Legal Question in Business Law in Pennsylvania

Re: Operating agreement is it required

To answer your question, yes and no. In any business relationship outside of a sole proprietorship there must be an agreement between the parties. Many times this is not a written agreement and form a simple partnership.

The relationship is understood between the parties. But if there is a dispute and there is no documentation of the relationship then the law or arbiter will "fill the gaps" with the standards in the particular jurisdiction.

As to LLCs, they are a new breed and have many of the same characteristics as corporations and partnerships. There is no requirement by most states that there be any document besides those filed with the state. That said, operating without an operating agreement is not recommended. In the first, you have no fallback to rely upon should you need to assert claims of limited liability. Without an operating agreement any lawyer will make short work of piercing the veil of limited liability to get to the owner's personal assets. Second, many businesses will not treat with an LLC without examining and vetting the operating agreement. There's no law that requires them to do business with any business and there are many reasons that they should not do business without perform due diligence, which would include a review of the organic documents of a business.

Hope that made the situation clear.

If I can be of assistance, please contact me. And, if you are getting contrary advice from someone more familiar with the particular situation then this commentary should be disregarded.

Regards,

Roger Traversa

[email protected]