The Supreme Court of the State of Delaware is considering a case regarding whether a former executive’s noncompete and nonsolicitation agreements, which were agreed to in exchange for company shares, remain enforceable if those shares have been forfeited due to violations of the agreements. The case could answer questions about the enforceability of restrictive covenants under Delaware law when the restricted party no longer enjoys the benefits of the incentives or consideration offered to enter restrictive covenants.

Quick Hits

• The Delaware Supreme Court is reviewing a case on whether noncompete and nonsolicitation agreements remain enforceable after the forfeiture of equity units due to violations of the noncompete agreement by a former executive.
• The Delaware Court of Chancery ruled that because the executive’s equity units were automatically forfeited under the agreement when he was terminated for cause, the restrictive covenants lacked the necessary consideration at the time the employer sought to enforce them.
• The outcome of the case could clarify the standard for enforceability of restrictive covenants under Delaware law, especially regarding the necessity of retained consideration after contract formation.

On November 5, 2025, the Delaware Supreme Court heard oral arguments in North American Fire Ultimate Holdings LP v. Doorly, in which a fire and life safety systems company., NAF, seeks to enforce restrictive covenants against a former executive, Alan Doorly,...

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