California expands translation requirement for consumer contracts

Ballard Spahr LLP

Ballard Spahr LLP

On September 25, 2020, California Governor Gavin Newsom signed several consumer protection bills, including AB 3254, which extends the right to receive a translated version of certain consumer contracts to nonparty signatories, such as guarantors or cosigners.

Under existing law, a business negotiating a covered contract in Spanish, Chinese, Tagalog, Vietnamese, or Korean (the five most common non-English languages spoken in California) must provide the consumer with a translated version of the contract.  Covered contracts include auto sales and leases, apartment leases and rental agreements, mortgages, agreements for legal services, and any loans and other extensions of credit meant primarily for personal, family, or household purposes.

The California Senate’s analysis states that AB 3254 merely “[e]xpands the translation requirement . . . to any person signing the contract, not just the parties to the contract,” which would not impose any additional costs because it “simply requires providing additional copies of the already-translated contracts.”  However, it is unclear (and the legislature did not address) whether or how the existing law’s provisions related to missing or deficient translations would apply to the bill’s translation requirement.  In particular, and without limitation, existing law provides that failure to provide the required translation grants the right to rescind the contract to “the person aggrieved.”  Because that term is not defined, it might be read to include nonparty signatories. See Civ. Code § 1632(k).

While existing law provides that the parties’ “rights and obligations” are determined by the English terms of the contract, it makes the translation admissible “[t]o show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.”   Such differences might also be considered an unfair, deceptive, or abusive act or practice under the recently enacted California Consumer Financial Protection Law, and could, therefore, create a significant risk of an enforcement action by the California Department of Financial Protection and Innovation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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