SB170 Alabama 2020 Session

Summary

Primary Sponsor

Rodger SmithermanSenator

Democrat

Session

Regular Session 2020

Title

Contracts, creation and enforcement of non-disparagement agreements

Summary

Creates the Alabama Non-Disparagement Obligations Act to govern how non-disparagement clauses in contracts are created and enforced.

What This Bill Does

Defines what counts as an injurious statement and what private or proprietary information is; makes non-disparagement clauses enforceable only if the contract is in writing, signed, and supported by consideration, and if the clause specifically prohibits disparagement and the statement is objectively injurious and causes specific loss. It also sets allowed disclosures for certain purposes and allows sealing of court filings; allows a court to void a clause that is overly broad, unconscionable, or lacks mutuality; and provides for damages, attorneys’ fees, and potential remedies if a breach occurs.

Who It Affects

• Parties to contracts governed by the act (individuals or organizations) – must meet specific writing, signing, consideration, and content requirements to enforce or defend a non-disparagement clause; may seek damages or other remedies if breached.
• Shareholders, owners, members, and officers of entities governed by Title 10A, Code of Alabama 1975 – may waive rights under the act if the waiver clearly states they are relinquishing those rights.

Key Provisions

• Definition of injurious statement and the types of information (private and proprietary) that can be involved.
• Enforceability standard: a non-disparagement clause is enforceable only if the contract prohibits disparagement, an objectively injurious statement is made, and it causes specific loss.
• Contract requirements: the agreement must be in writing, signed by all parties, and supported by adequate consideration.
• Disclosure permissions and notice: contracts may include allowed disclosures (e.g., to law enforcement, regulators, subpoenas, legal proceedings, or in sealed filings) and may require notices related to protected information.
• Court authority: a court may void a contract or parts of it if it is overly broad, unconscionable, or lacks mutuality.
• Damages and remedies: courts may award actual damages, injunctive relief, and attorneys’ fees where allowed or provided by the contract; defendants may mitigate damages by good faith or retracting the injurious statement.
• Effective date: the act takes effect on the first day of the third month after passage/approval.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Contracts