Key Takeaways

  • A non disparagement agreement template helps protect reputations in legal settlements, business relationships, and employment settings.
  • These clauses prohibit either party from making public statements that could harm the other's reputation.
  • Violations can be difficult to define due to vague wording, but enforceability is possible in both state and federal courts.
  • Recent federal law prohibits their use in consumer contracts, especially regarding online reviews.
  • Templates often include carve-outs for legal obligations or protected activity like whistleblowing.
  • Sample language, customization tips, and common pitfalls can help users draft effective, enforceable clauses.

A non disparagement clause sample is often used in lawsuits to prevent both parties involved from saying negative things about the other in public after making an agreement. When an agreement is made, a defendant will often pay a significant settlement to bring the case to a close and will not want to risk a bad reputation after paying out.

Signing the Agreement

When you sign a settlement agreement, you will often see a paragraph toward the end of it that says "no disparagement." This means both parties signing the document agree never to disparage the other. This is a common provision included in most settlement contracts. While your attorney might say it is nothing to worry about or you might think there is no way to enforce it, you could be mistaken. 

Nondisparagement agreements have been enforced in court settings at both the state and federal levels. This agreement often gets violated because its wording is vague. Further, many people don't understand what constitutes as disparagement. 

This is usually an essential section of an agreement for many businesses, due to the importance of a company's reputation. Things like negative publicity can drive potential customers away and lead to a drop in profit. Therefore, many businesses will readily seek to enforce breaches of these clauses.

You might have heard a nondisparagement agreement under the term gag clause in a contract. While these clauses can be and are used in settlement cases, recent federal laws forbid their use when entered into agreements with consumers.

These agreements were created to not only protect businesses but also all parties involved in a contract from soured relationships that can result in reputation smear campaigns. When a nondisparagement agreement is in place, both parties will be unable to:

  • Say negative things about the other in public.
  • Post negative reviews or comments about each other on public forums such as Yelp or TripAdvisor.
  • Create negative publicity about each other.
  • Perform any public action aimed at damaging the other's reputation.

Many attorneys will try to get these agreements in place before, during, and after the settlement process to help limit possible damage to their clients and prevent their clients from disparaging the other party. These agreements are even more critical in today's society where social media and online interactions are extremely common and can spread information quickly. Getting these agreements in process before proceedings is also an important way to keep each party from discrediting each other in the public eye if the case goes to trial.

Common Terms Found in a Non Disparagement Agreement Template

When reviewing or drafting a non disparagement agreement template, it's important to understand the standard language and legal provisions typically included. While the wording may vary, most templates will contain:

  • Definition of Disparagement: A detailed explanation of what qualifies as disparaging remarks, such as defamation, slander, or libel.
  • Scope of Application: Specifies the parties covered (e.g., individuals, employees, management) and the extent of communication prohibited (e.g., verbal, written, online).
  • Duration of Obligation: Defines how long the non disparagement clause remains in effect — it may be indefinite or have a specific term.
  • Protected Activities Exemption: Many templates clarify that statements made under legal rights — such as whistleblower protections or during legal proceedings — are not prohibited.
  • Remedies for Breach: Outlines what happens if a party violates the clause, such as financial penalties, injunctive relief, or legal action.

These clauses often accompany severance agreements, settlement agreements, and employment termination packages. In employment contracts, they’re especially used with executives or public-facing employees whose opinions may significantly influence a brand’s image.

Mutual Non Disparagement Clauses in Employment and Business Contracts

Content:

A mutual non disparagement agreement is commonly used when both parties — such as an employer and an employee or two businesses — want to ensure neither side will speak negatively about the other. These clauses are particularly common in:

  • Severance agreements: When an employee leaves a company, both sides may want to avoid reputational damage.
  • Business-to-business (B2B) partnerships: Companies entering into or exiting partnerships may seek mutual protection.
  • Executive employment contracts: To safeguard brand and investor relations, many executive contracts include mutual nondisparagement terms.

An example clause might read:“The Parties agree not to make any oral or written statements, whether truthful or not, that could reasonably be construed as disparaging toward the other Party or its affiliates.”

