ABSTRACT
Investigative reporters and the #metoo movement exposed the widespread use of nondisclosure agreements intended to maintain confidentiality about one or both contracting parties’ embarrassing acts. These reputational NDAs (RNDAs) have been widely condemned and addressed in the past half-decade by legislators, activists, and academics. Their exposure, often via victims’ breaches, revealed a curious and distinct dilemma for the non-breaching party whose reputation is vulnerable to disclosure. In most contracts, non-breaching parties might choose to forgo enforcement because of the cost and uncertain success of litigation and the availability of other pathways to a satisfactory resolution. Parties to a RNDA, by contrast, often decide to forgo enforcement when doing so would increase the very harm the contract sought to limit, and when victory would bring limited relief. It is unsurprising, then, that RNDAs are often under enforced, or enforced sporadically and with limited success. In such instances, the RNDAs have failed to meet their goals while they worsened the reputational harm of the embarrassing acts themselves …
Fenster, Mark, How Reputational Nondisclosure Agreements Fail (Or, In Praise of Breach) (January 20, 2023), Marquette Law Review, volume 107, no 2, 2024.
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