Contractual penalties?
Thread poster: Charlotte Blank

Charlotte Blank  Identity Verified
Local time: 06:31
Czech to German
+ ...
Jul 9, 2013

Hello,

recently I have been contacted by an agency (with very good BB rating) but before getting started I'll have to sign their "Services agreement". On the whole it sounds quite reasonable but I'm a bit reluctant to sign something which would mean I'd have to pay a penalty of about 2 000 euros if there will be any direct contact with a client of the agency within "at least" 2 years from termination of the agreement... What do you think about this?

The next point is that they would like to make me pay around 20 000 euros in case I don't deliver my TM with the translation or will use the client's TM for my own purpose. Of course I'm not going to do either but IMO this sum is far too high. BTW, it's not an American agency (I've heard that in the US such large penalties - or even more - are normal) but within EU!

Thanks for your thoughts!

Charlotte


 

Peter Gleason  Identity Verified
United States
Member (2008)
Russian to English
+ ...
Limit Liability to the Amount of the Deal Jul 9, 2013

I usually just strike out contractual penalties, put my initials next to stricken line, and then fax back the contract.

Some of the terms agencies try to stuff "services agreements" with are just nutty. This sounds like one of those cases.

All the best!


 

Jean Lachaud  Identity Verified
United States
Local time: 00:31
English to French
+ ...
Preposterous Jul 9, 2013

Charlotte Blank wrote:

The next point is that they would like to make me pay around 20 000 euros in case I don't deliver my TM with the translation or will use the client's TM for my own purpose. ... I've heard that in the US such large penalties - or even more - are normal) but within EU!



 

Joakim Braun  Identity Verified
Sweden
Local time: 06:31
German to Swedish
+ ...
LOL Jul 9, 2013

Tell them where to put their services agreement.

Why not counter with a clause of your own: a 20,000 Euro penalty for every late payment or accounting error.

[Bearbeitet am 2013-07-09 20:16 GMT]


 

Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 06:31
English to Polish
+ ...
My thoughts Jul 10, 2013

Charlotte Blank wrote:

Hello,

recently I have been contacted by an agency (with very good BB rating) but before getting started I'll have to sign their "Services agreement". On the whole it sounds quite reasonable but I'm a bit reluctant to sign something which would mean I'd have to pay a penalty of about 2 000 euros if there will be any direct contact with a client of the agency within "at least" 2 years from termination of the agreement... What do you think about this?

The next point is that they would like to make me pay around 20 000 euros in case I don't deliver my TM with the translation or will use the client's TM for my own purpose. Of course I'm not going to do either but IMO this sum is far too high. BTW, it's not an American agency (I've heard that in the US such large penalties - or even more - are normal) but within EU!

Thanks for your thoughts!

Charlotte


Unless you are executing a particularly large and important localisation project (or there exist some other special circumstances of similar gravity), anybody who is capable of seriously uttering a demand for EUR 20,000 for failing to deliver your TM needs to have his head examined. It doesn't even sound abusive, it sounds dysfunctional.

On the other hand, I don't see anything wrong with an EUR 20,000 penalty if you use agency-supplied TM for your own purposes (although attaching that sort of penalty to your own TMs looks heavy-handed).

EUR 2000 for soliciting clients from the agency doesn't look bad, but 'contact' may be excessive, especially if the only fact triggering penalty is that, 'there was contact,' as in no matter who initiated it.

Regarding American agencies, American law would actually not normally tolerate a contractual penalty.icon_smile.gif

My recommendation is: be very serious and ask them if they really meant to say that if you fail to return the TM you should be liable to a penalty of EUR 20,000. If they are puzzled or ashamed, perhaps they simply need to learn to draft better (or change their drafter). But if they confirm that, if they get defensive (and there's a good chance of a tell-tale outburst in such a case when dealing with a dysfunctional person), then you should avoid that agency.

