Litigation: Can LLC members effectively waive their fiduciary duties?
As limited liability companies (LLCs) continue to become more prevalent, courts have begun to consider the extent to which members may waive fiduciary obligations.
February 14, 2013 at 03:15 AM
9 minute read
The original version of this story was published on Law.com
As limited liability companies (LLCs) continue to become more prevalent, courts have begun to consider the extent to which members may waive fiduciary obligations. Recent decisions by the Delaware Court of Chancery and the New York Court of Appeals exhibit a trend that favors contractual waiver, but courts in many other states have yet to make their own contours clear.
Delaware
The Delaware LLC Act expressly allows members of an LLC to insert in their Operating Agreement a provision that they do not owe each other any fiduciary duties. Notably, the Delaware Supreme Court had ruled that fiduciary duties could not be waived, but in 2004, the legislature amended the LLC Act to allow for such waivers.
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