Non-Disparagement Clauses in New Zealand

If you run a small business, your reputation is one of your biggest assets. It’s also one of the easiest things to damage - sometimes with a single post, review, or message that’s shared at the wrong time (or with the wrong tone).

That’s why many business owners ask about including non-disparagement clauses in their contracts, settlement arrangements, or exit paperwork. Used properly, they can be a practical way to reduce the risk of public “fallout” when a relationship ends or a dispute arises.

But like most legal protections, it’s not as simple as copying a template and hoping for the best. A non-disparagement clause has to be drafted carefully, used in the right situations, and balanced against other legal obligations you may have (especially in an employment context).

Below, we’ll break down what a non-disparagement clause is, where it’s commonly used in New Zealand, what can affect whether it’s enforceable, and what to watch out for as a business owner.

What Is A Non-Disparagement Clause (And What Does It Cover)?

A non-disparagement clause is a contract term where one party agrees not to make negative statements about the other party.

In a business context, that usually means your contract says the other party (for example, an employee, contractor, supplier, customer, or outgoing business partner) won’t:

publish negative comments about you or your business (including online);
encourage others to criticise or boycott your business;
make statements that could harm your brand, reputation, or goodwill; or
repeat allegations in a way that escalates conflict or damages trust.

Non-Disparagement vs Confidentiality (They’re Not The Same)

It’s common for businesses to mix up non-disparagement and confidentiality, but they do different jobs.

Confidentiality focuses on keeping certain information private (for example, pricing, client lists, or dispute terms). It’s usually handled through a Non-Disclosure Agreement or a confidentiality clause inside a broader contract.
Non-disparagement focuses on what someone says (or publishes) about your business - even if what they say doesn’t reveal confidential information.

In many cases, you’ll want both protections working together, especially where a working relationship ends on difficult terms.

What About “Honest” Negative Statements?

This is where things can get tricky. Even if a statement is “honest” from someone’s perspective, it may still harm your business. A non-disparagement clause is often intended to reduce public negativity regardless of intent.

That said, these clauses aren’t a blanket “anything goes” solution. If a clause is drafted so broadly that it effectively tries to prevent someone from doing things the law protects or requires (like making a protected disclosure, participating in an investigation, raising a personal grievance, or giving evidence), that can create real enforceability issues. We’ll cover carve-outs and other drafting tips below.

When Should Small Businesses Use A Non-Disparagement Clause?

A non-disparagement clause isn’t something every business needs in every contract. The goal isn’t to “gag” people - it’s to reduce a very real commercial risk when a relationship ends or a dispute happens.

Here are some common situations where non-disparagement terms come up for small businesses in New Zealand.

1) Employment Relationships (Including Exits And Settlements)

Non-disparagement clauses are commonly included in:

employment agreements (especially for customer-facing, senior, or brand-associated roles);
exit agreements; and
confidential settlements.

For example, if there’s a workplace dispute and you resolve it with a settlement, it’s very common to document the final terms in a Deed of Settlement, which may include confidentiality and non-disparagement obligations on both sides.

It’s also worth making sure the underlying documents (like your Employment Contract) are consistent with any exit terms, so you don’t accidentally create conflicting obligations.

2) Contractor And Freelancer Arrangements

Contractors often work closely with your customers and your internal team. If the relationship ends badly, a contractor could potentially post criticism online, message clients, or make statements that undermine your business.

Including a non-disparagement clause in a well-drafted services arrangement can help reduce that risk - alongside other key protections like confidentiality, IP ownership, and clear deliverables (often set out in a Service Agreement).

3) Business Sales, Partnerships, And Shareholder Exits

If you’re buying or selling a small business, or going through a partnership breakdown, non-disparagement terms can be important for protecting goodwill.

Even if everyone starts with good intentions, a messy exit can easily turn into “competing narratives” online or in the market. A carefully drafted non-disparagement clause can support a clean handover and reduce reputational spillover.

4) Customer Or Client Disputes (Where You’re Offering A Resolution)

Some businesses consider non-disparagement clauses when they resolve a customer complaint (for example, a refund or credit offered as a goodwill gesture).

This area needs careful handling. You don’t want to create terms that could look unfair, heavy-handed, or inconsistent with consumer law expectations (and you should be especially cautious if the customer has little bargaining power).

