SB176 Alabama 2021 Session

Summary

Primary Sponsor

Rodger SmithermanSenator

Democrat

Session

Regular Session 2021

Title

Contracts, creation and enforcement of non-disparagement agreements, provided

Summary

SB176 creates the Alabama Non-Disparagement Obligations Act to govern how non-disparagement clauses in contracts are created and enforced.

What This Bill Does

It defines key terms and sets when a non-disparagement clause can be enforced in a contract. For enforcement, the contract must be in writing, signed, and supported by consideration, and it must prohibit disparagement of named parties with a statement that is objectively injurious and causes specific harm. The act also allows certain disclosures in specific contexts (law enforcement, regulators, subpoenas, court proceedings, legal consultation, discovery under protective orders, and sealed civil filings) and provides remedies like injunctions, actual damages, and attorney fees, while clarifying that no new cause of action exists outside a contract. The law applies to contracts entered into on or after January 1, 2022, and includes severability, disclaimers, and damage-mitigation provisions.

Who It Affects

• Group 1: Parties to contracts governed by the act in Alabama (including individuals, corporations, trusts, government entities, and other legal or commercial entities) who create, sign, or are bound by non-disparagement clauses.
• Group 2: Named third parties in such contracts and the courts, lawyers, and government agencies involved in enforcement, disclosures, protective orders, and disputes arising under these contracts.

Key Provisions

• Establishes the Alabama Non-Disparagement Obligations Act to govern creation and enforcement of non-disparagement clauses in contracts.
• Defines injurious statements, private information, and proprietary information used to determine when a statement is harmful.
• Requires a contract to be in writing, signed by all parties, and supported by adequate consideration to be enforceable under the act.
• For enforceability, the contract must prohibit disparagement of named parties, involve an objectively injurious statement, and show specific resulting loss.
• Creates carve-outs allowing certain disclosures (to law enforcement, regulators, grand juries, in court, for legal counsel, during discovery with protective orders, or in sealed civil filings).
• Authorizes contracts to require filings under seal and gives courts discretion to unseal information, considering potential harm to parties.
• Allows severability of unenforceable provisions from the rest of the contract and permits waiver only if clearly stated by the parties.
• Preserves other legal defenses and obligations; clarifies that the act does not create remedies outside contract enforcement and not reduce existing rights,
• Provides damages mitigation options (good faith or corrective retractions) and outlines available remedies (injunctive relief, actual damages, and attorney fees) when a breach occurs.
• Applies to contracts entered into on or after January 1, 2022, with the act becoming effective on that date.

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