What Is A Disparagement Agreement?

In many legal and business agreements such as settlement contracts, severance packages, or partnership contracts you may encounter a provision called a disparagement agreement, more commonly known as a non‘disparagement clause. This type of agreement restricts individuals from making negative or critical comments about another party. Despite being common, these clauses carry serious implications and are enforceable in many courts. Understanding what a non‘disparagement agreement means, when it is valid, and how it may affect your rights is essential before signing such a contract.

What Is a Disparagement Agreement?

A disparagement agreement, often called a non‘disparagement clause, is a contractual term in which one or both parties agree not to make statements that could harm the reputation of the other party. These statements can be verbal, written, or even indirect such as encouraging someone else to make such statements. The objective is usually to protect a company’s or individual’s goodwill and public image.

How Courts Define Disparagement

Although disparage might seem vague, courts have upheld that it means to bring discredit or dishonor, or to lower someone’s esteem in the eyes of others. This can include truthful statements that nonetheless harm reputation meaning even factual, non‘defamatory comments may count if they reduce goodwill. ([turn0search4](turn0search4))

When and Why Disparagement Clauses Are Used

These clauses frequently appear in

• Settlement and release agreements resolving disputes
• Severance packages between employers and departing employees
• Partnership or shareholder agreements
• Confidentiality or non‘disclosure agreements

The goal is typically to prevent post‘termination criticism or public commentary that could damage reputation, deter future litigation, or discourage negative publicity.

Key Features of a Non‘Disparagement Clause

• May be mutual (both parties agree) or unilateral (only one party is bound)
• Often prohibits comments across all media social media, personal communication, interviews, etc.
• Usually covers statements made after the agreement is signed, not before
• May include carve‘outs for truthful legal testimony, government reports, or internal communications

Well‘drafted clauses often include exceptions that honor free speech rights in legal or civil settings. A review of company policies, regulation, or carve‘out provisions is essential before signing. ([turn0search1](turn0search1))

Enforceability and Legal Limitations

Courts across many jurisdictions, including state and federal courts, generally enforce non‘disparagement clauses as long as they are clear and appropriate under contract law. The U.S. Ninth Circuit upheld a clause where a defendant clicked I Accept online and was later sued for criticizing the company, finding the clause neither unconscionable nor vague. ([turn0search4](turn0search4))

Challenges Under Labor Laws

In employment contexts, overly broad non‘disparagement clauses may conflict with labor protections. The National Labor Relations Board (NLRB) has signaled that clauses which restrict workers from discussing working conditions or discrimination may be unlawful. Restrictions on discussing harassment or wage issues may also be limited under state laws like California’s and Washington’s Silenced No More Acts. ([turn0news20](turn0news20), [turn0search7](turn0search7))

Potential Consequences of Violating a Clause

Breach of a non‘disparagement agreement can result in serious legal consequences

• Requirement to repay settlement or severance payments if the clause states so
• Liability for damages caused by reputational harm
• Possible injunctions to prevent further breaches
• Attorney’s fees and litigation costs if contained in the contract

Liquidated damages clauses where a pre‘negotiated penalty is set if breached are enforceable if they represent a genuine estimate of harm rather than punitive measures. If overbroad, they may be struck down as penalties. ([turn0search6](turn0search6))

What Is Not Disparagement?

Some statements may not violate a clause

• Comments made before the agreement signing date
• Purely factual statements not intended to harm reputation (e.g., employment ended or lawsuit settled)
• Required disclosures in legal proceedings or government investigations

Courts often distinguish between factual disclosures and disparaging language. For instance, stating that a lawsuit was settled is not necessarily disparaging. ([turn0search0](turn0search0))

Negotiating or Modifying a Disparagement Agreement

Before signing

• Request carve‘outs for legal obligations such as testifying or reporting wrongful conduct
• Narrow the clause to specific individuals or roles if possible
• Ensure the language is precise define disparagement clearly
• Limit duration avoid clauses that extend perpetually

Seeking legal counsel to review any clause before signing is advisable, especially if it affects professional reputation or limits future speech. ([turn0search12](turn0search12))

Case Examples

FreeLife v. American Education Music

A marketing executive who had agreed to a non‘disparagement clause online criticized company policies. The court enforced the clause strictly, holding that the agreement was valid and that disparage was clear enough even though it may seem vague. ([turn0search4](turn0search4))

Network Ten v. van Onselen (Australia)

An academic signed a severance agreement containing a non‘disparagement clause. Later, he published an topic criticizing his former employer. The New South Wales Supreme Court held that the statement was disparaging and enforceable, even though it was based on public information. The court declined a further injunction, relying on a declaration and ordering costs. ([turn0search10](turn0search10))

Benefits and Drawbacks to Each Side

Advantages

• Protects reputations, reduces risk of public disputes or litigation
• Provides finality in settlement or employment situations

Disadvantages

• Restricts free speech even truthful criticism may lead to breach
• May chill disclosures about discrimination, safety issues, or legal wrongs
• Broad clauses may violate public policy or labor rights (e.g. NLRB objections)

A disparagement agreement is a legally enforceable provision that limits one party’s ability to make negative statements about another. While widely used in settlements, severance, and business agreements, these clauses must be carefully drafted to avoid being overly broad, vague, or infringing on statutory rights. Courts generally enforce these clauses, even if the comments are true, unless limited by labor laws or public policy. Anyone presented with such a clause should review it carefully, understand the restrictions and consequences, and consider legal advice if needed to negotiate exceptions or narrow language.