Contracts: Social Media Clause

By: Reinier W.L. Russell
Russell Advocaten B.V.
Amsterdam, Netherlands

A good reputation is precious, both in the corporate world and your private life. However, after a dispute a reputation can be damaged quickly by social media content and negative information on the Internet. So what can you do to prevent this?

It’s impossible to imagine life today without social media use. People use, for instance, Twitter and Facebook to share their joys and sorrows. Social media can also be used for business in many positive ways. On the other hand, social networking can also have a negative impact. Throwing dirt at someone can result in serious reputation damage, when, for instance, a customer makes negative comments about your products on Facebook. To prevent this, it’s prudent to include a social media clause in your contracts.

Employment contracts and settlement agreements

It is common to include a non-competition clause and/or a business relations clause, and/or a confidentiality clause in employment contracts and settlement agreements. The employee is not allowed to join competitors, to approach customers of his former employer, or to share confidential data after the termination of employment. However, comments and “friendships” on social media platforms are not covered by these clauses. Therefore, employers are well-advised to include a social media clause in contracts and agreements too, so that there won’t be questions about whether approaching customers or business relations through Twitter, Facebook, or LinkedIn is prohibited as well and to prevent that negative comments are being made.

In the event this has not been included in the employment contract yet, upon termination of employment, employers will have to include a clause in the settlement agreement stipulating that the employee is not allowed to make negative comments about his (former) employer on the Internet. That way, reputation damage can be prevented. Mandatory “unfriending” of business relations is another way to prevent this.

Corporate contracts

It’s advisable to include a social media clause when entering into a contract. This applies to all contracts that will be terminated sooner or later and where both parties will go in different directions. This could be, for instance, shareholders agreements, letters of intent, sales and purchase agreements (SPA), collaboration contracts (partnerships / joint ventures), lease contracts, and agency and distribution agreements.

Divorce

More and more couples include a social media clause in their divorce agreement. The spouses agree not to publish negative comments about each other on social media and that posting of unwanted photos/videos and sending hate mail will not be permitted.

Penalty clause

If one of the parties violates the social media clause, (s)he has to pay the agreed-upon fine until all negative information will be deleted from the Internet. If the fine is not paid, the party can be summoned to appear in court by the other party.

Action

Make sure to include a social media clause in your agreements. In particular, termination agreements should include a social media clause. Include a penalty clause as well and take care that it’s robust and unambiguously phrased. Thus, you can prevent not only reputation damage but also disputes about whether or not comments on social media platforms will fall under the clause.

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