LLC operating agreements and the statute of frauds
Posted on 04/18/2010 at 02:00 PM by The Newsroom
Section 489.102(15) of the new Iowa LLC Act contains a rather expansive definition of operating agreement. It says that an LLC operating agreement can be oral, written or implied. And a written operating agreement can be modified orally or by implication. Oral operating agreements or operating agreements implied by the conduct of the members are problematic, let alone a written operating implicitly modified by conduct or oral agreement. This is the reason the drafters of the Iowa LLC Act added a provision allowing written operating agreements to include a clause that only requires amendments to be in writing. See Iowa Code Section 489.111(4). But what about written operating agreements that do not contain that provision or LLCs without a written operating agreement? Does the statute of frauds apply to them? Iowa's version of the statute of frauds is found at Iowa Code Section 622.32. It provides that evidence of a contract that is not to be performed within one year of its making is not valid, unless the contract is in writing and signed by the party against whom the contract is to be enforced.
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Categories: Commercial Litigation
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