ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, September 11, 2014

California law against non-disparagement clauses

This is big - Governor Jerry Brown just signed a bill into law that would prohibit non-disparagement clauses in consumer contracts.  The law states that contracts between a consumer and business for the "sale or lease of consumer goods or services" may not include a provision waiving a consumer's right to make statements about the business.  The section is unwaivable. Furthermore, it is "unlawful" to threaten to enforce a non-disparagement clause.  Civil penalties for violation of the law range from up to $2500 for a first violation to $5000 for each subsequent violations.  (Violations seem to be based upon actions brought by a consumer or governmental authority, like a city attorney.  They are not defined as each formation of a contract!)  Furthermore, intentional or willful violations of the law subject the violator to a civil penalty of up to $10,000.

We've written about the dangers of non-disparagement clauses on this blog in the past.  It's nice that one state (my home state, no less!) is taking some action.  Will we see a California effect as other states follow the Golden State's lead?  As I've said before, those non-disparagement clauses aren't such a good idea- now would be a good time for businesses to clean up their contracts.

 

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