Saturday, September 12, 2009

Not Reading a Contract is No Defense: Even in Italian

Many of you are probably snickering just reading the title. Seems obvious enough to most. Nevertheless, it seems from time to time even a business party to a contract will claim they did not read the contract. Such was situation in the recent case of Amit Israeli v. Dott. Gallina S.r.l. Dario Gallina and David Gallina (W.D. Wis. 2009). Not a simple case of not reading, but not a surprising outcome. Israeli, a U.S. citizen, contracted with Gallina, an Italian concern, to sell Gallina plastics in the United States according to a price list that Gallina provided. The operating agreement was in English, but the price list was only in Italian. While the operating agreement specified that the law of Wisconsin applied, the price list stated that disputes would be resolved exclusively in the Court of Turin. Israeli, who did not speak Italian and did not ask for a translation, initialled the price list anyways. When a dispute developed about the price charged for shipments and Israeli brought suit in Wisconsin, Gallina argued that the Court of Turin should resolve the dispute. The CISG, which applied to the transaction since the parties were both doing business in contracting states, does not address issues of "validity" of specific contract provisions. See Article 4.

Israeli claimed unconscionability should prevent the application of the forum clause since: (1) he did not read the price list and (2) it was in Italian, which he could not read, even if he tried. The court, agreeing that there was some procedural unconscionability, rule that the forum selection clause was not substantively unconscionable. Not only was Israeli's claim that he did not read the contract a "nonstarter," his claim that the price list was in Italian was also a loser:
Equally unpersuasive is plaintiff's argument that the forum selection
clause was written in a foreign language. "[Plaintiff] makes much of
the fact that the written order form is entirely in Italian and that [Plaintiff]
. . . neither spoke nor read Italian. This fact is of no assistance
to [Plaintiff's] position. We find it nothing short of astounding
that an individual, purportedly experience in commercial matters, would sign a
contract in a foreign language and expect not to be bound simply because he
could not comprehend its terms. We find nothing in the CISG that might
counsel this type of reckless behavior and nothing that signals any retreat
from the proposition that parties who sign contracts will be bound by them
regardless of whether they have read them or understood them.

Id. (quoting MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostino, 144 F.3d 1384, 1389 n.9 (1998)).

This outcome holds no surprise to me. Quite simply, the party who chooses to do business in a language that they do not understand bears the risk of having done so. Israeli did not speak Italian and did not arrange for a translation. As such, he bore the risk of having done so. While this is not a case where both parties subjectively understood they chose to resolve all disputes in Turin, Italy, the forum selection clause is easily allocated to Israel who could have avoided the misunderstanding. Off to Turin, Italy he should go!


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