She couldn't understand Remilia very well either. They both use ancient japanese.
That shouldn't be a problem for Aya, who is as old as both Scarlet sisters put together.
Starting a contract such as that is ridiculous. Flan, if let outdoors, would be able to catch her own food easily, as she would just kill random humans as she pleased, whether she's insane or not. One, it's her social ineptitude that makes her unable to care for herself and have such a dependence on her sister; as it was probably planned by Remilia in the first place. If Flan's power was that unstable, then making her dependent on the only person who can control her is the perfect way to keep her in check. And two, if she was originally truly insane she would have probably fought Remilia if a contract like that was suggested, and it definitely wouldn't have been initiated by herself. Flandre respects Remilia more than anyone else and Remilia takes advantage of that to keep her still. There's no real evidence here to suggest that a contract could have been brought into place.
Insane doesn't mean automatically violent (many forms of mental illness render one more likely to be the victim of violence than the perpetrator), or always unable to see what is in one's own best interests and act on it. Insanity isn't necessarily incompatible with willingly being contracted. She doesn't necessarily have any reason to fight it, and lots of reasons to accept.
For example, even if Flandre can catch her own food, if she had something like, say, schizoid personality disorder, she might not want to, since it would involve interaction with people (which schizoid sufferers tend to shun). She also needs a place to stay during the daytime and during the rain, and presumably she'd rather live in a comfortable house protected by others. For all her power, she's still someone with a ton of weaknesses who can be ambushed in her sleep. Besides friendship, why do you think that Remi keeps Patchy around? Because she's a powerful person who doesn't need to sleep. China, Sakuya, and the hordes of otherwise useless fairy maids all serve a similar function as well: they can slow down an intruder long enough for the Scarlet sisters to wake up and get ready for them (and if the intruder is weak enough, the help can keep them out entirely).
Here's another way of thinking about it. Remilia can manipulate fate. Flandre obeying her and staying in the basement is accomplished because Remilia uses her powers to control Flan' fate. Flan never questioning what she eats, Flan coming up only when Remilia wants her to and respecting Remilia in general: is all controlled by her powers. Why do you think they moved to Gensokyo? Why does Flan only escape from the mansion immediately after the heroines defeats Remilia, and the heroines just so happen to be there on the day Flan gets loose? Think about it.
Ah, you're saying that Remilia deliberately altered fate to get Flandre some human contact (with the heroines)? Sure, that makes sense.