These clauses can be customized to specify individuals (e.g., only executive leadership) and even include protocols for public inquiries, such as directing requests to a human resources department that will confirm only basic employment details.

Sample Cases Involving Nondisparagement Agreements

Recently, in Dallas, Texas, a business attorney sued a couple after they posted a poor review on Yelp of a pet-sitting company. They were sued for violating a nondisparagement clause. The business was seeking $1 million in damages to its reputation and loss of business due to the poor review. 

When it comes to enforcing a nondisparagement agreement with your customers, there are conflicting opinions in different jurisdictions on whether the clause can be enforced. Therefore, you're more likely to be able to enforce a nondisparagement clause between two businesses than between a business and a customer.

If the court does rule against the plaintiff and decides to strike down a nondisparagement agreement, the judge will form his or her opinion based on the First Amendment rights of individuals or the vagueness in determining what constitutes disparaging language. 

There have been no state-reported court decisions to this point. The federal Arizona District Court addressed it, however, in the case of FreeLife Intl Inc. vs Am. Educ. Music Publications Inc. The online sales distributorship FreeLife sued Am. Educ. Music Publication for breach of contract it had "accepted" when it pushed the "I Accept" button on FreeLife's website. This effectively made the defendant a marketing executive for the company. 

When the defendant later criticized Freelife's policies and products on its own website, it was sued in part for violating the nondisparagement agreement that was part of the acceptance. The court deemed the agreement to be understandable and ruled against the defendant.

As you can see, agreeing to a nondisparagement clause in a contract can backfire if you say anything that could disparage the other party involved.

Limitations and Legal Risks of Non Disparagement Clauses

While these agreements offer reputational protection, they come with legal risks and limitations:

  • First Amendment Concerns: Courts may invalidate a nondisparagement clause that conflicts with an individual’s right to free speech, especially when the language is overly broad.
  • Consumer Protection Laws: Federal and state laws, such as the Consumer Review Fairness Act, bar businesses from enforcing nondisparagement clauses against customers who leave negative reviews.
  • Unenforceable Vagueness: Vague language can render a clause unenforceable. Courts may strike down agreements if the term "disparagement" isn’t clearly defined.
  • Public Policy Exceptions: Clauses that attempt to limit whistleblower activity, reporting criminal behavior, or participating in investigations are often voided for violating public policy.

For these reasons, it's important to ensure that any non disparagement agreement template includes narrowly tailored language and legal carve-outs for protected activities.

How to Customize a Non Disparagement Agreement Template

Content:

Using a non disparagement agreement template can streamline the drafting process, but it’s essential to customize the template to fit the specific context. Consider the following adjustments:

  1. Identify Parties Clearly: Include full names and roles (e.g., employer, former employee, partner company).
  2. Define the Scope of Prohibited Conduct: Be explicit about what forms of communication are covered (e.g., social media, professional references, internal memos).
  3. Tailor the Duration: Consider the nature of the relationship. A short-term consultant may have a shorter obligation than a departing executive.
  4. State Legal Exemptions: Incorporate clauses that protect the parties’ rights to comply with the law or regulatory reporting requirements.
  5. Include Remedies or Consequences: Define the process and penalties for breach — including financial damages or arbitration requirements.

If you need assistance drafting or reviewing a non disparagement agreement template that fits your specific legal situation, you can post your legal need on UpCounsel’s marketplace to connect with a top-rated attorney.

Frequently Asked Questions

  • What is a non disparagement agreement template used for?
    It’s used to create a formal agreement where parties commit not to make negative statements about each other, often in employment or settlement contexts.
  • Are non disparagement clauses legally enforceable?
    Yes, they can be, especially if the clause is clearly written and doesn’t infringe on rights like free speech or whistleblower protections.
  • Can I include a non disparagement clause in consumer contracts?
    Generally no. The Consumer Review Fairness Act prohibits clauses that penalize consumers for leaving honest reviews.
  • How long does a nondisparagement agreement last?
    The duration is flexible and depends on what the parties agree to — it can be limited to months or remain in effect indefinitely.
  • Do I need a lawyer to draft a nondisparagement agreement?
    While templates are useful, consulting an attorney is recommended to ensure enforceability and proper legal language. You can find experienced attorneys through UpCounsel.

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