Parties frequently want settlement terms kept confidential, and several constraints limit how far that can go.
Between the parties. A confidentiality provision is enforceable, with carve-outs for disclosure to advisers, to tax authorities, as required by law, and to enforce the agreement.
Court records. Sealing a settlement filed with the court requires overcoming the public right of access. Settlements not filed are generally not public.
Statutory restrictions. Several states prohibit confidentiality provisions covering allegations of sexual harassment, assault or discrimination, or make them voidable at the claimant’s election. Federal law makes predispute non-disclosure of sexual harassment claims unenforceable in defined circumstances, and denies tax deductions for settlement payments subject to harassment-related non-disclosure agreements.
Public entities. Settlements involving public bodies are usually public records regardless of a confidentiality clause, and drafting one that cannot be honoured damages credibility.
Regulatory reporting. Some settlements must be disclosed to regulators, insurers, auditors or lenders.
Remedies. Liquidated damages are common because loss is hard to prove. Provisions requiring repayment of the entire settlement for any breach are attacked as penalties; tiered, proportionate provisions fare better.
Practical drafting. State who may say what, and provide an agreed public statement.