can such mistakes be avoided? Here is some advice:

• As an NNES, assess your knowledge of the English language and of foreign legal systems realistically.
• Be aware of the pitfalls and sources of error.
• Contracts in which the language is different to the applicable law, i.e. when an English language contract is subject to Austrian law, are particularly critical. English legal terms, which are foreign to Austrian law should be avoided.
• Do not use translations from encyclopaedias or translation programs without critically checking them. Make sure you are sure about the meaning of the translation.
• When using English legal terms, it is often helpful to quote the German translation in brackets.
• If you are drawing up a contract in two different languages, insert a clause that determines the language hierarchy (which version takes precedence?).

For a more in-depth study of this topic, we recommend reading the German book “Englisch als Vertragssprache” by Triebel/Vogenauer, recently published by Beck and LexisNexis.