Can a Member in a Manager-Managed LLC Co-Sign Deals?

Question from johny3377, Can a Member in a Manager-Managed LLC Co-Sign Deals?

Answer from AI:

In the United States, the ability of a member in a manager-managed Limited Liability Company (LLC) to co-sign deals depends on the specific structure and operating agreement of the LLC. Here’s a general explanation of how this works:

Understanding Manager-Managed LLCs

In a manager-managed LLC, the members (owners) designate one or more managers to handle the day-to-day operations and decision-making of the company. This is different from a member-managed LLC, where all members share in the management responsibilities.

Authority of Managers vs. Members

In a manager-managed LLC:

• Managers have the authority to make decisions and enter into contracts on behalf of the LLC.
• Members typically do not have the authority to bind the LLC in contracts or deals unless explicitly granted that power in the operating agreement.

Operating Agreement

The operating agreement is a crucial document for any LLC. It outlines the roles, responsibilities, and powers of both managers and members. To determine if a member can co-sign deals, you should:

1. Review the operating agreement to see if it grants specific authority to members to co-sign deals.
2. Check for any clauses that outline the process for authorizing members to act on behalf of the LLC.

State Laws and Regulations

State laws also play a significant role in defining the powers of members and managers in an LLC. Most states follow the Revised Uniform Limited Liability Company Act (RULLCA) or have similar statutes. Generally, these laws:

• Default to the operating agreement for guidance on authority and roles.
• Provide a framework for the powers of managers and members if the operating agreement is silent on specific issues.

For example, under the RULLCA, unless the operating agreement states otherwise, members in a manager-managed LLC do not have the authority to bind the LLC in contracts.

When Legal Advice is Necessary

Given the complexities involved, it is often necessary to consult with a legal professional to:

• Interpret the operating agreement accurately.
• Understand the specific state laws that apply to your LLC.
• Ensure that any actions taken are legally binding and in the best interest of the LLC.

Resources and Next Steps

To get started, you can:

1. Review your LLC’s operating agreement.
2. Consult state-specific LLC statutes, which can often be found on your state’s official website or through legal information resources like [Nolo](https://www.nolo.com/legal-encyclopedia/llcs).
3. Seek advice from a legal professional to clarify any uncertainties.

For more detailed information, you can refer to the [Revised Uniform Limited Liability Company Act (RULLCA)](https://www.uniformlaws.org/committees/community-home?CommunityKey=193ff839-7955-4846-8f3c-ce74ac23938d).

Remember, while this information provides a general overview, each LLC is unique, and specific legal advice is essential for making informed decisions.