Dysfunctional partners in business are too much of a risk. It isn't even the penalties. There would probably be no real opportunity for them to collect under those clauses. But somebody who serious thinks in such patterns poses an overall danger to your business due to his way of seeing business.

[Edited at 2013-07-10 00:17 GMT]


 

Sarah McDowell  Identity Verified
Canada
Local time: 23:31
Member (2012)
Russian to English
+ ...
I would stay clear of this type of agency Jul 10, 2013

If this is actually serious on their part I would not ever want to collaborate with such an agency with such an outlandish agreement.

 

Woodstock  Identity Verified
Germany
Local time: 06:31
Member (2005)
German to English
+ ...
I would also avoid any agency Jul 10, 2013

stipulating such ridiculous terms. That spells Trouble with a capital "T" to me. I worked for a very reputable agency briefly that also had a "5" rating - believe me, that doesn't mean an awful lot. The initial rate was not bad on the surface, but they had to comply with the DIN requirement that involved a lot of checking and re-checking, reviewing, vocabulary query forms with a bunch of info needed, etc. etc. At the end of the day the rate was a pittance after all the time spent pushing the text back and forth between the translator, reviewer, back to the translator, then to somebody else for QA, then back to the translator for whatever reason, not to mention the numerous additional forms that had to be filled out without any added compensation... ::shudder:: I quit after two assignments because it was such a hassle that I was spending more time filling out forms or going over previously translated texts than translating. I don't consider that part of my job description! Others may have a different opinion.

My point is that the more complicated the agency's requirements are, the less satisfying it is to work with them on numerous levels. Just forget that one - there are lots of others with "5" ratings that are great and uncomplicated to work with.


 

LilianNekipelov  Identity Verified
United States
Local time: 00:31
Russian to English
+ ...
Such contracts are mostly to scare you Jul 10, 2013

It probably says: you may have to pay, not you will pay. First they would have to sue you for that amount. Anyhow, if you wanted to work for them, you may just cross out the nonsense from the contract, initial it, and sign the rest.. As to the contact with direct clients -- this part is normal -- they may actually sue you for trying to solicit business from their directed clients. It is usually up to $1,000 in most contracts I have seen, but they will also have to sue you for that amount. If the can prove it, they may win, if they actually decide to sue you. The TM is a total nonsense.

 

Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 06:31
English to Polish
+ ...
Good one Jul 10, 2013

LilianBNekipelo wrote:

It probably says: you may have to pay, not you will pay. First they would have to sue you for that amount. Anyhow, if you wanted to work for them, you may just cross out the nonsense from the contract, initial it, and sign the rest.


Good one. Never thought of it. Psychologically, it gives them a ready contract, and they'd need to upset the now-existing status quo to get anything to change. They might not bother.

However, you'd need to make sure that you're on the right side of contract formation laws (offer & acceptance) when you do that to a contract already signed by them first (not a problem if you are the first signatory).

As to the contact with direct clients -- this part is normal -- they may actually sue you for trying to solicit business from their directed clients. It is usually up to $1,000 in most contracts I have seen, but they will also have to sue you for that amount. If the can prove it, they may win, if they actually decide to sue you. The TM is a total nonsense.


Suing depends a lot on mentalities, but it also depends on how easy the legal system is, how accessible the courts are, the waiting periods, filing fees and other costs, chances of recovery of costs from the losing party (or having to reimburse the winner if you lose etc.). That's quite a lot of variables, and the final outcome will differ from place to place. Some types of small-claims all-in-the-writing suits can be very easy and cheap to get through.

And yes:

Such contracts are mostly to scare you


Sometimes such contracts are probably just that. Still don't sign unless you know you'll never incur the penalty.

[Edited at 2013-07-10 20:06 GMT]


 

Charlotte Blank  Identity Verified
Local time: 06:31
Czech to German
+ ...
TOPIC STARTER
Thank you all! Jul 11, 2013

There are some very good points in your answers and I'm now going to strike out the sentences around those euros. After all I don't intend not to give back a client's TMicon_wink.gif

As for the direct contact with the end client I was puzzled by their "for *at least* two years from termination of our cooperation" - in plain language this would mean forever!

