Delaware Rulings Could Impact Florida Noncompete Agreements

Delaware Supreme Court Issues Two Significant Decisions on Noncompetition Covenants and Their Influence on Florida businesses

Businesses operating in Florida continue to navigate a shifting national landscape surrounding noncompetition agreements. Although Florida law remains comparatively friendly to reasonable restrictive covenants, recent decisions from the Delaware Supreme Court – often influential in corporate and commercial matters – offer timely guidance on how courts may evaluate consideration, scope, and enforceability. Two February 2026 opinions, North Am. Fire Ultimate Holdings, LP v. Doorly and Fortiline, Inc. v. McCall, highlight the importance of careful drafting and the limits of judicial willingness to salvage overbroad restrictions.

Consideration Is Measured at Contract Formation, Not Enforcement

In North Am. Fire Ultimate Holdings, LP v. Doorly, the Delaware Supreme Court reversed the Court of Chancery’s dismissal of claims seeking to enforce noncompetition and related covenants against a former employee who had formed a competing business. The lower court had held that because the employee forfeited his incentive units upon termination for cause, the restrictive covenants lacked consideration at the time of enforcement.

The Supreme Court rejected that reasoning. It held that consideration is evaluated when the agreement is executed, not when enforcement is sought. Even though the incentive units were subject to vesting and could later be forfeited, they were not illusory at the time of contracting. As a result, the restrictive covenants were supported by adequate consideration, and the case was remanded for further proceedings. For Florida businesses, the decision reinforces a familiar principle: if consideration exists at signing, later events—such as forfeiture—do not retroactively invalidate the bargain.

Overbroad Restrictions Remain Unenforceable, Even When Only Damages Are Sought

One week later, in Fortiline, Inc. v. McCall, the Delaware Supreme Court affirmed the Court of Chancery’s ruling that a set of nationwide noncompetition and nonsolicitation covenants were unreasonably broad and unenforceable. The covenants prohibited competition with Fortiline or any of its affiliates anywhere in the United States for one year, and barred solicitation of customers, suppliers, and employees.

After the court denied injunctive relief, Fortiline amended its complaint to seek only damages. It argued that reasonableness review should not apply when the remedy sought is monetary rather than injunctive. The court disagreed. Relying on Cantor Fitzgerald and LKQ Corp., it distinguished between forfeiture‑for‑competition provisions, which merely condition a benefit on noncompetition, and restrictive covenants, which affirmatively prohibit competition and can impair a person’s livelihood. Because the covenants at issue were true restraints on competition, they remained subject to reasonableness review – and failed it.

Key Takeaways for Florida Businesses

• Noncompetition agreements continue to face heightened scrutiny nationwide. Many states have restricted or banned them, and even states that permit them – like Delaware and Florida – require that they be reasonable in scope, geography, and duration.
• Consideration matters but timing matters more. As North American Fire confirms, courts look to whether adequate consideration existed at the time of execution. Later, forfeiture does not erase the original exchange of value.
• Overbreadth is fatal. As Fortiline demonstrates, courts will not rewrite or “blue‑pencil” covenants that sweep too broadly, especially those extending to affiliates or nationwide markets without justification.
• Alternatives may offer stronger protection. Nondisclosure agreements, targeted nonsolicitation covenants, and well‑structured forfeiture‑for‑competition provisions often withstand scrutiny more reliably than broad noncompetition clauses.

For Florida businesses, these decisions underscore the importance of tailoring restrictive covenants to legitimate business interests, ensuring they are supported by clear consideration at signing, and avoiding the temptation to overreach. Thoughtful drafting on the front end remains the best defense against costly litigation and unenforceable agreements.

The business attorneys at Stross Law Firm in Oldsmar, Florida, can help write or review your noncompete agreements to ensure they work for your business. Contact us at 813-852-6500 to schedule an appointment.