Comedians often use NDAs to keep their jokes from overexposure. The idea is that when they test out shows in front of live audience they don’t want their jokes to become public or get on social media. This way they can try to limit the spread of jokes that are not working or jokes that they are testing out to later be featured in a special.

However, the $1 million penalty is unprecedented for this type of NDA and it would be unrealistic to obtain that amount in damages in court. It would be difficult to establish that he and the people attending show reasonably anticipated $1 million in damages.

The penalty is more likely there to deter anyone who may break the rules or breach the NDA and not something that could be reasonably enforced in court. While this exaggerated penalty would not necessarily make the entire agreement unenforceable, Davidson would have to prove the monetary value of the harm he suffered, which would not realistically be near $1 million.