In the case of Seaport Village Ltd. v. Seaport Village Operating Company LLC, C.A. No. 8841-VCL (Sept. 24, 2014), Vice Chancellor Laster found that the operating agreement of a limited liability company (“LLC”) can be binding upon the parties to that agreement, even if the agreement is not signed by the parties.

This holding is consistent with Section 18-101(7) of the Delaware Limited Liability Company Act (the “LLC Act”), which provides that “[a] limited liability company is bound by its limited liability company agreement whether or not the limited liability company executes the limited liability company agreement.” 6 Del. C. § 18-101(7).

Members of a Delaware LLC and their attorneys should be aware of this opinion and not operate under the assumption that an LLC operating agreement is invalid simply because it is unsigned.

Carl D. Neff is a lawyer with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.