News & Analysis as of

Contract Terms Forfeiture

Farrell Fritz, P.C.

The Forfeited Equity Trap: Why Your Non-Compete Might Be Worthless

Farrell Fritz, P.C. on

Imagine you’re a private equity firm. You buy a company, and you want to retain and incentivize key employees, so you give them some equity in the form of incentive units.  You also want to prevent them from running off and...more

Proskauer - Employee Benefits & Executive...

Tenth Circuit Affirms Distinction Between Forfeiture and Penalty for Competition

In Lawson v. Spirit AeroSystems, Inc., the U.S. Court of Appeals for the Tenth Circuit upheld the forfeiture of certain stock awards for violating a covenant not to compete. Like the Seventh Circuit in LKQ Corp. v....more

Troutman Pepper Locke

Restrictive Covenants Unenforceable Where Consideration Forfeited

Troutman Pepper Locke on

In North American Fire Ultimate Holdings, LP v. Alan Doorly, the Delaware Court of Chancery held that the restrictive covenants included in an incentive unit grant agreement were unenforceable when the units received by the...more

Morris James LLP

Delaware Supreme Court Clarifies Enforcement of Forfeiture-for-Competition Provisions

Morris James LLP on

LKQ Corp. v. Rutledge, C.A. No. 110, 2024 (Del. Dec. 18, 2024) - In this en banc decision, the Delaware Supreme Court answered a certified question from the United States Court of Appeals for the Seventh Circuit...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

German Federal Labor Court Finds Certain Virtual Stock Option Forfeiture Clauses May Unreasonably Disadvantage Employees

On March 19, 2025, the German Federal Labor Court (Bundesarbeitsgericht or BAG) held in Case No.: 10 AZR 67/24 that certain forfeiture clauses in General Terms and Conditions of Business (Allgemeine Geschäftsbedingungen or...more

Troutman Pepper Locke

Feeling Competitive: The Reasonableness of Forfeiture-for-Competition Provisions

Troutman Pepper Locke on

In 2024, employers rushed to track the twists and turns of the Federal Trade Commission’s (FTC) noncompete ban, which attempted to limit the enforceability of agreements that restrict employees from working for a competitor...more

Epstein Becker & Green

Massachusetts High Court To Weigh In on Forfeiture-for-Solicitation Provisions in Era of Massachusetts Noncompetition Agreement...

Epstein Becker & Green on

On Monday, March 3, 2025, the Massachusetts Supreme Judicial Court (“SJC”) heard argument in Miele v. Foundation Medicine, Inc., regarding whether the Massachusetts Noncompetition Agreement Act, G. L. c. 149, § 24L (the...more

Mayer Brown

Delaware Law Alert: The Delaware Supreme Court Further Validates Forfeiture-for-Competition Provisions—What It Means for M&A Deals

Mayer Brown on

In a notable holding, the Delaware Supreme Court has confirmed that forfeiture-for-competition provisions generally are not subject to reasonableness review, greatly enhancing the likelihood of their enforceability. LKQ...more

BakerHostetler

Delaware Is an Employee Choice State - It Is Official

BakerHostetler on

The Delaware Supreme Court’s ruling in Cantor Fitzgerald v. Ainslie, which reversed the Court of Chancery’s 2023 finding that forfeiture-for-competition provisions should be evaluated by the same “reasonableness” standard as...more

Allen Matkins

In This Case, Termination Of Membership Without Compensation Is Not An Improper Forfeiture

Allen Matkins on

The word "forfeiture" has an interesting etymology.  It is derived from two Latin words, foris meaning a door or gate, and facere meaning to do.  Eventually, the word came to refer to a misdeed punishable by a fine.  Today,...more

Farrell Fritz, P.C.

Dollars, Donuts, and Buy-Sell Options

Farrell Fritz, P.C. on

Buy-sell agreements come in all shapes and sizes. Some are straightforward. Others are outrageously complex, especially purchase price formulas. Some have triggers for death. Others disability. Retirement. Expulsion....more

BakerHostetler

Delaware Supreme Court Settles Forfeiture-for-Competition Question, Adopts Employee Choice Doctrine - Seventh Circuit Asks, ‘Are...