Often, the better approach is to focus on clear communications and strong contract terms upfront (including your Website Terms And Conditions if you sell online).

Are Non-Disparagement Clauses Enforceable In New Zealand?

Non-disparagement clauses can be enforceable in New Zealand, but whether you can actually rely on one is highly fact-specific. It depends on the exact wording, the context of the relationship (especially employment or consumer scenarios), how the clause was agreed, and whether it’s reasonable in the circumstances.

In practice, a clause that’s specific and proportionate is much easier to enforce than one that tries to ban all criticism forever, in every form, to every person.

Key Legal Concepts That Can Affect Enforceability

Here are some of the main legal “pressure points” to be aware of (without getting lost in legal jargon).

Contract Law Basics

Non-disparagement clauses are contractual promises. That means they generally need:

clear wording (so the parties understand what’s prohibited);
proper agreement (offer, acceptance, intention, etc.); and
consideration (something of value exchanged), unless it’s structured as a deed (common for settlements).

In NZ, contract principles (including those reflected in the Contract and Commercial Law Act 2017) matter because if the clause is vague or uncertain, it can be difficult to enforce.

Employment Law: Good Faith And Practical Fairness

If you’re using a non-disparagement clause in an employment context, the Employment Relations Act 2000 and the duty of good faith can be highly relevant.

In practice, that means:

the clause should not be used (or drafted) in a way that intimidates someone who’s raising genuine workplace concerns through lawful processes; and
if you’re asking an employee to sign new post-exit obligations, the process (including time to consider and the ability to seek independent advice) can matter.

Settlement terms need particular care, because they often come after a dispute and the power imbalance can be more pronounced.

Defamation Risk Still Exists (With Or Without A Clause)

Even without a non-disparagement clause, defamatory statements can create legal risk under the Defamation Act 1992.

However, defamation claims can be slow, expensive, and uncertain. A well-drafted non-disparagement clause can be a more direct contractual tool - but it still needs to be realistic about what you can prove and what remedies a court is likely to grant on the facts.

Carve-Outs: You Usually Can’t (And Shouldn’t) Restrict Everything

Most well-drafted non-disparagement clauses include sensible carve-outs, such as allowing disclosures:

required by law (for example, to comply with a court order);
to professional advisers (lawyers, accountants) on a confidential basis;
to regulatory bodies (when permitted or required); or
as part of protected processes (for example, participation in an investigation or giving evidence when required).

These carve-outs help keep the clause realistic and reduce the risk of it being challenged as unreasonable or unfair in the circumstances.

How To Draft A Strong Non-Disparagement Clause (Without Overreaching)

If you’re going to include a non-disparagement clause, the goal is to make it clear, enforceable, and commercially useful - not just “aggressive”. Overreaching usually backfires, because it creates ambiguity and increases the chance of pushback or unenforceability.

Here are the drafting points we typically recommend businesses think through.

1) Define What “Disparagement” Means

Don’t rely on assumptions. Consider defining “disparaging” conduct, such as:

publishing or communicating statements that are derogatory, harmful, or damaging to reputation;
statements made to customers, suppliers, staff, competitors, or the public (including online);
encouraging others to publish negative statements.

The definition should be tailored to your business. A hospitality business may be more exposed to reviews and social media. A B2B consultancy may be more exposed to direct outreach to clients and referral networks.

2) Make It Mutual Where Appropriate

In many situations (especially settlements), a mutual non-disparagement clause is more practical. It shows balance and can reduce the chance of the other party feeling “cornered”, which can also reduce the likelihood of a breach driven by frustration.

Mutual obligations are also common where both parties have reputational leverage (for example, between two businesses, or during a contractor exit).

3) Be Clear About The Time Period

Some non-disparagement obligations are ongoing, but that doesn’t mean “forever” is always appropriate.

Common approaches include:

a fixed period (for example, 12–24 months);
an ongoing obligation limited to specific types of statements; or
an ongoing obligation tied to confidential settlement terms (common in deeds).

What’s “reasonable” depends on the context, the role, and the commercial risk you’re trying to manage.

4) Cover The Channels That Actually Matter

It helps to be explicit that the clause applies to communications made:

on social media (public posts, comments, stories);
in reviews (Google reviews and other review platforms);
by email or direct message to clients, suppliers, or staff; and
in any public forum or media statement.

