The new offer by porn star Stormy Daniels to return the $130,000 she received for signing a non-disclosure agreement [NDA] – so that she can again be completely free to not only discuss her alleged affair with Donald Trump, but to also make public any evidence she may have supporting her claims – may seem reasonable to non-lawyers and help generate publicity, but it makes little sense from a legal point of view, says public interest law professor John Banzhaf.
One of the major purposes of any contract involving money, explains Banzhaf, is to lock in the price and obligations on each side so that the parties cannot later renege if the situation changes.
In a typical NDA, a departing employee may be paid a fixed sum of money for agreeing not to reveal certain information in the future. The price for his silence, set forth in the agreement, is what the information may seem to be worth at the time the deal is struck.
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But, if the value of that information skyrockets for some reason after a year or two, the employee obviously cannot simply return the money he had been paid because someone else will now give him much more for that information which has now become more valuable, any more than the company can demand most of the money back if the value of the information declines.
So, at least from a legal point of view, Daniels can’t avoid her obligations under the NDA simply by returning the money she has already received in return for her promise of silence.
However, because parties recognize that it may often be difficult if not impossible to prove what harm a breach of an NDA would cause, they often agree in advance to a specific amount.
Daniel’s NDA establishes such an amount of liquidated damages – in effect a penalty – of $1 million in the event of a breach. So, assuming the NDA is found to be valid, Daniel’s should be able to breach it if she is prepared to pay the $1 million in the liquidated damages it specifies.
It is quite likely that Stormy Daniel could make many times that amount of money by breaching the agreement and writing a book, agreeing to interviews or appearances, etc.
Moreover, since there are many politically active multi-millionaires and even billionaires who strongly oppose Trump and would love to do anything which might further embarrass him, it would not be surprising if one or more would be willing to free her from the NDA, and therefore able to talk freely by agreeing, public or privately, to pay that money if that amount were ultimately awarded against her.
So, whether it’s $130,000 or $1,000,000, it’s quite likely that Stormy Daniels will shortly be able to tell her story and produce any supporting evidence she might have, whether of not the NDA is held valid.