BakerHostetler on

Less than two months after the Delaware Supreme Court provided the employers, investment partners and other business leaders that trust in the stability of Delaware law to protect their critical business interests with the...more

Paul Hastings LLP

Delaware Supreme Court Rejects “Reasonableness” Test for Forfeiture-for- Competition Provisions

Paul Hastings LLP on

Last week, the Delaware Supreme Court reversed a Chancery Court decision that we wrote about previously, which invalidated a forfeiture-for-competition provision as an unreasonable restraint of trade. The Ainslie et al. v....more

BakerHostetler

Delaware Supreme Court Upholds Enforceability of Forfeiture-for-Competition Provisions in Limited Partnership Agreements,...

BakerHostetler on

The Delaware Supreme Court yesterday upheld the enforceability of forfeiture-for-competition provisions in limited partnership agreements, reversing the Court of Chancery, which had reasoned that such provisions should be...more

BCLP

What a relief! High Court grants relief from forfeiture of an option to take a new lease

BCLP on

This decision has confirmed that a court can grant relief from forfeiture in relation to a tenant’s option to take a new lease. It is a useful reminder for landlords that forfeiture does not apply solely to leases, and is a...more

Hogan Lovells

COVID-19 UK – Additional breathing space…but tenants who can pay should

Hogan Lovells on

Most commercial leases require the tenant to pay its rent quarterly, and invariably include a provision allowing the landlord to forfeit if that rent has been unpaid for a period of time, e.g. 7, 14 or 21 days.  Outside of...more

Gray Reed

Spudding? Reworking? What are “Operations” Under an Oil and Gas Lease?

Gray Reed on

Quick answer: It depends on what the lease says.  Last week featured a tug-of-war between a producer and the community in which it operates; this week in HJSA No. 3 LP v. Sundown Energy LP  it’s the producer and the lessor....more

Skadden, Arps, Slate, Meagher & Flom LLP

Recent Developments in the Enforceability of Make-Whole Premiums in the Second Circuit

In March 2019, Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York ruled that lenders using clear and unambiguous language in their loan agreements may be entitled to prepayment...more

Seyfarth Shaw LLP

Not All Is Lost for California Employers: Enforce Non-Compete Forfeiture Provisions through ERISA Top Hat Plans?

Seyfarth Shaw LLP on

Even before the California Supreme Court decided Edwards in 2008, employers knew all too well the woes of attempting to enforce non-competes against California employees. Edwards simply reaffirmed California’s long-standing...more

Orrick, Herrington & Sutcliffe LLP

Ausschlussklauseln ohne Mindestlohnausnahme sind unwirksam

Seit Inkrafttreten des Mindestlohngesetzes (MiLoG) am 01.01.2015 stellt sich die Frage, ob Ausschlussklauseln in Arbeitsverträgen Ansprüche auf den Mindestlohn ausdrücklich ausnehmen müssen....more

Orrick - Employment Law and Litigation

Germany – The Time to Review Your Standard Employment Contracts is Now!

A recent ruling of the Federal Labor Court will invalidate thousands of forfeiture clauses in employment contracts in Germany. Companies need to review and revise their standard employment contracts now and explore options to...more

Littler

German Labour Court Decision Forcing Employers to Reexamine Their Employment Contracts

Littler on

It is rare for the highest German labour court to issue a decision that will require employers to take immediate action with respect to their employment contracts. On September 18, 2018, however, the Federal Labour Court...more

Sunstein LLP

August 2018 IP Update - Non-Competition Agreements: Massachusetts Meets California Halfway

Sunstein LLP on

California has long led the nation in its disdain for noncompetition agreements. Pressed by venture capitalists who believe that this gives California an advantage over other states, the Massachusetts legislature has finally...more

BCLP

Eight Lessons for Your Practice from the Law of Canine Replevin (#5 Will Amaze You)

BCLP on

Some years ago, a judge in New York wrote that “the reported cases for replevin of a pet dog are few, in part because of the legal expense involved in maintaining such an action.” Webb v. Papaspiridakos, 889 N.Y.S.2d 884...more

Hogan Lovells

Keeping It Real Estate Blog: The Rise and Rise of Short Term Lettings

Hogan Lovells on

Thanks to the popularity of short term lettings, we are benefiting from a wealth of choice and flexibility in holiday accommodation. Wherever the destination, there will certainly be unique properties available at reasonable...more

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