Delaware Business Litigation Report

Court Of Chancery Provides Guidance On Reconciling Public Policy Exception To Noncompete Agreements

Cabela’s LLC v. Wellman, C.A. 2018-0607-TMR (October 26, 2018)

Delaware law broadly enforces noncompete agreements. However, it will not do so when the public policy of a state with greater contacts to the parties prohibits that enforcement. As this decision explains, how to decide what exactly that competing public policy is may not be easy to do given the exceptions to that policy that frequently exist. Here the Court carefully examines the public policy of Nebraska and finds it permits enforcement of noncompete agreements when to do so will prevent unfair competition.

The decision is also useful in explaining how to calculate the amount of an injunction bond.

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