Non-disparagement clauses are inserted into legal agreements to stop a party making public statements which might damage the other party’s reputation. For example:
The Customer warrants that they will not disparage the Business in any way (directly or indirectly)
In this article, we find out whether a business can use a non-disparagement clause as a legal tool to remove a negative post or review on social media which damages the reputation of the business in the digital world.
And for those who don’t have or can’t use a non-disparagement clause, at the end of this article, Michael Field will explain other ways to deal with negative comments made online.
How do social media platforms respond to a request to remove a post or review?
A business wanting a negative post or review removed will complain to the social media platform and request its removal. It will find that the grounds for removal are limited.
Illustrations
Facebook: you can report a post (give ‘feedback’) if it contains:
Nudity / Violence / Harassment / Suicide or self-injury / False news / Spam / Unauthorised sales / Hate speech / Terrorism / Something else (such as a breach of Intellectual property)
Google Reviews: you can flag as inappropriate (a ‘policy violation’) if:
- This post contains hateful, violent, or inappropriate content
- This post contains advertising or spam
- Off-topic
- This post contains conflicts of interest
TripAdvisor Reviews: you can complain about a review if is ‘fraudulent or otherwise improper’ in violation of the guidelines.
Comments: None of these social media platforms lists ‘damage to reputation’ as a ground for complaint. The closest are: ‘Hate speech’, ‘hateful’, ‘inappropriate’ or ‘improper’.
A business should complain, but know that it is unlikely that an offending post or review will be removed because the social media platforms assume that ‘freedom of speech’ is a constitutional right not only in the USA but world-wide.
To illustrate, TripAdvisor states that it will ‘only sometimes’ remove a review and recommends that a business write a management response as the best way to deal with a negative review.
Might a non-disparagement clause be the answer?
What is needed for a legally valid non-disparagement clause?
Non-disparagement clauses are often found in consumer contracts. Their purpose is to ‘discourage’ negative comments.
But unless the clause complies with the Australian Consumer Law (ACL) provisions concerning unfair contract clauses, it will be void.
Illustration
Home builders are a magnet for complaints ranging from delays to poor workmanship to unforeseen extra costs. Naturally, they would like to stop dissatisfied customers from posting bad reviews online on social media.
From October 2008, Wisdom Properties, a home builder, included this non-disparagement clause in over 3,000 Home Building Agreements:
- The owner must not make a media release, announcement, blog, public statement or article for publication about the Contract or the services provided pursuant to this Contract, whether in electronic form or otherwise, except:
- with the prior written consent of the Builder (which may be withheld at the Builder’s absolute discretion); or
- as required by law.
- If the Builder agrees to the Owner’s request to make a media release, announcement, blog, public statement or article for publication, the Builder is entitled to determine the time and wording of that media release, announcement, blog, public statement or article for publication.
- The Owner shall indemnify the Builder for any loss arising from any media release, announcement, blog, public statement or article for publication whether or not the Builder authorised that media release, announcement, blog, public statement or article for publication.
- The Builder reserves its right to commence any action, including but not limited to a defamation action, against the Owner arising from any publication of information howsoever related to the Builder.
Wisdom Properties used this clause to stop bad reviews from being published on the online review website, ProductReview.com.au.
Unfortunately, Wisdom Properties continued to use the clause after the unfair contract terms law came into force on 12 November 2016. The law applies to its Home Building Agreements because they contain standard form contract terms.
The regulator, the ACCC (Australian Competition & Consumer Commission), considered that the non-disparagement clause was an unfair contract term and therefore void under sections 23 and 24 of the Australian Consumer Law (the ACL).
Wisdom Properties admitted that the clause was an unfair contract term and undertook to remove the clause from its agreements for three years, to send a corrective customer letter, to publish a corrective notice on its website and to implement an ACL Compliance Program.
ACCC Commissioner Sarah Court said: “Any standard form contract terms that prevent or limit a customer from making public comments about goods or services are likely to be unfair under the Australian Consumer Law.” See ACCC media release (6 June 2018)
Comments
(1) The ACCC used the word likely in the media release because the ACCC’s interpretation of the law on whether non-disparagement clauses are unfair contract terms has not been tested in court. There are two arguments that a business might raise that a clause is valid:
(a) the clause is valid because it is reasonably necessary to protect the legitimate interests of the party advantaged by the term (s 24(1)(b) ACL), and
(b) the customer has not suffered any detriment because of the clause (s 24(1)(c) ACL).
- The non-disparagement clause used by Wisdom Properties was broadly drafted and imposed unfair obligations on the customer, and it was agreed it was invalid. If a non-disparagement clause was drafted more narrowly to simply prohibit statements which actually disparage the business, it may be valid in a standard form contract.
Conclusion: A simple and clear non-disparagement clause has more chance of being valid and enforceable than a complex and broadly drafted clause, as we will see in the case study below.
What legal action can be taken to remove a post or review?
A business which includes a valid non-disparagement clause in its documentation has a specific reason to request that a negative post or review be removed from social media.
There is no court decision on removal of a negative post or review on social media in Australia using a non-disparagement clause. But there is a court decision where a non-disparagement clause was used to prevent a program screening on traditional media (free to air television).
The decision is Cleary v Kocatekin [2012] NSWSC 364 in the Supreme Court of New South Wales in which Justice Davies was asked to enforce a non-disparagement clause in a deed of settlement of a building dispute between a builder and a customer. The clause was:
Each party agrees not to disparage or otherwise bring into disrepute or otherwise cause any injury or potential injury or damage to the good name and standing of the other, either orally or in writing.
The builder sought an injunction against Channel Seven to prevent it from screening on its Today Tonight program a story about the building dispute because the screening would be in breach that non-disparagement clause.
Justice Davies agreed and granted an interim injunction against Channel Seven (even though it was not a party to the deed of settlement), saying:
there is a serious question to be tried on the issue of whether Channel Seven would be aiding, abetting or assisting the breach of contract by the Defendant [the customer] by disclosing information concerning the dispute which might injure the good standing or repute of the Plaintiff [the builder]. [paragraph 35, judgment]
Comments
- A deed of settlement is drafted when a legal dispute is settled. It is not a standard form contract.
- The builder was able to use the clause against Channel Seven even though it was not a party to the deed because Channel Seven would be aiding, abetting or assisting the breach of contract by screening the interview.
- If the damage to reputation is serious enough to warrant the cost of legal proceedings, this decision will assist a business to seek a court order for the removal of a negative post or review on social media if it is in breach of a non-disparagement clause.
Conclusion
A properly drafted and valid non-disparagement clause could be a very useful legal tool to use for the removal of a negative post or review on social media, if coupled with the threat of legal proceedings.
