The UK's product safety regulator, the Office for Product Safety and Standards (OPSS) has published new guidance on the use of confidentiality clauses in settlement agreements with consumers.
The guidance is particularly relevant to product manufacturers and distributors settling product liability claims with consumers.
OPSS recognises the value of settlements and acknowledges that confidentiality clauses can incentivise settlement and benefit both parties. However, they raise concerns that the agreements may prevent the disclosure of safety issues to regulators and, in the case of recalls, discourage consumers who have signed NDAs from talking about their experiences.
To address these concerns, OPSS sets out its view on best practice, which should be taken into account when drafting agreements. While this guidance is not legally binding, it provides a clear indication of the expectations of the regulator, and should be carefully considered by all product manufacturers or distributors when settling product liability claims with consumers.
Here are OPSS' best practice tips:
- Ensure the wording is in plain English.
- Be clear and specific about what can and cannot be shared and with whom.
- Avoid overly broad phrases, which are likely to be unenforceable. For example, 'You cannot discuss this with anyone, without exception'.
- Avoid clauses that could give the impression to the consumer that they cannot discuss the case with appropriate public authorities.
- Avoid any verbal or written implication or say that the claimant cannot discuss the case with appropriate public authorities.
- Make the claimant aware that the non-disclosure clause does not prevent them from speaking with appropriate public authorities about the issue.
- Avoid clauses that would prevent consumers from passing on information about a corrective action or recall programme that is likely to be in the public interest.
If your settlement agreements require review in light of this guidance, reach out to the author or your usual Cooley contact to discuss further.
The guidance was published on 31 July 2020 and is available here.
Originally published 31 July, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.