This doesn’t mean you list every platform under the sun - but you do want the clause to reflect real-world behaviour, not just “traditional” advertising.

5) Think About Remedies (What Happens If Someone Breaches?)

If there’s a breach, what do you want to be able to do?

Depending on the situation, your agreement might deal with:

injunctive relief (asking a court to order the person to take content down or stop publishing);
damages (compensation for loss);
repayment of a settlement sum (sometimes negotiated, but it can be hard to enforce if it operates like a penalty rather than a genuine pre-estimate of loss); and/or
a process for resolving disputes quickly (for example, written notice and a short cure period to remove content).

This is also where it pays to have the whole agreement reviewed, not just the one clause. A single clause can look fine on its own but create problems when it interacts with the rest of the contract. If you’re updating templates, a Contract Review can help you pressure-test the clause against your actual business risks.

6) Avoid Accidentally Creating A “No Complaints” Clause

One of the biggest mistakes we see is clauses that (intentionally or unintentionally) try to prevent someone from raising legitimate issues, for example:

raising a personal grievance or participating in an employment process;
making a complaint to a regulator where permitted;
making a privacy complaint about personal information handling; or
reporting serious misconduct.

A well-drafted non-disparagement clause should focus on public or harmful statements, while still allowing lawful reporting and necessary participation in legal processes.

How Non-Disparagement Fits With Privacy, Reviews, And Online Conduct

For many small businesses, the biggest reputational risk isn’t a newspaper article - it’s day-to-day online behaviour: reviews, screenshots, social media posts, and public comments.

So when you’re thinking about a non-disparagement clause, it’s worth also checking your “digital legal foundations”.

Privacy And Personal Information Can Become Part Of The Dispute

If a dispute escalates, people sometimes start sharing screenshots of emails, invoices, chat logs, or internal messages. Depending on what’s shared, that can raise privacy issues.

If your business collects customer information, you’ll usually want a properly tailored Privacy Policy and internal practices that align with the Privacy Act 2020 (including safe storage and appropriate disclosure rules).

A non-disparagement clause won’t replace privacy compliance - but good privacy practices can reduce the “fuel” available if a conflict becomes public.

Online Reviews: Consider The Commercial Reality

It’s tempting to try to “ban” negative reviews through contract terms, but from a practical perspective:

review platforms have their own policies (and they don’t always care what a private contract says);
attempting to silence customers can create bigger reputational blowback than the original complaint; and
overly harsh terms can look unfair, especially where consumers are involved.

For most small businesses, the best strategy is:

reduce disputes upfront with clear terms, transparent pricing, and good communications;
use a non-disparagement clause mainly in negotiated situations (like settlements), not as a default “fine print” weapon; and
have a plan for how your team responds if negative posts do happen.

Make Sure Your Contracts Align (So You’re Not Relying On One Clause)

A non-disparagement clause is usually strongest when it sits inside a wider set of protections, such as:

confidentiality and IP clauses;
clear termination terms;
return-of-property obligations (for devices, files, account access); and
a clean dispute resolution process.

In other words, it’s one part of a bigger system. If the rest of your contract is unclear, a non-disparagement clause can become hard to enforce in practice (because you’ll still argue over what happened and who did what).

Key Takeaways

A non-disparagement clause is a contract term designed to reduce the risk of harmful public statements that could damage your business reputation.
Non-disparagement is different from confidentiality - you’ll often want both, especially in exits, contractor arrangements, and settlements.
Non-disparagement clauses can be enforceable in New Zealand, but enforceability is highly context-specific, and they need to be clear, reasonable, and used appropriately (especially in employment and consumer situations).
Good clauses usually include sensible carve-outs (for example, disclosures required by law or to professional advisers) to avoid overreach.
The strongest non-disparagement clauses are tailored to your real-world risks, define what “disparagement” means, and set out practical consequences if there’s a breach (noting some remedies can be difficult to enforce depending on how they’re drafted).
If your goal is to protect reputation, don’t rely on one clause alone - make sure your wider contracts, online terms, and privacy practices support the same outcome.

If you’d like help adding a non-disparagement clause to your contracts (or reviewing an existing clause to make sure it’s fit for your business), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.

Non-Disparagement Clauses In New Zealand: What Businesses Should Know