Understanding Typical Contracts

Time Investment: 90-120 minutes of analysis and research

Learning Objectives

By the end of this activity, you will be able to:

Identify the three main types of contracts used in localization workflows
Understand the purpose and key components of each contract type
Recognize the difference between fair and exploitative contract terms
Apply contract analysis skills to real-world professional documents

Overview: The Contract Ecosystem

Translation and localization work between translators and agencies typically involves three types of contracts that work together to govern professional relationships.

1. Non-Disclosure Agreement (NDA)

Purpose: Protects confidential information

When signed: First document, before any proprietary information is shared

Key protection: Client intellectual property and sensitive business information

2. Independent Contractor Agreement (ICA) / Service Agreement

Purpose: Defines the overall working relationship

When signed: After background checks, before beginning regular work

Key areas: Rights, responsibilities, intellectual property, quality standards

3. Purchase Order (PO) / Work Order

Purpose: Specifies terms for individual projects

When signed: For each new project or assignment

Key details: Scope, deadlines, payment, specific requirements

Contract Analysis: Three Examples

Example 1: Non-Disclosure Agreement

Review the NDA from our previous activity - this is a example of an NDA used for educational purposes.

Key Issues Identified

Transfers intellectual property rights from participants to organizer
Uses educational context to obscure commercial terms
“Perpetual” and “irrevocable” language typical of problematic agreements

Example 2: Independent Contractor Agreement

Based on American Translators Association (ATA) model contract used until 2022

Professional Standards Included

References ATA Code of Ethics and Professional Practice
Defines translation as skilled professional work requiring specialized knowledge
Includes protections for translator’s moral rights and copyright

Fair Terms

Mutual indemnification (both parties protected equally)
Right to decline assignments without penalty
Payment not contingent on client paying the agency
Reasonable quality assurance timeframes

Areas for Negotiation

Payment terms (30 days vs. 45 days)
Late payment fees
Definition of confidential information
Termination notice period

Example 3: Purchase Order

Project-specific document covering

Exact scope of work and deliverables
Word counts and payment calculations
Technical requirements and tools
Quality assurance expectations

Common Issues

Hidden additional work requirements
Unclear invoicing procedures
Penalty clauses for minor variations
Technology requirements at contractor’s expense

Regional and Legal Context

Mexican vs. US Contract Law

Important Differences

Contract Duration: Mexican law requires service agreements to be at least 6 months to avoid employment classification issues
Moral Rights: Mexican copyright law provides stronger protections for creators’ moral rights than US law
Employment Classification: Different standards for distinguishing contractors from employees

Credit the Translator Movement Professional organizations worldwide advocate for:

Recognition of translators’ names on published works
Protection of moral rights in translation contracts
Fair compensation and professional treatment
Resistance to exploitative industry practices

Normalcy Bias in Contract Signing

Understanding Why People Sign Without Reading

Normalcy Bias is the tendency to underestimate threats and assume that because others are doing something, it must be safe or normal.

Emily Cipriani’s Reflection on Signing the Loc101 NDA “My sister was waiting at the doctor’s office one day when the fire alarm went off. People looked around at each other, shrugged, and stayed in their chairs. A few minutes later, a doctor came out, saying, ‘The alarm is beeping! You need to leave!’ In the safety of a classroom, I fell under the influence of Normalcy Bias; I wasn’t on guard to notice the obvious warning signs, and when peers signed quickly, I did too.”

Breaking the Normalcy Bias

Professional Strategies

Always read contracts completely before signing
Research unfamiliar terms and clauses
Ask questions about unclear provisions
Consider the long-term implications of what you’re agreeing to
Remember that you have the right to negotiate or decline

Reflection: Would You Sign Now?

Think back to our opening question from the NDA analysis: Would you sign the Loc101 NDA knowing what you know now?

Consider these factors:

The educational value of the seminar vs. the intellectual property rights you’d give up
Your power to negotiate vs. the necessity of agreeing to participate
Whether the surprise element of discovering the IP clause after signing was educational or manipulative
How this experience might change your approach to future contract decisions

Discussion Questions

How did normalcy bias influence your initial contract decision?
What warning signs do you now recognize that you missed before?
How might cultural expectations about authority and compliance affect contract-signing behavior?
What role does economic necessity play in professionals accepting unfair contract terms?

