The law can be confusing, and I am happy to offer an explanation of one legal concept that has confused many readers untutored in its ways. The concept for which I hope to provide clarity is known as “non-disclosure.”
Agreements dealing with non-disclosure known as “non-disclosure agreements” may be created when two people have been involved in an event that one of the participants doesn’t want anyone else to know about. In that case the person seeking confidentiality may pay the other person a sum of money, in exchange for which that person agrees not to disclose anything about the event.
Current events offer a perfect example of how a well arranged non-disclosure agreement works. For purposes of this example, I will use two fictional people, one of whom will be referred to as Donald and the other as Stormy.
In the example I have chosen, Stormy signed a non-disclosure agreement, and although Donald did not sign it, initials were placed on the agreement that, as I will explain later, were intended to bind Donald. What the non-disclosure agreement hoped to keep from public view, was a meeting that took place at a celebrity golf tournament on the shore of Lake Tahoe in 2005. At that event, Stormy met Donald. What we know, and what the non-disclosure agreement is intended to keep private, is that as a result of that meeting Stormy had a sexual encounter with Donald that she described as uninspired (my words-not hers.) We also know it was never repeated, notwithstanding requests for a repeat performance by Donald.
What we also know, and what my readers would have learned without the benefit of this column, thanks to a story in the Wall Street Journal on January 12, 2018, is that someone named Michael Cohen, who we know was Donald’s personal attorney, since his identity was not concealed, negotiated a non-disclosure agreement with Stormy’s lawyer prior to the 2016 presidential election. Its purpose was to withhold from the public what this column describes.
Pursuant to the terms of the non-disclosure agreement, Stormy agreed to accept $130,000 for not disclosing that she had had the sexual encounter with Donald in 2006 about which, as of this writing, everyone knows. In response to the January WSJ story, Mr. Cohen said both Donald and Stormy denied that a sexual encounter occurred even though anyone who had been paying attention knew that it had occurred by the time Mr. Cohen spoke.
We also know that to effect the payment to Stormy, Mr. Cohen created a company, Essential Consultants (EC). The sole purpose of EC was to receive $130,000 from Mr. Cohen that EC turned around and paid to Stormy to persuade her to sign the non-disclosure agreement so we would not learn of the events described above. The agreement was not signed by Donald, but wherever there was a space for him to initial the agreement, the initials EC (Essential Consultants) appeared.
One of the provisions in the agreement said that for every breach of the agreement by Stormy, she would owe Donald $1 million. A breach would occur if Stormy described the events that Stormy and Donald agreed not to disclose and that I have just described for you. (I am not subject to the terms of the non-disclosure agreement which is why I can describe it for you.) The non-disclosure agreement also provided that any dispute between Donald and Stormy had to be resolved through “binding confidential Arbitration to the greatest extent permitted by law.” That was placed in the agreement so that the events I have just described would remain confidential even if they became subject to arbitration.
After the agreement was signed, Stormy went on a number of television programs and described the events in a manner that left some people with the feeling that the events she was talking about had in fact occurred, but she coyly refused to admit them because she wanted to be faithful to the terms of the agreement. She wanted to be faithful to the agreement, even though everyone in the country knew that the events described therein had occurred, and even though both Donald and Stormy said they had not.
In March 2018, Stormy filed a lawsuit against Donald, seeking to be relieved of the restraints imposed on her by the agreement, so that she could tell everyone what this column has told you. She could, of course, probably fill in a few details that I inadvertently, or perhaps out of ignorance, omitted, although it is hard to imagine that I have left out anything of importance pertaining to the affair unless, it is the color and type of underwear worn by the participants during the encounter.
The next event took place on September 9, 2018, when Donald’s legal team announced that they agreed with Stormy that the non-disclosure agreement was invalid since it was never signed or, alternatively, agreed with her that if it was valid, it should be rescinded. We know about it because unlike most of the other events described herein, that announcement was not subject to the non-disclosure agreement.
Now that readers have a clear understanding of non-disclosure agreements, herewith two postscripts:
(a) Stormy’s new book, “Full Disclosure” will be released October 2, 2018. In it she says she’ll share details of the night she spent with Donald.
(b) Michael Cohen’s lawyer has said that Michael wants his $130,000 back.