Business & Finance Associate, Aylin Daldal authored this article in Law 360 on how Delaware courts are much less willing to “blue-pencil,” or rewrite, overly broad restrictive covenants to make them more enforceable. Traditionally, broad noncompetes have received more lenient treatment, especially in sale-of-business contexts. The shift presents significant implications and considerations for both transactional lawyers and litigators. It also shows a broader trend, in which courts are focusing on whether restrictive covenants are narrowly tailored to the seller’s actual business operations and legitimate protectable interests, rather than the buyer’s broader ambitions. Boilerplate language stating the restrictions are “reasonable” or “necessary” no longer carries much weight. Moving forward, restrictive covenants must be precise, limited, and tied to real business interests from the start, or they risk being struck down entirely.
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