Contract Types Activity

Your Goal: Find and analyze a contract type we haven’t covered in class.

Step 1: Research Contract Types

Look for examples of:

Employment contracts for in-house translators
Freelance service agreements for direct clients
Non-compete agreements in your region
Copyright assignment agreements
Partnership agreements between translation professionals
Licensing agreements for translation tools or software
Publishing contracts involving translation rights
Any other professional agreement relevant to language services

Step 2: Analyze Your Example

For your chosen contract type, identify:

Purpose: What relationship or transaction does this contract govern?
Key Parties: Who typically signs this type of agreement?
Critical Clauses: What are the most important terms to understand?
Potential Issues: What red flags should professionals watch for?
Regional Variations: How might this contract type differ in Mexico vs. other countries?

Post to Contracts discussion forum:

Create a brief analysis (300-500 words) that includes:

Contract Type: Name and brief description of the contract you researched
Source: Where you found your example (without violating anyone’s confidentiality) - include a link or an attachment if possible
Key Components: Most important clauses and what they mean
Professional Relevance: How this contract type relates to translation/localization careers
Red Flags: Any concerning provisions you identified
Recommendations: What professionals should know before signing this type of agreement

Example post format: “I researched [type of contract] which is commonly used when [situation]. The most important clauses include [key terms]. Translation professionals should be particularly careful about [specific concerns] because [explanation]. If I were reviewing this type of contract, I would make sure to [specific recommendations].”

Professional Development Takeaways

Building Contract Literacy

Essential Skills for Language Professionals

Critical Reading: Analyzing legal language for implications and risks
Risk Assessment: Understanding what you’re agreeing to and potential consequences
Negotiation Preparation: Identifying discussion points and alternatives
Professional Communication: Discussing contract concerns respectfully but firmly

Industry Awareness

Understanding Power Dynamics

Economic pressures that lead to acceptance of unfair terms
How industry consolidation affects individual professionals’ leverage
The importance of professional organizations in setting standards
Regional legal differences that affect international work

Long-term Professional Strategy

Protecting Your Interests

Developing specialized skills that increase your negotiating power
Building direct client relationships to reduce dependence on intermediaries
Networking with ethical agencies and fair-minded clients
Contributing to professional advocacy for better industry standards

Additional Resources

For Contract Research

Understanding Terms and Conditions Culture

“Visualizing the Length of the Fine Print, for 14 Popular Apps” - Visual Capitalist infographic
“I Read All the Small Print on the Internet and It Made Me Want to Die” - The Guardian
“Terms and Conditions, The Graphic Novel” - Mozilla

Key Vocabulary Review

Contract Types

Term	Meaning
NDA (Non-Disclosure Agreement)	Protects confidential information
ICA (Independent Contractor Agreement)	Defines working relationship
PO (Purchase Order)	Specifies individual project terms
Service Level Agreement (SLA)	Defines performance standards and metrics

Psychological Concepts

Term	Meaning
Normalcy Bias	Tendency to assume dangerous situations are normal because others aren’t reacting

Professional Terms

Term	Meaning
Language Service Company (LSC)	Agency that provides translation services
Independent Contractor	Self-employed professional providing services
Subcontractor	Professional hired by a contractor to perform part of the work
End Client	Final customer requesting translation services

📥 Download this Content

Find this file on our repo and download it.

🤖 GAI Study Prompts

Copy the downloaded content and try it with these prompts:

“Based on these contract examples, what are the key differences between fair and exploitative agreements in the translation industry?”
“How can I prepare to negotiate contract terms that protect my interests as a freelance translator?”
“What questions should I ask before signing any professional agreement in the language services industry?”
“Explain how normalcy bias affects professional decision-making and how to counteract it”

Next Activity: Assignment: Negotiate a Contract where you’ll practice negotiating contract terms.