Delaware Covenants
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FAQ
They are usually created in a deed between two parties, with one party agreeing to restrict the use of its land in a certain way for the benefit of another's land. For registered properties, any covenants affecting the property will be stated in the title.
Courts will enforce restrictive covenants in certain cases. The scope of the restrictions must not be wider than the employer needs to protect its legitimate business interests. The usual business interests which an employer may protect include: Confidential information and trade secrets.
Under Delaware law, restrictive covenants generally are enforceable unless overly broad in the circumstances, and Delaware courts closely scrutinize them.
Delaware courts also have the discretion to blue pencil or modify non-competes they determine to be overbroad. As noted in Kodiak Building Partners, LLC v.
If the clause is too restrictive then it is likely to be struck out as unenforceable by the courts. For example, if a covenant seeks to restrict your dealing with ?all clients? (known as a ?non-dealing clause) this may well be too wide and therefore unenforceable.
Under Delaware law, a restrictive covenant, such as a non-compete, generally is enforceable if it: (1) meets general contract law requirements; (2) is reasonable in scope and duration; (3) advances a legitimate economic interest of the party enforcing the covenant; and (4) survives a balance of the equities.
Apart from the "covenant hostile state" issue discussed above, the majority of jurisdictions within the US (either by statute or case law) will enforce restrictive covenants to the extent they are "reasonable" under the circumstances.
A registered restrictive covenant is recorded on the title of the burdened land but is not recorded on the title of benefiting land. If the benefited land has been subdivided and re-subdivided, you might need to search the original plan of the subdivision and earlier titles to identify the benefited owners.
