Tom Hall, via Wiki.

The vast majority of cases I work on are a lot like the material we read in law school.  My Torts professor told us on more than one occasion that “there are real people behind every one of these cases.”  My cases are no different.

She also told us that they were in these casebooks “because some lawyer goofed.”  Or words to that effect, anyway.  I took both thoughts to heart, and they have guided my immersion in the profession ever since.*

In 2016, when I posted “Five Essential Things All Business Owners (and Their Lawyers!) Should Know Before Signing Global Contracts,“ I had those real people– and preventing lawyerly goof-ups– in mind.  But lately, I’ve realized that some elaboration is necessary.  Why those five things matter ought to be apparent.  But some nuance is necessary, so I offer a five-part series that elaborates on each point, more for than benefit of lawyers than for the business owners who want to venture abroad.

Those five things, in turn…

  1. Designate an agent for service in the United States.
  2. Include a choice of venue.
  3. Choose a governing law.
  4. Determine the operative language.
  5. Secure a guarantee of judgment debt.

To elaborate on Point Four…

Include a choice of language clause.

This is a classic problem, and it was at the heart of one of my favorite cases in law school, as well as a little known treaty that created a nation:

Frigaliment Importing Co. v. B.N.S. International Sales Corp., 190 F.Supp. 116 (S.D.N.Y, 1960).

Yes, you remember the case.  And if you don’t, here’s a hint:

Nobody does it better than Costco. Nobody.

When I first read Frigaliment, I thought I might just need new glasses.  A month into my 1L year, and the judge writes, quite literally…

The issue is, what is chicken?

Remember it now?  It seems the parties to the contract failed to define what they meant by a seemingly innocuous word.  Chicken is chicken, right?

No, said the buyer.  Chicken is “young fryers”, rather than those old, stringy stewing hens you sent us.  Give us our money back.

The case was included in our Contracts casebook to illustrate the concept of usages— course of performance, course of dealings, usage in trade– and it does so beautifully.**  But a significant part of the course of dealings analysis turned on communication between the parties in German.  The German word they used was just as ambiguous, so the court then had to move on to more attenuated analyses, but the analysis necessitated a whole bunch of bilingual gymnastics that courts hate having to deal with– so just avoid the issue altogether.  In the end, it could have been handy to have a translation of the contract, because a German translator may have asked for clarification.  The best ones always do.

The Treaty of Waitangi, 1840

Depending on how you look at it, a tragic loss befell an entire people in the early years of Queen Victoria’s reign.  It seems the Royal Navy sailed into what is now Auckland Harbor and offered a treaty to the native Māori tribes who had inhabited New Zealand for centuries.  The gist of the treaty, in the Māori language:  you guys let us Brits administer these two big islands– islands that strangely resemble Middle Earth, but whatever– and we’ll give you a big chunk of the profits.  Call it rent.

In the English version of the contract, the gist was different:  you guys let us Brits take ownership of these two big islands– islands that strangely resemble Middle Earth, but whatever– and we’ll give you… well, we won’t destroy your civilization completely.  Call it protection.

No choice of language clause would have mattered– the British would have certainly taken the place by force anyway– but the Māoris signed onto the treaty based on the understanding of the terms offered in their own language.  They assumed that their own language governed, and that was a tragic mistake.

The Bottom Line

Don’t let your clients make the same mistake.  Take the issue off the table altogether.  Make a decision about what language is operative because, if you have two versions of a contract without a choice, which do you think the forum court is going to prefer?  THE ONE IN ITS OWN LANGUAGE.

But think about a few things as you do…

  1. Don’t be too certain that your language is the best way to go.  A rural Kansas state court may not have sufficient expertise to adjudicate an international trade case, and it definitely doesn’t have the expertise to parse a contract written in both English and traditional Chinese.
  2. Don’t be too certain that the other fellow’s language is not the best way to go.  In some cases, particularly in China (as highlighted frequently by Dan Harris’ excellent China Law Blog), choosing the foreigner’s language (and law and venue) may prevent a breach altogether.
  3. Be certain the selected language has sufficient connection to the facts & parties involved.  Sure, French might be a great diplomatic language, but if the parties are American and Mexican and the court isn’t francophone, it makes zero sense.  A court might kick the case just out of spite because you’re making the judge and staff work harder than reasonably necessary.
  4. Recognize that the choice of language clause can be an outstanding negotiating concession.  If you’ve concluded that communicating in the other fellow’s language wouldn’t be a tragedy, give that fellow*** what he wants in exchange for something you truly need.  My favorite Nelson Mandela quote: “If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart.”  There’s a whole lot of preventive medicine in that idea.  A good chunk of Ubuntu as well.
  5. Above all, for crying out loud, make the venue and governing law correspond to the language!  It’s awfully impractical to expect a Minnesota court to adjudicate a Spanish contract under German law.  Ponder that for just a moment– it insults Minnesota because you don’t believe in English or Minnesota law, in insults Spain (or Mexico or Argentina, etc.) because you don’t believe in Spanish courts or law, and it insults Germany because you can’t be bothered to adjudicate there in its language.

Seriously.  This stuff is crucial, and there is no “required” language.  Do what seems right in light of the circumstances surrounding the language issue.

* I learned Torts from Nancy Levit.  It was my best grade that very first semester, which isn’t saying much (a horrible 14 weeks, for sure), but I definitely learned a bunch from Nancy.  The learning continued after I graduated, with two books she co-wrote with Doug Linder (my ConLaw professor, two semesters worth).  I highly recommend The Happy Lawyer and The Good Lawyer.

** Usages are also a great way to illustrate customary international law.  Just because there’s no writing… doesn’t mean the parties aren’t bound by past practice.

*** An explanation on the gendered language: I’m not trying to exclude here.  Just trying to keep some lingustic cohesion in the paragraph.