Can I have a non-disparagement or no-review clause in my contract?
Not if you’re in California. On September 9th, 2014, Governor Jerry “doo-doo” Brown(1) signed into law bill AB 2365, aka the “Yelp Bill.” The statute provides that any contract for the sale of consumer goods or services “may not include a provision waiving the consumer’s right to make a statement regarding the seller.” If a wedding vendor violates this new law, the fine can be up to $2,500 for the first violation and $5,000 for the second violation. Willful or reckless violation can get a wedding vendor slapped with a $10,000 fine. Yowsa!
(**DISCLAIMER: In no way, shape, or form is this article intended to be legal advice. This article is published for general informational and entertainment purposes only. If you have specific questions related to your legal needs, please contact an attorney in your area. Again, this article is not legal advice and I am not your lawyer. I’m your private dancer. Dancer for money.(2) Just kidding. But seriously, this article is not legal advice.**)
So what if your wedding business is not in California? Will this have an effect on your ability to contract for a client’s silence? It’s all going to depend. But first, please step on the bus, because I’m about to take you to school.
What is a Non-Disparagement Clause?
A non-disparagement clause (also referred to as a ‘no-review’ clause) is a provision in a contract that prohibits the client from making statements that would tend to slight, belittle, or lower the esteem of the wedding vendor.(3)
Remember when I told you that defamation is a false statement that lowers a professional’s reputation? No client has the legal right to do that, ever. The key difference between a defamatory statement and a disparaging statement is that the latter, while lowering the vendor’s reputation, may still be factually true and is therefore lawful. The line is not always clear. So, a non-disparagement clause prevents the client from saying all things bad: whether true, false, or the grey area in between.
Depending on the scope of the of the non-disparagement clause, the prohibition may include statements made both online and offline, i.e., talking smack to her buddies at the nail salon or posting bad reviews online (theknot.com, weddingwire.com, yelp.com, angieslist.com, etc).
Are Non-Disparagement Clauses Common in Business?
Yes. Non-Disparagement clauses are extremely common and generally enforceable in two contexts: Negotiated Settlements (like after a lawsuit is filed) and Employment Contracts (both at initial hire and as part of severance agreements).
No beef is given to non-disparagement clauses within the sphere of settlement and employment agreements for two principal reasons: There’s a level playing field and there’s consideration.
A LEVEL PLAYING FIELD (OF DREAMS)
An overwhelming percentage of contracts executed in the U.S. are “contracts of adhesion,” meaning that one party drafted the document, and the other party can either ‘take it or leave it.’ Generally, the drafting party is in the more powerful position. Your cell phone contract, insurance policy, and cable terms and conditions all fall into this category.
Large companies know that clients (a) never read them, (b) don’t understand them, and (c) have few other options for that particular product or service.(4)So, when companies try to sneak something crazy into a contract of adhesion, the Courts will view it with much more scrutiny and criticism.
Not so with settlement and employment agreements. Courts are more likely to enforce these contracts, even if strange or oppressive terms are included, because both parties stand on equal ground.
Generally, settlement and employment agreements are drafted by lawyers after several rounds of haggling. Even when there are no lawyers (no fun!), everyone gets a chance to put their two cents into the document. Even more significant, executing a settlement agreement is better for the parties than most alternatives. In other words, it’s not ‘take it or leave it,’ and both parties tend not to want to leave it.
Every contract requires consideration on both sides to be legally enforceable. Consideration means something of value. For example, let’s say you and I agree that I will sell you my 2004 F-250 (aka Truck-a-saurus) for $10. My consideration is the truck and your consideration is the $10. Got it? Good.
Courts are more likely to enforce a non-disparagement clause in settlement and employment agreements because there is identifiable consideration on both sides. Employers often share various proprietary and non-proprietary information with employees. As such, employers can be vulnerable to ex-employees with an axe to grind. In employment and severance agreements containing non-disparagement provisions, the employer forks over x dollars in exchange for a promise from the employee to S.T.F.U.
Are Non-Disparagement Clauses in Wedding Vendor Service Contracts Enforceable?
“Hey, that’s great info about employment contracts, but I thought we were talking about non-disparagement clauses in wedding vendor service contracts?” OK, calm down. We’re getting to that.
Outside of the Golden State, the answer as to whether a wedding vendor service contract may contain a non-disparagement clause is open to debate. Like most contract law, this issue will be handled on a state by state basis.
