About This Blog

Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

Morris James Blogs

Links

Showing one post in Non-Compete Claims.

Chancery Finds Liquidated Damages Clause for Breach of Non-Compete Unenforceable

Posted In Non-Compete Claims

Lyons Ins. Agency, Inc. v. Wark, C.A. No. 2017-0348-SG (Del. Ch. Jan. 28, 2020). 

In this decision on cross-motions for summary judgment, the Delaware Court of Chancery held that a liquidated damages clause for a breach of a covenant not to compete in an employment contract (the “Non-Compete”) was unenforceable on public policy grounds. The Court noted that while Delaware will enforce a non-compete that is “reasonably tied to the interests of the employer,” liquidated damages clauses that are “untethered to the losses caused by ex-employee competition,” are unenforceable contractual penalties. More ›