¶ 801
Overview
Scope of the chapter. Chapter 7 examined how an operating agreement comes into being, who is bound by it and how courts read it. This chapter examines the life of the agreement after it is made: how it is amended, how its terms are waived or the defects in acts taken under it are cured, how it is enforced and how its several documents fit together into one agreement. It closes with the provisions that govern conflicts within the agreement and between the agreement and other instruments, and with a drafting checklist.
Why amendment and enforcement matter. An LLC may last for decades, and its agreement will almost certainly be changed during that time. New members are admitted, capital is raised on new terms, governance is reorganized and the business may be combined with another. Each change raises the same questions: whose approval is needed, what may the approving members change, and what protection do members who did not approve receive. When a dispute arises, a second set of questions follows: in what court or forum the agreement may be enforced, what remedies are available and against whom. The answers depend on the agreement's own terms, read against the statute. The Delaware act and the uniform act give the agreement wide control over its own amendment and enforcement, but each contains rules that apply whatever the agreement says, and each supplies defaults that apply when the agreement is silent.
Organization. The chapter proceeds in nine parts:
- the power to amend and the statutory defaults (¶ 810);
- supermajority, class and consent provisions (¶ 820);
- amendment by merger, division and other transactions (¶ 830);
- limits on the power to amend (¶ 840);
- waiver, estoppel and the ratification of defective acts (¶ 850);
- enforcement of the agreement (¶ 860);
- integration, side letters and agreements consisting of several documents (¶ 870);
- severability, conflicts and governing-law clauses (¶ 880); and
- a drafting checklist (¶ 890).