To date, no state appellate court has rendered an opinion on this topic. These two cases involving non-disparagement clauses in service contracts are currently in litigation but will likely not yield much useful information. You can read more about them here and here. According to my research, Pennsylvania is the only other state considering legislation similar to California’s ‘Yelp Bill.’
Can we use what we know about settlement and employment agreements to determine whether a court would uphold a non-disparagement clause (for brevity’s sake: “NDC”) in a service contract? Yes. The factors determining the legitimacy of NDCs in those cases, among others, would likely inform a court’s decision on service contracts. As we know, there are rarely bright lines in the law, and a court’s analysis will often depend on numerous facts.
Negotiated Terms: As stated above, an NDC is more likely to be considered enforceable if the contract is negotiated (even without lawyers). Most wedding vendor service contracts are not contracts of adhesion. I have not come across a single wedding professional that does not negotiate value or price, or remove/add terms at the request of potential clients. In other words, most wedding service contracts are not ‘take it or leave it.’ Competition is so tight in the wedding industry that very few businesses could survive with that policy. Score this one in favor of the NDC.
Consideration Part I: NDCs in employment agreements are favored because employers are vulnerable to disparagement based on dissemination of proprietary and non-proprietary info. This is NOT the case with basic service contracts. Since wedding clients are not spending time with the boss’ gossip loving secretary or learning the company’s dirty laundry, the same vulnerability is not present. Put another way, the client’s disparaging statements would be limited to the quality of the service provided (outside view- par for the course) and not about how the sausage is made (the inside view- not for the public). As such, there is not a real value exchange, and therefore no consideration. Score this one against the NDC.
Consideration Part II (First Blood): But, what if the service contract explicitly addresses consideration for the NDC? For example, where the agreement states that a portion of the price, or even an amount over and above the price, is paid by the client expressly in exchange for the client’s promise to S.T.F.U.? While there are no cases on point to test this theory, if an NDC appears in this fashion, a strong argument can be made that the parties attached a value to the client’s future silence, and the vendor agreed to pay that value. Like, when you go to the hair school to get your haircut for $3. You can’t then go complain that your haircut was terrible. C’mon man, you only paid $3. What’d you expect? Plus, they’re learning. Give em’ a break. Score this one in favor of the NDC, Flock of Seagulls.
Conspicuous: Courts tend to void terms (particularly in adhesion contracts) that are hidden deep in a contract and not typically present in similar contracts. Hiding an NDC in 3 point font between paragraph 36(b)(i)(a) and 36(b)(i)(b) would probably piss the court off. However, if the NDC appears in bold, is underlined, and requires the client’s initial, then the wedding vendor is now cooking with grease. Score this as a wash.
Reviewed by a Lawyer: Again, if a lawyer gets involved, Courts generally assume that the parties know what they are doing and will not second guess the contract. So, if the client says, “I’ll let my family lawyer look at it first,” and then signs, score this in favor of the NDC. Unless that family lawyer is Matlock, then score this against the NDC.
First Amendment: The First Amendment only deals with actions taken by the State or Federal Government and will not limit private parties’ ability to contract. Thus, Courts will not consider Constitutional rights with regard to NDCs. Score this one in favor of the NDC and James Madison.
FRANKIE SAYS RELAX! DON’T DO IT
In conclusion, with the exception of California, who the hell knows whether a wedding vendor contract with an NDC will be considered enforceable. But even if it was absolutely, 100% legal, would you really want that in your contract? NO WAY! Wordy legal jargon forced on the client at the outset of the relationship is not the way to solve the problem. There are always going to be nutjobs that will torch you online. We must rely on our established reputation with our clients that love us to outshine negative reviews.
I advise soon-to-be-weds to run away if they see a ‘no-review’ clause. And I’m not the only one that doesn’t trust a vendor that cannot stand by their work. Look at the backlash this Hotel received for fining guests $500 for bad reviews. While that Hotel might now have $500, it has a long line of people who will not stay there.
Shakespeare once wrote, “Love from the breast of thou former customer shall be stronger than any contractual provision a court may enforceth.” I think that’s pretty wise.
1. Due to an arrangement that I made in 2nd Grade, I am contractually obligated to refer to anyone with the last name Brown as ‘Doo Doo’ Brown.
2. This is a Tina Turner reference. I love Tina Turner.
3. If you are law nerd, there is a cool Michigan case that defines ‘disparagement.’ Check out Sohal v. Michigan State Univ. right here.
4. Check out FreeLife International, Inc. v. American Educational Music Pub., an Arizona case that has a discussion on contracts of adhesion.