By Shannon Hampton Sutherland, Lawrence H. Pockers and Brandon Harper
Continuing its trend of striking down overbroad restrictive covenants in the sale-of-business context, the Delaware Court of Chancery on March 4, 2026, struck down a worldwide noncompetition provision that expanded far beyond the seller’s regional footprint in BluSky Restoration Contractors, LLC v. Robbins & Popwell. BluSky, like Intertek Testing Services NA, Inc. v. Eastman before it and Kodiak Building Partners, LLC v. Adams before that, is another example of the court closely scrutinizing restrictive covenants under the sale-of-business standard to determine whether they go beyond the legitimate business interests of the buyer in protecting the business sold. Consistent with its predecessors, Kodiak and Intertek, the court refused to “blue pencil” or otherwise reform the overbroad restrictive covenants in BluSky. Companies engaged in business transactions governed by Delaware law should be mindful of the scope being established by these cases when drafting restrictive covenant provisions.