News & Analysis as of

Contract Terms Operating Agreements

Clark Hill PLC

Can you eliminate fiduciary duties in a Texas LLC?

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Bottom Line: Yes, as of May 14, 2025, members of a Texas LLCs can now eliminate fiduciary duties through their company agreements (aka “operating agreements”), thanks to a crucial amendment that added the word “eliminate” to...more

Paul Hastings LLP

Nevada Court Finds Business Judgment Rule Applies to Nevada LLCs

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The Nevada District Court recently clarified that the business judgment rule — a fundamental corporate law protection — applies to limited liability companies when their operating agreements specify fiduciary duties. The...more

Roetzel & Andress

What’s in Your Operating Agreement? Legal Tips for Healthcare Providers

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This week on the HealthLawHotSpot, host Ericka Adler welcomes Roetzel shareholder Jonna Eimer to discuss the essential role of operating agreements in healthcare practices. Whether you're starting a new practice or reviewing...more

Kilpatrick

8 Key Takeaways | Navigating Operating Agreements: Material Terms and Best Practices

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At a recent Association of Corporate Counsel (Charlotte Chapter) event, Kilpatrick’s Mikail Clark presented on the topic of “Navigating Operating Agreements: Material Terms and Best Practices.”...more

Venable LLP

Despite Chancery Court Decisions in Recent Years, Agreements Continue to Include Transfer Restrictions That May Not Be Enforceable

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Despite recent decisions by the Delaware Court of Chancery, many key corporate documents continue to include restrictions on indirect transfers of equity that may not be enforced if challenged in court....more

Farrell Fritz, P.C.

New Year, New Law – New Opacity – for LLC Owner Disputes

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New York’s appellate courts are breaking new ground in 2025. Until a month ago, I would have said that “deadlock” most certainly is not enough on its own to dissolve a New York LLC....more

Gray Reed

Arbitration Result Can Be “Good”, “Bad” or “Ugly”

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The message in RSM Production Corporation v. Gaz du Cameroun SA: According to the federal Fifth Circuit, an arbitration tribunal’s construction of a contract and the arbitration rules governing the dispute “hold, however...more

DarrowEverett LLP

LLC's Failure to Execute Operating Agreement Opens Legal Trapdoor

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While entity distinctness is a bedrock principle of corporate law, it may often appear redundant and unnecessary for a limited liability company (“LLC”) to sign its own operating agreement. That was likely the thinking of the...more

Farrell Fritz, P.C.

Is an LLC Bound by its Own Operating Agreement?

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Is a limited liability company a party to and bound by its own operating agreement? Many folks would say, “Yes, of course.” But it turns out the answer varies depending upon the law of the company’s state of...more

Lathrop GPM

Delaware Case Examines Amendment-by-Merger Provision of LLC Act

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On  August 30, 2024, the Delaware Court of Chancery issued an opinion in Campus Eye Management Holdings, LLC v. DiDonato, dismissing a challenge to a merger effecting an amendment to the limited liability company agreement of...more

Farrell Fritz, P.C.

Did Chancery Court Just Crack Open the Door to Equitable Dissolution of LLCs?

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Delaware Chancery Court’s contractarian approach to all things LLC, embedded statutorily in Section 18-1101(b) of the Delaware LLC Act (“It is the policy of this chapter to give the maximum effect to the principle of freedom...more

Farrell Fritz, P.C.

Crossing the Hudson: Recent Business Divorce Decisions from Yonder States

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Folks who’ve been following this blog for years know that periodically I like to venture beyond New York’s borders to find and report on interesting decisions from other states in business divorce cases....more

Farrell Fritz, P.C.

New York Appellate Court’s Split Decision Involving Delaware LLC Pits “Harsh” Contractarianism Against “Fundamental Fairness”

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Last week, the Manhattan-based Appellate Division, First Department, handed down one of the more intriguing decisions by a New York court I’ve seen in a long time involving a dispute between LLC members....more

Farrell Fritz, P.C.

