Recent Developments in Delaware Restrictive Covenant Case Law: The Alternative Entity Creep

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There is a growing trend of parties inserting restrictive covenant provisions into alternative entity governing documents for business entities organized in Delaware. As a result, over the past year, Delaware courts have been confronted with the intersection of restrictive covenant, contract and alternative entity law, where parties to alternative entity governing agreements have sought to enforce these restrictions against their other members and partners. 

The presenters will discuss and explore recent decisions by Delaware courts in Sunder Energy, Ainslie, and Seva which raise important questions and issues concerning the policy tension between respecting employees’ rights to earn livelihoods and promoting the freedom of contract inherent in the formation and governance of alternative entities.

 

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