Del. Ruling May Redefine Consideration in Noncompetes

Partners Michael Schulman and Crescent Moran Chasteen and associate Sarah Doberneck wrote this article providing an in-depth analysis of a recent case from Delaware, North American Fire Ultimate Holdings LP v. Doorly. In this case, the court found that restrictive covenants tied to a forfeited equity award were unenforceable due to lack of consideration, introducing significant restrictions on the use of equity awards as consideration for such agreements. The article explores the implications of the ruling and offers guidance on navigating these changes in practice, particularly as Delaware has been moving in this direction in recent years.

Read the full article.