Non-Disclosure Agreements (or “NDAs”) are common in a vast array of business contracts; however, their use is not in any way reserved or confined to business contexts. Celebrities have used NDAs to ensure that signatories keep certain personal or private information confidential or else “pay up” incredibly hefty amounts for breaching that agreement.

 

 

While the deemed confidential information will be outlined in any particular, well-drafted NDA, celebrities tend to use these agreements to keep information about their private lives, intimate or romantic relationships, business and financial interests, or even parties that they host confidential.

 

NDAs, of all Shapes and Sizes, Will Affect the Rights of Anyone who Signs Them

Just like any other agreement of this kind, an NDA which a celebrity requires one to sign will affect the rights of any person who signs it. The agreement will often contain a clause stipulating the amount for which one could be sued for speaking about or revealing any information deemed confidential under the agreement.

 

For example, in 2013, when Justin Bieber was only 19 years of age, he hosted – what leaked pictures portrayed as – an extravagant, Great Gatsby-esque house party and required each of his A-List celebrity guests to sign an NDA before even entering his Los Angeles mansion.

This NDA stipulated, among other things, that he retained the right to sue any person who spilled the beans about his party for a whopping $5 million. In 2015, he hosted yet another party and again required his guests to sign an NDA, although this time he could only sue for $3 million if someone violated the agreement.

 

Whether you begin to see a celebrity romantically, stumble across a celebrity at a downtown nightclub and end up at an after-party at his or her home, or are hired to work as a celebrity’s new dance choreographer, there are good chances you will be asked to sign an NDA. If you do sign it, think carefully before making any disclosures. In many cases, you will not be allowed to speak about the wild night with even your closest friends, let alone Entertainment Weekly, without opening yourself up to liabilities for breach of the NDA. In short, if you decide to reveal anything deemed to be confidential information, be ready to pay the big, big bucks.

 

Contracts, Confidentiality, Consideration

While the nature of the NDAs executed by celebrities seems wonky (after all, how many individuals do you know ask their guests to sign a contract before entering their home), it is not out of the ordinary.

 

These NDAs contain the same language and clauses as any other. Because they are also still contracts, they must also satisfy the requirements of a valid contract, namely consensus, intent, legality, capacity and consideration.

 

The NDA that Justin Bieber used at his 2015 house party provided for the valid consideration to be exchanged between him and each signatory. Specifically, the consideration which he was providing was entrance into his home and participation in his activities; part of the relevant clause read: “… in consideration of being permitted to enter the Property and participate in the Activities …”.

 

Consideration is something of ‘value’ to be exchanged between the parties to a contract. While the opportunity to participate in activities in the Biebs’ Los Angeles mansion is certainly something of value to at least some people, this consideration clause may cause even a few fans to raise an eyebrow.

Why? Well, it is not common for an agreement to provide that “permission to enter the Property” constitutes valid consideration. In fact, this clause is probably one of the most striking differences between NDAs commonly executed by celebrities and others.

 

Does the recipient have the capacity to enter into an agreement?

From the perspective of the celebrity, an invitation to someone to come and join the party contains other potential issues. For example – did the recipient have time to think through the agreement? Does the person have the capacity to enter into the agreement?  It’s wise to make sure that you have sent the agreement ahead of time. Requiring that the recipient have the agreement explained by an independent legal advisor is best, but also good is breaking down the contract into plain english, having the recipient initial the individual important sections, and requiring that the initials and signatures are all witnessed.

 

Takeaways:

  • As a recipient, before signing any contract put to you, read through the document carefully and decide whether the agreement is worth entering into

  • After signing a non-disclosure agreement, think carefully before revealing confidential information in violation of the agreement

  • If you are unsure about whether certain information is protected by the confidentiality provision of the non-disclosure agreement, ask a lawyer for advice, before opening yourself up to potential liabilities (and hefty payments!)

  • Disclosers should provide agreements ahead of time so that the recipient has sufficient time to think about the risks of noncompliance, and should also make sure that specific important provisions are brought to the attention of the signing party

 

Author: Ashley Andaya

Editor: Rajah Lehal

 

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