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Clause against negative reviews

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fstep2

Member
What is the name of your state (only U.S. law)? NY

I found this article pretty interesting. Basically a company made a clause in it's terms of service which forces their customers into an agreement not to leave negative or defamatory feedback if they do business with them or face a $3,500 fine. Apparently it worked years ago on multiple occasions. Just wondering if this is a legit technique and whether it will hold up in court?

http://www.techdirt.com/articles/20131113/06112425228/online-retailer-slaps-unhappy-customers-with-3500-fee-violating-non-disparagement-clause.shtml
 


quincy

Senior Member
What is the name of your state (only U.S. law)? NY

I found this article pretty interesting. Basically a company made a clause in it's terms of service which forces their customers into an agreement not to leave negative or defamatory feedback if they do business with them or face a $3,500 fine. Apparently it worked years ago on multiple occasions. Just wondering if this is a legit technique and whether it will hold up in court?

http://www.techdirt.com/articles/20131113/06112425228/online-retailer-slaps-unhappy-customers-with-3500-fee-violating-non-disparagement-clause.shtml
These clauses, while a few companies are still including them in their terms of service, are unenforceable/unconstitutional.
 

fstep2

Member
These clauses, while a few companies are still including them in their terms of service, are unenforceable/unconstitutional.
Since when have they become unenforceable? This company apparently collected quite a few fines just a few years ago.

Is there a more appropriate way to phrase this that would stand in court?
 

quincy

Senior Member
Since when have they become unenforceable? This company apparently collected quite a few fines just a few years ago.

Is there a more appropriate way to phrase this that would stand in court?
The only way non-disparagement clauses are enforceable is if the person signing a contract that contains such a clause has been made aware of the clause in the contract in advance, understands exactly what it means (including what constitutes "disparagement"), and specifically, knowingly waives their constitutional right to freely express their opinion.

Even then, however, these clauses can be challenged by a consumer/employee if they get the urge to speak publicly. They have already been challenged in many states.

California, as a note, recently introduced legislation which would allow for civil penalties against companies that include these clauses without clear notification to the employee/consumer of the existence of the clause. The employee/consumer then must intentionally and voluntarily waive his/her constitutional right to freely speak of the employer/company.

Everyone really needs to read carefully and understand all terms of any contract or agreement before signing. I think it is generally smart to avoid signing any contract that has a non-disparagement clause (with only a few exceptions).
 
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fstep2

Member
The only way non-disparagement clauses are enforceable is if the person signing a contract that contains such a clause has been made aware of the clause in the contract in advance, understands exactly what it means (including what constitutes "disparagement"), and specifically, knowingly waives their constitutional right to freely express their opinion.

Even then, however, these clauses can be challenged by a consumer/employee if they get the urge to speak publicly. They have already been challenged in many states.

California, as a note, recently introduced legislation which would allow for civil penalties against companies that include these clauses without clear notification to the employee/consumer of the existence of the clause. The employee/consumer then must intentionally and voluntarily waive his/her constitutional right to freely speak of the employer/company.

Everyone really needs to read carefully and understand all terms of any contract or agreement before signing. I think it is generally smart to avoid signing any contract that has a non-disparagement clause (with only a few exceptions).
But isn't the consumer implying an agreement to terms of service of a website when they conduct business there? If not what constitutes "making someone aware"?
 

quincy

Senior Member
But isn't the consumer implying an agreement to terms of service of a website when they conduct business there? If not what constitutes "making someone aware"?
To make someone aware of what is in a contract means not hiding it in a several paragraph or several page contract filled with legalese. It is better to make problematic clauses stand out, and then to reiterate the provisions that are important (either leading with the provision or, if in the middle of the contract, adding it again at the end above the signature) to ensure the employee/consumer knows it is there.

An employer/company does not want the contract terms found by a court to be either ambiguous or provisions inconspicuously hidden in the pages to "get one over" on the signer. The person signing should, of course, read all contracts in their entirety and know and understand what is being signed prior to signing, but easier to understand provisions and clear wording in the contract means the contract is more likely to hold up in court.

