The Delaware Court of Chancery, in Lyons Insurance Agency, Inc. v. Kelly Wark, et al., C.A. No. 2017-0348-SG, memo. op. (Del. Ch. Jan. 28, 2020), found a noncompetition agreement’s liquidated damages clause constituted an unenforceable penalty where it would hold former employee liable for former employer’s loss of a client, which former employee did not cause.
NEW: Chauna Abner discusses the decision in Chancery Addresses Liquidated Damages Clause in Non-Competition Agreement.
Morris James discusses the decision in Chancery Finds Liquidated Damages Clause for Breach of Non-Compete Unenforceable.