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http://ssrn.com/abstract=2222136
 
 

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Damning Dictum: The Default Duty Debate in Delaware


Mohsen Manesh


University of Oregon School of Law

August 1, 2013

Journal of Corporation Law, Vol. 39, No. 1, pp. 35-70, Fall 2013

Abstract:     
Bizarrely, in 2013, even the most sophisticated business lawyer could not answer a seemingly simple question: whether, in the absence of an express agreement to the contrary, the manager of a Delaware limited liability company (LLC) owes traditional fiduciary duties to its members as a default matter? This was not always the case. For years, this question was settled — settled at least in the Delaware Court of Chancery. But in November 2012, the Delaware Supreme Court cast doubt on a long line of chancery court precedent in Gatz Properties v. Auriga Capital. Given the broad freedom of contract available under LLC law, it may be that default duties do not much matter. And, in any case, the uncertainty created by Gatz has now been resolved by recent legislation. Consequently, the lasting impact of Gatz is not on the substantive legal question. Rather, the lasting impact of Gatz is on Delaware law’s reputation for certainty as well as the use of dictum, an established Delaware judicial practice that has been vital to the state’s success in attracting corporate, and now LLC, charters. 

Number of Pages in PDF File: 36

Keywords: LLCs, limited liability companies, fiduciary duties, default duties, Delaware, LPs, limited partnerships, dicta, dictum

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Date posted: February 22, 2013 ; Last revised: February 18, 2014

Suggested Citation

Manesh, Mohsen, Damning Dictum: The Default Duty Debate in Delaware (August 1, 2013). Journal of Corporation Law, Vol. 39, No. 1, pp. 35-70, Fall 2013 . Available at SSRN: http://ssrn.com/abstract=2222136 or http://dx.doi.org/10.2139/ssrn.2222136

Contact Information

Mohsen Manesh (Contact Author)
University of Oregon School of Law ( email )
1515 Agate Street
Eugene, OR 97403
United States
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