I just found another point I did not notice before: If the agency or the end client suffers any damage because of my translation, *even due to negligence*, I'd be fully liable. Is this a normal clause? IMO negligence is human (though I'm not excusing it!) and if there is an error in my translation it should be found by the proofreader...


 

Sheila Wilson  Identity Verified
Spain
Local time: 05:31
Member (2007)
English
+ ...
Negligence is why proofreaders are there Jul 11, 2013

Charlotte Blank wrote:
I just found another point I did not notice before: If the agency or the end client suffers any damage because of my translation, *even due to negligence*, I'd be fully liable. Is this a normal clause? IMO negligence is human (though I'm not excusing it!) and if there is an error in my translation it should be found by the proofreader...

Indeed! If there are many errors and/or omissions in your work, the agency may have grounds for reducing your remuneration, to cover the extra work required at their end. But if the agency forwards those errors or omissions to their own client, then that's their own negligence, not yours. Your contract is not with their client.


 

philgoddard
United States
Member (2009)
German to English
+ ...
Just humour them. Jul 11, 2013

The agency has gone to a lot of trouble and effort developing the relationship with the end client, and it would be unethical for you to approach the client shortly after parting company with the agency. You wouldn't do it, so whether a contractual penalty applies is irrelevant. This is a standard clause in freelance and employment contracts.

I think you can get hung up on the precise wordings of contracts. They contain lots of hypothetical situations that are very unlikely to happen, and they're just going to get shoved in the digital equivalent of a dusty filing cabinet and forgotten about. So don't start striking out bits that you don't like: they're not trying to screw you, and they just want something in writing.

[Edited at 2013-07-11 16:25 GMT]

[Edited at 2013-07-11 16:27 GMT]


 

Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 06:31
English to Polish
+ ...
Liability allocation is often seen in a subjective light Jul 11, 2013

Sheila Wilson wrote:

Charlotte Blank wrote:
I just found another point I did not notice before: If the agency or the end client suffers any damage because of my translation, *even due to negligence*, I'd be fully liable. Is this a normal clause? IMO negligence is human (though I'm not excusing it!) and if there is an error in my translation it should be found by the proofreader...

Indeed! If there are many errors and/or omissions in your work, the agency may have grounds for reducing your remuneration, to cover the extra work required at their end. But if the agency forwards those errors or omissions to their own client, then that's their own negligence, not yours. Your contract is not with their client.


... As in everybody wants the least of it for himself while the most opportunity. Translators want to avoid it once the proofreader is done with the text (and at any rate a small deduction if anything but no damages), some agencies want to be unsuable and devise indemnities, holdharmlesses etc. I used to be irked, but these days it doesn't really move me that much. Still, 1) I don't want to be anybody's insurer, and 2) I don't want to incur plenty of liability for important transactions when I'm paid per-word and not a nice percentage of the transaction value.

At any rate, no corner cutting by agencies and dumping the attendant risk on the translators. Proofreaders are like the no. 1 thing here.


 

Samuel Murray  Identity Verified
Netherlands
Local time: 06:31
Member (2006)
English to Afrikaans
+ ...
Don't promise more than you can deliver Jul 12, 2013

philgoddard wrote:
You wouldn't do [the thing that carries the penalty], so whether a contractual penalty applies is irrelevant.


Never promise anything you can't deliver. This includes money. Don't promise to pay EUR 20 000 "in the event that X happens", even if you're 101% sure that X will never happen. It is all too easy to misread something or be unaware of some legal loophole that makes one thing mean another thing that you didn't know of, so don't take the unnecessary risk, even if you think "there's no risk to me".

If X will never happen, then say so (and sign your name), but don't back up your claim with promises to pay money in case you're mistaken in your belief that X will never happen.

They're not trying to screw you, and they just want something in writing.


If that is true, then they shouldn't mind if you cross out those amounts. Right?


 


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