Enforcing the Guardrails on Transactions Involving Interested Directors of Close Corporations

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In my business divorce practice I deal with many closely held corporations that have only a few or perhaps just two shareholders, each of whom is actively involved in running the business. Within that category are many...more

Farrell Fritz, P.C.

A Lifeline for the Stale “Schedule A”

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One need not peruse the pages of this blog for long to learn that its authors strongly advise against entering into an owners’ agreement that calls on the members to “annually” (or worse, “regularly”) update a critical aspect...more

Winstead PC

Entity Formation as a Process: The Strategic Importance of Carefully Drafting Limited Liability Company Agreements Before Forming...

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From early-stage startups to seasoned enterprises, businesses eventually form at least one legal entity to carry out their operations. Down the road, as opportunities arise for a business to expand, acquire others, merge, or...more

Farrell Fritz, P.C.

Dissolution Defined: The First Department’s Recent Guidance on Interpreting Operating Agreements

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The owners’ agreement is the backbone of the closely-held business.  In intracompany LLC disputes, few things are more important than what the operating agreement has to say on the subject.  As a consequence, the pages of...more

Farrell Fritz, P.C.

Scrivener’s Error Keeps Sailboat-Owning LLC Afloat

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The members of Nite Cap’s owner, Bull-Poet, LLC, recently traded the full sheets and gentle seas of the Hudson for the strum and drang of litigation in New York’s Supreme Court.  But the squall has passed; thanks to New York...more

Farrell Fritz, P.C.

And a Time to Every Purpose Under . . . the Operating Agreement?

Farrell Fritz, P.C. on

It’s a bit of a stretch to suggest that King Solomon prophesied the standard for judicial dissolution of LLCs, but there it is: under New York’s judicially construed standard for involuntary dissolution under Section 702 of...more

Farrell Fritz, P.C.

The Contract is King: Advancement and Indemnification Under Delaware Law

Farrell Fritz, P.C. on

In last week’s New York Business Divorce, we wrote about an important decision from New York’s highest court, Sage Sys., Inc. v Liss (___ NY3d ___, 2022 NY Slip Op 05918 [Ct App Oct. 20, 2022]). In Sage, the Court of Appeals...more

Farrell Fritz, P.C.

Warning: If You Want Legal Fee Advancement or Indemnification, You May Need to Amend Your Partnership, Shareholder, or Operating...

Farrell Fritz, P.C. on

The universe works in mysterious ways. Four days ago, when I sat down to write this article, my plan was to feature a decision from Manhattan Commercial Division Justice Andrea J. Masley denying dismissal of a closely-held...more

Farrell Fritz, P.C.

Magic Words Still Matter, and Equitable Defenses Can’t Save a “Void” Transfer

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New York’s default rules regarding LLC members’ rights to transfer their interests appear in sections 603 and 604 of the LLC Law. Section 603 provides that a membership interest is fully assignable, but the assignee does not...more

Fox Rothschild LLP

A Member of a Delaware LLC Can Withdraw Their Membership by Implied Agreement

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The Court of Chancery recently concluded that a member of a Delaware LLC could reach an implied contractual agreement to withdraw as a member of the LLC, even if the LLC does not have a written operating agreement....more

Hicks Johnson

The Importance of “Plain and Unambiguous Language” When Eliminating Fiduciary Duties in Delaware

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The Delaware Limited Liability Company Act allows for the fiduciary duties of a member to be expanded, restricted, or eliminated by provisions in the operating agreement of a limited liability company (“LLC”). If drafters...more

Gray Reed

Exculpatory Clause Does Not Save Operator From Liability

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Non-operators under the 1989 Model Form JOA have been hoping to drive a stake through the dark heart of Reeder v. Wood County Energy, LLC. Bachtell Enterprises, LLC v. Ankor E&P Holdings Corp might be a start. The question...more

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