What a non-disparagement clause does
A non-disparagement clause restricts what a party may say about the other once the deal closes or the relationship ends. It typically reaches oral and written statements, social media posts, online reviews, press comments, and remarks made to customers, investors, or employees. The obligation is often drafted to survive termination, because the reputational risk usually outlives the contract itself.
The clause serves three practical goals. First, it protects goodwill that the parties bargained for, especially in the sale of a business or a negotiated exit. 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. A non-disparagement clause lowers that bar by making the promise contractual, so the injured party can sue on the agreement rather than on tort law.
Scope is everything. A well-drafted clause defines who is bound (the signatory only, or also its officers, affiliates, and agents), what speech is covered (false statements, or any negative statement), and to whom it applies. The broader the language, the more valuable it looks to the protected party, and the more likely a court is to question it.
Drafting example
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, its officers, directors, or products. Mutual wording binds both sides and reads as fairer to a court. Nothing in this Section restricts either party from (a) providing truthful testimony or information required by law, subpoena, or legal process; (b) communicating with or participating in an investigation by a government agency; or (c) enforcing this Agreement or exercising any legal right. These carve-outs preserve legally protected speech and keep the clause enforceable. This Section survives termination or expiration of this Agreement.
The annotations matter as much as the operative words. The mutual framing signals balance. The carve-outs prevent the clause from being read as a gag on protected activity. The survival sentence answers a question that otherwise invites litigation: how long the promise lasts.
What US law says
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, but several federal and state limits now cut across that baseline.
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. 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. 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. 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 clauses frequently acknowledge that money damages alone may be inadequate.
Common mistakes to avoid
The most frequent error is overbreadth. A clause that bars “any negative statement” about a party can sweep in truthful complaints, government reports, and court testimony, which makes it both 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.
A second mistake is a one-sided clause where mutuality was expected. If only the departing employee or the seller is bound, the other side stays free to criticize them, and the imbalance can weaken both enforcement and goodwill. A third is silence on scope: failing to say whether officers, affiliates, and agents are covered leaves an obvious loophole, since a company can speak only through people.
Other recurring gaps include 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
Non-disparagement clauses do their heaviest work at moments of separation and sale. Severance and settlement agreements use them to close a chapter cleanly and prevent a public airing of grievances. In the sale of a business, the buyer pays for goodwill and does not want the seller undermining it afterward, so the clause protects value on the balance sheet. Executive employment and separation agreements use them to guard leadership reputations on both sides.
They also matter in vendor, partnership, and co-marketing deals, where public criticism can unsettle customers or investors, and in influencer and endorsement arrangements, where a brand’s reputation is directly exposed. In each case, the clause is a survival obligation that must be tracked long after signing, since a breach can occur years later in a single post.
That tracking is where disciplined contract management pays off. A non-disparagement clause is only as strong as an organization’s ability to remember it exists, locate the exact wording, and act quickly when a breach appears. 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 an 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 carve-outs, that discipline turns a well-drafted clause into a promise you can actually enforce.
Related clauses
Frequently asked questions
Is a non-disparagement clause legally enforceable?
A non-disparagement clause is generally enforceable when it is supported by consideration and drafted with a reasonable, defined scope. Courts treat it as a voluntary contract promise, not a First Amendment issue, because the parties choose to limit their own speech in exchange for something of value. Enforceability narrows, however, where federal or state statutes restrict the clause, such as in severance agreements or harassment settlements.
What is the difference between a mutual and a one-sided non-disparagement clause?
A mutual non-disparagement clause binds both parties not to disparage each other, while a one-sided clause restricts only one party. Mutual wording is generally seen as fairer and can read more favorably to a court reviewing the balance of the agreement. One-sided clauses are common where one party has clearly more leverage, such as an employer in a severance deal, but they leave the restricted party exposed to criticism with no reciprocal protection.
Can a non-disparagement clause stop you from talking to a government agency?
A properly drafted non-disparagement clause should not stop you from talking to a government agency or filing a complaint. Federal and state law protect the right to report to bodies like the EEOC, the SEC, or the NLRB, and clauses that try to block that activity can be unenforceable or unlawful. Well-drafted agreements include an explicit carve-out preserving communication with government agencies and truthful testimony required by law.
Does a non-disparagement clause cover truthful statements?
Whether a non-disparagement clause covers truthful statements depends entirely on its wording. A narrow clause reaches only false or misleading statements, so honest criticism stays permitted, while a broad clause can bar any negative statement, true or not. Broad versions are riskier: they may be limited by statutes such as the Consumer Review Fairness Act or the NLRA, and courts may decline to enforce them as written.
What is the difference between a non-disparagement clause and a non-disclosure clause?
A non-disparagement clause limits negative or harmful statements about a party, while a non-disclosure clause limits sharing confidential information regardless of whether it is negative. In short, non-disparagement protects reputation and non-disclosure protects secrecy. Many agreements include both, and they should be drafted separately with their own carve-outs, since the same statute can affect them differently.
How long does a non-disparagement clause last?
A non-disparagement clause lasts as long as the contract specifies, and well-drafted clauses state their duration expressly. Many are written to survive termination or expiration of the agreement, sometimes indefinitely, because reputational risk does not end when the deal does. If the contract is silent on survival, the duration can become a point of dispute, which is why a clear survival sentence is best practice.