Menu X Menu
How may we help you?


Delaware LLC Agreements – Get it in Writing!
Companies Served Since 1981

Delaware LLC Agreements – Get it in Writing!

By Brett Melson Thursday, February 4, 2010

The Delaware Supreme Court recently issued a decision that effectively requires all limited liability company agreements (“LLC Agreements”) for Delaware LLCs to be in writing.  The decision holds that LLC Agreements are subject to Delaware’s Statute of Frauds, which requires certain types of contracts to be in writing in order to be enforceable.  This decision appears to contradict the express language of Section 18-101 of the Delaware Limited Liability Company Act (the “Act”), which states that a limited liability company agreement may be “written, oral or implied”

Although clients typically commit an agreement to writing, some small or relatively newly formed LLCs operate pursuant to an oral understanding or implied course of dealing among the members. For example, members of an LLC may have orally agreed upon or may have simply accepted over time a certain distribution of profits and losses, or assumed that voting rights were distributed among the members in a certain way.

A member seeking to assert his or her rights in court, however, could not rely upon the oral agreement or implied understanding as an LLC Agreement governing the operations of the entity, despite the language of the Act.

This decision reinforces the importance of putting an LLC Agreement in writing as early as possible, and having all members sign the agreement. Business partners or investors in the first stages of an exciting business opportunity often do not foresee (or do not consider) the possibility of a later disagreement and the potential need to assert their respective rights, but putting the terms governing the operations of an LLC in writing at an early stage protects the interests of everyone involved.

More By Brett Melson


Comment Facebook Twitter Google Reddit LinkedIn

Leave a Comment


* Required

Email Address:

* Required, will not be published

Website: Comment:  
Secure Connection
X Secure & Confidential

Your personal information is encrypted by Secure Sockets Layer (SSL) software so that it cannot be read as the information travels over the Internet.

X Our customers love us!
We have lots of great customer reviews.
Like our service? If you are one of our many satisfied customers, please let us know.
BBB A+ Rating
X A+ Rated BBB Accredited Business

Need more proof that we're the best? Check out our record!

100,000+ Companies Formed

Companies Formed Since 1981

Disclaimer: Harvard Business Services, Inc. is a document filing service that provides general information. We cannot render legal or financial advice and your use of this site is subject to additional terms and conditions. HBS is not affiliated with Harvard University.

© Copyright 1996-2017. All rights reserved.