Pub. 4 2015-2016 Issue 1

20 San Diego Dealer Foreign Language Translation Requirements F or decades, California has required dealers (and other businesses) to provide translated contracts when negotiating business trans- actions in certain foreign languages. The intent of this law is to prevent businesses from taking unfair advantage of foreign language speaking customers by negotiating certain elements of a contract, and then putting different terms into the contract that the customer cannot read. When the law was first passed in 1976, it applied only to contracts negotiated in Spanish, and only required certain aspects of the agreement to be translated (e.g., a business could have satisfied the law by providing a blank translated copy of the contract that did not contain terms specific to the transaction). In 2003, two separate bills were passed to expand the foreign language translation requirements. Senate Bill 146 (Martha Escutia, D—Whittier) required that the customer be provided with a translation of every term and condition of the contract prior to execution. Assembly Bill 309 (Judy Chu, D—Monterey Park) expanded the translation requirement to include the next four most-commonly spoken languages in California: Chinese, Tagalog, Vietnamese, and Korean. Always a hot topic for litigators and law enforcement, foreign language vehicle sale and lease transactions trigger several obligations for dealers. Recently, the Court of Appeal in Fresno recently issued a favorable opinion relating to dealer translation obligations for foreign language transactions when the dealer negotiates in English and the customer brings their own translator. After losing the appeal, the plaintiff in the case filed a petition for review to the California Supreme Court. Earlier this year, the Supreme Court decided not to take up the case. Effectively, this means that transactions negotiated (from a dealer’s perspective) only in English do not require a translation to be provided, even when the buyer is negotiating in a foreign language through a translator. With the political, law enforcement, and litigation activity that will surely stem from this decision, now is a good time to review some best practices relating to transactions negotiated (in whole or in part) in a foreign language. What Does the Law Say? Civil Code § 1632 effectively requires businesses that negotiate certain transactions (including motor vehicle credit sale or lease transactions) primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean (orally or in writing), to provide a translation of “every term and condition” in that language prior to execution of the actual contract. Note: While “primarily negotiated” would appear to apply to trans- actions where more than 50% of the terms are negotiated in a covered language, dealers are advised to exercise caution inmeasuring the amount of the negotiation that occurs in the foreign language: the customer may (legitimately or otherwise) recall the negotiations differently than your staff. A safer approach would be to treat transactions where any significant negotiations take place in a covered language as foreign language transactions: doing so helps eliminate the he-said/she-said that may arise in a dispute. Note: Dealers are also advised not to treat customers who are truly fluent in both languages any differently than customers who speak no English whatsoever—the mandate does not consider customer fluency, but whether negotiations occur in a covered language. If your sales staff negotiates in the foreign language, but your financewriter only negotiates in English, a safe approach would be to treat the transaction as a foreign language transaction and not leave it up to a court to decide. Foreign Language Translation of Subsequent Documents The law clarifies that this translation requirement applies to the following documents: • The document creating the rights and obligations of the parties. In addition to the conditional sale or lease agreement, this likely includes: • GAP contracts; • Contract cancellation option agreements; • Agreements incorporated by reference (except as exempted