The text file was created/saved on a system using a different character set encoding than the computer/application you're using.
Only US ASCII codes are reasonably universal; these include characters A-Z and a-z, numbers, basic punctuation and a small selection of special characters like the dollar, the hash and percentage signs, some very basic mathematical symbols and so on. Other characters are considered "special", and various encoding schemes exist to handle various types of "extended" character sets.
If there's a mismatch between the encoding schemes used by a sender and a recipient of data, any "extended" codes may be interpreted incorrectly. In your case, accented characters aren't displayed properly. This is a very common problem with "pure" text files, since they lack any sort of header that identifies the character set encoding scheme being used.
If you can figure out which encoding scheme was used to create the file, you can convert it to the encoding scheme you're using with the iconv command.