HB206 Alabama 2020 Session

Summary

Primary Sponsor

Chris EnglandRepresentative

Democrat

Session

Regular Session 2020

Title

Contracts, creation and enforcement of non-disparagement agreements

Summary

The bill would create the Alabama Non-Disparagement Obligations Act to regulate how non-disparagement clauses in contracts are created and enforced.

What This Bill Does

It defines what counts as an injurious statement and what private or proprietary information is protected. It requires non-disparagement contracts to be written, signed, and supported by consideration, and to include a notice about allowed disclosures for certain official purposes. A contract can be enforced only if it clearly prohibits disparagement, the statement is objectively harmful, and it causes specific loss; courts may void overly broad provisions and can award damages, injunctive relief, and attorneys’ fees. The act also outlines how disclosures may be made, how filings can be sealed, and how statements can be mitigated or retraced to reduce harm. It clarifies that this act does not create a general cause of action outside a contract, and it becomes effective after governor approval and a short delay.

Who It Affects

• Parties to contracts governed by the act (individuals and businesses) who enter into non-disparagement agreements and may be affected by enforceability rules, required contract language, and potential damages or relief.
• Courts, lawyers, and regulatory authorities in Alabama who interpret, enforce, or adjudicate disputes involving these contracts, including decisions about voiding terms, sealing filings, and awarding damages.

Key Provisions

• Defines injurious statements and related concepts (private information and proprietary information) that the act covers.
• Sets enforceability conditions: a contract must prohibit disparagement, an objectively injurious statement must be made, and it must cause specific loss to be actionable.
• Requires contracts to be in writing, signed by all parties, and supported by adequate consideration.
• Requires a notice in the contract about permitted disclosures (law enforcement, regulators, subpoenas, testimony, legal representation, discovery, and filings in civil actions under seal).
• Allows communications to be sealed or unsealed under court rules, with balancing of privacy and public interest.
• Authorizes courts to void all or part of a contract that is overly broad, unconscionable, or lacks mutuality, and to award damages, injunctive relief, and attorneys’ fees as allowed by law.
• Allows mitigation of damages if the injurious statement was made in good faith or by mistake, or if it was properly retracted.
• Preserves other defenses and does not reduce existing obligations outside the contract, including for shareholders or officers who may waive rights under the act.
• Effective date: the act takes effect on the first day of the third month after it passes and is approved.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Contracts