Confidential Settlement

Confidential Settlement

Confidential Settlement

Confidentiality provisions restrict disclosure of the settlement amount, terms, and sometimes the underlying allegations. Enforceability varies, and several states restrict confidentiality where public safety or specific claim types are involved.

Court approval may be required for sealing.

Alternative Names:

Confidentiality in Settlement, Sealed Settlement

Why it Matters?

Statutory restrictions have expanded, with several states barring confidentiality provisions covering sexual harassment claims, public hazards, and in some jurisdictions the existence of a settlement itself. Provisions that violate those statutes may be unenforceable while the rest of the agreement stands. Drafting a liquidated damages provision for breach is also worth considering, since actual damages from disclosure are difficult to prove.

Frequently asked questions

Are confidentiality provisions always enforceable?

Are confidentiality provisions always enforceable?

No. Several states restrict them for harassment claims, public hazards, and product safety information, and such provisions may be void.

Why include liquidated damages?

Why include liquidated damages?

Because actual damages from a disclosure breach are difficult to prove, leaving the provision without a practical remedy.