Is a person free to say anything before signing an NDA?

Question

Lots of settlement agreements contain non-disclosure agreements (NDAs) and non-disparagement agreements.

1. In theory, could the creditor say/post anything they like about the debtor with no repercussions before agreeing to the settlement?

2. If the settlement agreement contained a confidentiality term that the agreement itself is confidential, could the creditor share copies of it with other people? Would those other people be bound to confidentiality in any sort of way?

I'm not wondering if this is a good idea. Rather, I'm wondering where the boundaries are.

Answer 1

Yes, but there will be consequences

Legally, so long as you don’t defame the other party, you can say what you want if there is no contract saying you can’t.

Of course, a settlement agreement implies a dispute which implies some sort of pre-existing relationship. Some types of relationship, such as employee-employer, contain obligations of confidence. If that’s the case then there may be legal consequences for your outspokenness.

However, even if you are free as a bird to say what you want - you’re negotiating agreement in which your silence is something of value that you’re bargaining with. If you give the candy away, why am I going to pay for it?

Answer 2

england-and-wales

In theory, could the creditor say/post anything they like about the debtor with no repercussions before agreeing to the settlement?

In theory, yes (but see Dale M's answer). You'd want to retain good evidence which shows the timing of the disclosure so you can prove it took place before the agreement.

Note that if you disclose information and fail to tell the other party about it, you could be at risk of misrepresentation. The other party might argue that in entering into settlement negotiations over an agreement that contains an NDA, you made an implied representation that you haven't already disclosed the information.

If the settlement agreement contained a confidentiality term that the agreement itself is confidential, could the creditor share copies of it with other people?

Usually NDAs contain clauses which provide for exceptions e.g. for disclosure to legal advisers, courts, law enforcement officers, etc. Failing that, you shouldn't share copies with other people or you risk being in breach of contract.

Would those other people be bound to confidentiality in any sort of way?

A third party cannot be bound by a contract that they were not a party to. Depending on the nature of the third party and the information, there might be other legal mechanisms which prevent disclosure. For example, a lawyer would be prevented from disclosure by their regulator's code of conduct. In the majority of other cases, the third party would be free to disclose the information.

For this reason, clauses which provide for disclosure exceptions usually also require that if you use the exception, you agree to sign an equivalent NDA with the third party and to guarantee that they won't disclose. In this way if the third party discloses, you can still be sued for breach of contract.

Answer 3

You would want to be able to demonstrate the timing to protect yourself. And the prudent thing would probably be to disclose prior comments. Whether the NDA holds up probably depends entirely upon its wording; but you wouldn’t want someone to retroactively state you did not enter the contract in good faith by somehow masking prior actions or otherwise acting in a manner deviating from the spirit of the contract. This speaks for the importance of what needs to be in a good contract, including addressing the prospect of prior actions.

Answer 4

A would offer B money for signing an NDA if B knows things that they would be legally allowed to tell the public, and that A doesn't want the public to know.

So while it is legal for B to tell the public before signing an NDA, since the information is out, A now has no reason to pay B for signing an NDA, so B will lose the money they could have received. And I would expect that A doesn't just pay for an NDA, but for an NDA plus confirmation that B hasn't told anyone the information yet. So in that case B receiving money for the NDA plus confirmation that the information is still secret at the time of signing could be fraud.