Mutual Non-Disparagement Clause: what it means and how to draft it

What a mutual non-disparagement clause does

A mutual non-disparagement clause restricts what each party may say about the other once a deal closes or a relationship ends, and it binds both sides on identical terms. It usually reaches oral and written statements, social media posts, online reviews, press comments, and remarks made to customers, investors, or employees. Because reputational risk tends to outlive the contract, the obligation is commonly drafted to survive termination.

What sets the mutual version apart is symmetry. In a one-sided clause, only one party (often the employee in a severance deal or the seller in an acquisition) gives up the right to criticize, while the other stays free to speak. A mutual clause removes that imbalance: each party accepts the same restraint and receives the same protection. That symmetry does more than feel fair. It supplies clear consideration on both sides, and it reads better to a court weighing whether the overall agreement is balanced and reasonable.

The clause serves three practical goals. First, it protects goodwill that both parties bargained for, which matters most when a relationship ends on difficult terms. Second, it lowers the temperature of a separation by giving each side a clear rule instead of an open-ended fight. Third, it creates a remedy. Without the clause, a disgruntled counterparty can say almost anything short of defamation, and defamation is hard and expensive to prove. Making the promise contractual and reciprocal lets whichever party is injured sue on the agreement rather than on tort law.

Scope still governs everything. A well-drafted mutual clause defines who is bound on each side (the signatory alone, or also its officers, directors, affiliates, and agents), what speech is covered (false statements only, or any negative statement), and to whom it applies. The broader the language, the more it may collide with statutes that protect certain speech, so balance the reach against enforceability.

Drafting example

Mutual Non-Disparagement. Neither party shall, directly or indirectly, make or publish any statement, oral or written, that disparages, defames, or is reasonably likely to harm the reputation or goodwill of the other party, or of that party’s officers, directors, affiliates, or products. Reciprocal wording binds both sides equally and reads as balanced to a court. Nothing in this Section restricts either party from (a) making truthful statements required by law, subpoena, or legal process; (b) communicating with, reporting to, or participating in an investigation by any government agency; or (c) enforcing this Agreement or exercising any legal right. Symmetric carve-outs preserve legally protected speech for both parties and keep the clause enforceable. This Section binds each party equally and survives termination or expiration of this Agreement.

The annotations matter as much as the operative words. The reciprocal framing signals balance and supplies consideration on both sides. The symmetric carve-outs keep the clause from being read as a gag on protected activity by either party. The survival sentence answers a question that otherwise invites litigation: how long the mutual promise lasts.

What US law says

Mutual non-disparagement clauses sit at the intersection of contract law, employment law, and free-speech policy, and the rules vary by context. The First Amendment does not bar these clauses in private agreements, because it restrains government action, not private parties who voluntarily limit their own speech for consideration. Courts generally enforce a clause supported by consideration and drafted with reasonable scope, and mutual wording helps on both fronts. Still, several federal and state limits cut across that baseline, and they apply to the mutual form just as they do to a one-sided one.

Under the National Labor Relations Act, the National Labor Relations Board held in McLaren Macomb (2023) that overly broad non-disparagement and confidentiality terms in severance agreements can unlawfully chill employees’ rights to discuss working conditions, even where the clause is framed as mutual. Employers commonly respond with narrower language and explicit carve-outs for protected concerted activity.

The federal Speak Out Act (2022) makes pre-dispute non-disparagement and nondisclosure clauses unenforceable as to disputes involving sexual assault or sexual harassment, and mutuality does not cure that. The Consumer Review Fairness Act (2016) voids clauses in standardized consumer form contracts that restrict a customer’s ability to post honest reviews.

State law adds further layers. Several states, including California and New York, limit non-disparagement and confidentiality provisions in settlements of harassment or discrimination claims, and some require specific carve-outs or timing regardless of whether the clause is reciprocal. Because these rules are state-specific and change often, the enforceability of any given clause should be confirmed for the governing-law state before signing.

Remedies also shape drafting. Reputational harm is hard to quantify, so parties sometimes add a liquidated-damages figure, though a court will strike it if it operates as an unenforceable penalty rather than a reasonable estimate of loss. Injunctive relief is often the more practical remedy, and mutual clauses frequently acknowledge, for both parties, that money damages alone may be inadequate.

Common mistakes to avoid

The most frequent error is overbreadth. A clause that bars “any negative statement” can sweep in truthful complaints, government reports, and court testimony, which makes it partly unenforceable and a liability under statutes like the NLRA. Narrow the language to false or misleading statements, and always carve out legally protected speech for both sides.

A mutual-specific mistake is false symmetry: labeling a clause “mutual” while the definitions, remedies, or carve-outs favor one party. If only one side’s officers and affiliates are covered, or only one side may seek an injunction, the clause is reciprocal in name only, and the imbalance can surface in a dispute. Read both directions of every sentence and confirm each obligation truly runs equally.

Other recurring gaps include silence on scope, so it is unclear whether officers, affiliates, and agents are bound (a company can speak only through people); no survival language, so the promise arguably ends with the contract; no defined remedy, which leaves the injured party with only hard-to-prove damages; and no reference to online reviews and social media, where most modern disparagement actually happens. Finally, parties often forget to check the governing-law state, and a clause that is fine in one jurisdiction can be void or restricted in another.

When it matters most

Mutual non-disparagement clauses do their heaviest work at moments of separation and sale, where both sides have reputations to protect. Severance and settlement agreements use the reciprocal form to close a chapter cleanly, so neither the departing employee nor the employer airs grievances afterward. In the sale of a business, the buyer pays for goodwill and the seller often stays in the same industry, so a two-way promise keeps each from undermining the other. Executive employment and separation agreements use mutual wording to guard leadership reputations on both sides at once.

They also matter in partnership, joint-venture, vendor, and co-marketing deals, where two brands are publicly linked and criticism from either can unsettle customers or investors. In each case, the clause is a survival obligation that both parties must track long after signing, since a breach can occur years later in a single post.

That tracking is where disciplined contract management pays off. A mutual non-disparagement clause is only as strong as each organization’s ability to remember it exists, locate the exact wording, and act quickly when a breach appears on either side. A CLM platform like Pactolane keeps every executed agreement in a searchable repository, and PactAI can surface non-disparagement and other survival clauses across a portfolio, extract their scope and duration, and flag them in a multilingual executive summary so counsel is not reconstructing obligations from scattered files. Combined with an audit trail and compliance playbooks that check new drafts against your standard, symmetric carve-outs, that discipline turns a balanced clause into a promise both parties can actually enforce.