Credit: Tero Vesalainen / Shutterstock.com For New Jersey LLC Members, Silence Can Have Serious Ramifications
Members control their own fate, but they tempt that fate unnecessarily if they wait until it is too late to review the LLC's operating agreement.
February 03, 2021 at 11:00 AM
8 minute read
New Jersey's Revised Uniform Limited Liability Company Act (NJ-RULLCA), N.J.S.A. 42:2C-1 et. seq., empowers LLC members, with limited exception, by giving them the freedom to contract the rules by which the entity will be governed. In fact, NJ-RULLCA endorses this contractual flexibility and instructs courts to construe its provisions liberally "to give maximum effect" to the LLC members' freedom of contract and to the enforceability of an LLC's operating agreement. N.J.S.A. 42:2C-11(i). Despite this legislative stamp of approval, where the members stay silent (intentionally or otherwise) and fail to address a particular matter in the company's operating agreement, NJ-RULLCA imposes default rules that courts will apply to resolve disputes. N.J.S.A. 42:2C-11(b).
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