News & Analysis as of August 15, 2025

Forfeiture

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Non-Compete Agreements are contracts, typically formed in employment or business purchase contexts, where one party agrees to refrain from engaging in a particular line of work or pursuing business within a certain industry or locale. The purpose of these agreements is to protect employers or business purchasers from competition stemming from former employees or former owners of a business. less -

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

Morris James LLP on 5/22/2025

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

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

Mayer Brown on 2/27/2025

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

Seventh Circuit Rules Forfeiture-for-Competition Clauses Under Delaware Law Enforceable and Not Subject to Reasonableness Review

Ogletree, Deakins, Nash, Smoak & Stewart,... on 2/6/2025

In 2021, LKQ Corporation (LKQ) filed suit against Robert Rutledge, its former plant manager, in the U.S. District Court for the Northern District of Illinois. LKQ alleged that Rutledge’s working for a competitor within nine...more

Delaware ruling supports enforceability of forfeiture-for-competition provisions

A&O Shearman on 12/26/2024

On December 18, 2024, the Delaware Supreme Court (the “Court”) held in LKQ Corp. v. Rutledge that forfeiture-for-competition provisions in employee equity award agreements are enforceable in certain contexts. This article...more

Delaware Chancery Court Invalidates Forfeiture-for-Competition Provision in Partnership Agreement

Proskauer - Law and the Workplace on 1/27/2023

On January 4, 2023, in Ainslie, et al. v. Cantor Fitzgerald, L.P., the Delaware Court of Chancery invalidated the forfeiture-for-competition provision in the financial services company’s limited partnership agreement, based...more

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