Document Type

Article

Publication Date

1994

Abstract

This article examines selected circumstances likely to give rise to claims of breach of fiduciary duty in the organizational brave new world of the limited liability company ("LLC") and explores likely resolutions under a number of LLC statutory regimes. For purposes of comparison, the article draws on patterns of dispute that are common in the older organizational forms that limited liability companies may supersede, specifically general and limited partnerships and closely held corporations. The article is not comprehensive in its treatment; it concentrates on circumstances that test the force of norms and illustrate interrelationships among bodies of legal doctrine. Despite their differences, many LLC statutes defer substantially to the terms of the parties' agreement, a fact that makes the craft of drafting organizational documents more important than in an organization that is more invasively structured by statute. In a contract-dominated organization, drafting failures - glitches, snafus, failures to anticipate the risk of opportunistic conduct - may well shape the resolution of subsequent disputes among participants that implicate fundamental aspects of their relationship. The article explores problems in the fit between contract law doctrine and issues likely to arise under LLC agreements, based on recent litigation involving comparable questions under limited partnership agreements.

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