Confidentiality Clauses in Ontario Settlement Agreements: What They Cover

You've reached a deal to resolve your dispute, and the other side's lawyer sends over a draft with a section headed "Confidentiality." Before you sign, it's worth understanding exactly what that clause asks you to give up — because a confidentiality clause in a settlement agreement is not boilerplate you can skim past.

Most Ontario settlements, whether they resolve a lawsuit already in progress or head one off entirely, include some version of this clause. It is standard practice, not a red flag on its own. But "standard" doesn't mean "one-size-fits-all" — the scope, the exceptions, and the consequences for breaking it vary a lot from one agreement to the next.

This article walks through what these clauses typically restrict, what they usually leave room for, and what can happen if one side says too much afterward.

What a Standard Clause Typically Restricts

A confidentiality clause in a settlement agreement commonly covers:

• The settlement amount — how much money changed hands, if any
• The terms of settlement — payment schedule, non-monetary conditions, any admissions (or, more often, an explicit non-admission of liability)
• The existence of the settlement itself — some clauses go further and prevent you from confirming a case even settled
• The underlying allegations or facts — particularly in disputes involving reputational, employment, or personal matters

Many agreements also pair confidentiality with a separate non-disparagement term, which restricts negative public comments about the other party rather than just the settlement terms themselves. The two provisions do different jobs, so read them separately.

What's Usually Carved Out

A well-drafted clause doesn't ask you to live in total silence. Common exceptions include disclosure to:

• Your spouse or immediate family, sometimes on the condition they also keep it confidential
• Your lawyer, accountant, or financial advisor, for the purpose of getting professional advice
• Tax or regulatory authorities, where you're legally required to report something
• A court, tribunal, or opposing party in a future proceeding, if compelled by a subpoena or court order

If a draft clause doesn't include carve-outs like these, that's worth raising before you sign — not after you've already told your accountant what you settled for.

Why Parties Ask for Confidentiality

Defendants often want confidentiality so the settlement isn't treated as a precedent, an admission, or an invitation for other claimants to come forward with similar demands. Plaintiffs sometimes want it too — to keep a difficult dispute private, especially in employment, family-adjacent, or reputational matters. Either side can ask for it, and it's frequently a point of active negotiation rather than something imposed unilaterally.

What Happens If You Breach It

A settlement agreement is a contract. If you (or the other side) break the confidentiality clause, the usual consequence is a claim for breach of contract — the party harmed by the disclosure can seek damages caused by the breach, and in some agreements a specific repayment or deduction mechanism is built in as a condition of the deal.

One complication worth knowing about: pursuing a breach of a confidentiality clause can itself become a public court proceeding, since Ontario civil litigation is generally open to the public (unlike private arbitration, which stays confidential). Careful drafting can address this, but it's a real tension — enforcing secrecy sometimes requires airing the dispute in a public forum.

Reviewing a Clause Before You Sign

Before agreeing to a confidentiality term, check whether it:

• [ ] Clearly states who is bound — just you, or also your family, employees, or advisors
• [ ] Lists specific, workable carve-outs (legal/financial advice, tax reporting, court order)
• [ ] Has a defined duration, rather than binding you indefinitely for no clear reason
• [ ] Spells out what happens if it's breached, and whether that consequence is proportionate
• [ ] Applies mutually, rather than restricting only you while leaving the other side free to talk

Frequently asked questions