I want to clarify now a bit what I said in an earlier post. I said that non-disparagement clauses are "unenforceable/unconstitutional" and that is only sort of correct. Anyone who signs a contract is (generally) legally bound by all terms of the contract, and this includes a contract with a non-disparagement clause in it. However, in reality, you cannot stop a person from speaking out and the costs to pursue a legal action against one who does so can be extremely high. The costs can easily exceed any damages (and that is if damages can be proved).

Some contracts have included, to go along with their non-disparagement clause, a penalty or damages provision that spells out what it will cost the signer of the contract if they breach it (ie, if you disparage me, you must pay me X amount of dollars). That would avoid a court hearing and the disparager could be billed for the breach.

However, these clauses, even when coupled with a damages provision, can be challenged or "worked around," and have been successfully.

First, the employer/company who has a non-disparagement clause in their contract and is "disparaged" (whatever that might mean - and the definition can be argued in court, if it is not specifically spelled out in the contract) - can sue for breach of contract or to collect damages provided for in the contract. It is costly to sue, as I said before, and it can actually be MORE damaging to an employer or a company's reputation to file a legal action against an employee or customer, because it generates more negative publicity than a single negative review would. This is something an employer or company must consider carefully.

If a review is defamatory and not simply disparaging (again, whatever "disparaging" might mean), there are already laws to handle defamation.

As a note, a third party (such as a spouse or friend of the contract-signer) is not bound by the contract terms and can freely speak ill of the employer or company. As another note, of those companies I am aware of whose non-disparagement provisions have been challenged, all have removed the clauses from their contracts as a result.

Non-disparagement clauses are common in settlement agreements but the parties involved in settlements are made aware of this being a term of settlement and, without agreement to this provision, there might not be a settlement.
 
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paula55

Junior Member
non-disparagement clause in real estate settlement agreement

I am looking for advice concerning a non-disparagement clause that was included in a settlement agreement and mutual release. I purchased two properties from a real estate company through the internet in 2010. Their website advertises all of their properties as fully rehabbed with tenants and property management in place. Not only were the properties not rehabbed but they cost me money in taxes, utility bills and fines for various violations.

This nightmare continued for almost two years until the owner and CEO of the company agreed to buy back the properties and make monthly payments over the course of a year. That was a year and a half ago and I have yet to see a dime. He included a non-disparagement clause in the settlement agreement which I signed in good faith. He has not responded to any of my emails or phone calls since last August.

I believe this person committed fraud and would like to report him to the BBB and write a negative review on Ripoff Reports to hopefully spare some other unsuspecting person from suffering the same trauma that I did. I believe the contract would be void as no consideration ever exchanged hands and I should be able to write my reviews and report him without fear of legal consequences. Has anyone else experienced something similar or know if my assumptions are correct. Thank you for any responses.
 
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quincy

Senior Member
I am looking for advice concerning a non-disparagement agreement. I purchased two properties from a real estate company through the internet in 2010. Their website advertises all of their properties as fully rehabbed with tenants and property management in place. Not only were the properties not rehabbed but they cost me money in taxes, utility bills and fines for various violations. This nightmare continued for two years until the owner and CEO of the company agreed to buy back the properties and make monthly payments over the course of a year. That was a year and a half ago and I have yet to see a dime. He included a non-disparagement clause in the settlement agreement which I signed in good faith. He has not responded to any of my emails or phone calls since last August. I believe this person committed fraud and would like to report him to the BBB and write a negative review on Ripoff Reports to hopefully spare some other unsuspecting person from suffering the same trauma that I did. I believe the contract would be void as no consideration ever exchanged hands and I should be able to write my reviews and report him without fear of legal consequences. Has anyone else experienced something similar or know if my assumptions are correct. Thank you for any responses.
paula55, please start your own thread and, when you do, please include the name of your state.

Reviving old threads to add new questions or comments is frowned upon on this forum.

Thank you. :)
 

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