Stay current on changes and developments in corporate law with a wide variety of resources and tools.
Sept. 24 — Under Delaware law, a limited liability company can enforce provisions of its LLC agreement even if the company does not sign it, according to a Sept. 24 Delaware Chancery Court opinion.
Vice Chancellor J. Travis Laster wrote, “[b]y statute, a limited liability company is a party to its own limited liability company agreement, regardless of whether the limited liability company executes its own limited liability company agreement.”
Seaport Village Operating Company, LLC (the “Company”) requested attorneys' fees from Seaport Village Ltd. (“Limited”) for lawsuits that arose out of the Company's limited liability agreement. The LLC agreement provided that in disputes between the parties, the prevailing party shall be entitled to recover reasonable attorneys' fees for actions arising out of the agreement.
Limited claimed that the Company was not a “party” to the LLC agreement because the Company did not sign it.
The court, however, rejected this argument as a matter of law. Vice Chancellor Laster found that amendments to Delaware's Limited Liability Company Act “make clear that the LLC and its members are parties to and bound by the LLC agreement, regardless of whether they sign it.”
Vice Chancellor Laster cited § 18–101(7) of the DLLCA, which states, “[a] limited liability company is bound by its limited liability company agreement whether or not the limited liability company executes the limited liability company agreement.”
The court additionally found that basic principles of contract law support this rule.
Vice Chancellor Laster awarded $363,803.82 in fees and expenses to the Company.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
The opinion is available at http://courts.delaware.gov/opinions/download.aspx?ID=212120.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)