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Limited Liability Company

Edina and Patsy form an LLC for the purpose of starting a public relations firm. Edina drafted the articles of organization for the LLC and gave the articles to Patsy, who read them briefly. Patsy told Edina, "Everything looks okay to me," and signed the agreement. Edina properly filed the LLC articles with the secretary of state and the LLC was formed. Edina operated the LLC as if she were the primary manager, excluding Patsy from most of the day-to-day investment and management decisions of the LLC. Patsy protested wanting more control of the business. Edina produced the articles of organization, which clearly stated that the LLC was manager-managed, with Edina listed as the sole manager. Patsy argued that as a member of the LLC, she had the inherent right to manage the LLC.

Is Patsy correct? Why?

Solution Preview

Hi,

In the research I did to answer this question, I found that LLCs can either be run by "members" or "managers". If the LLC is run by members, then the member is the owner of the company. "If a limited liability company is managed by the members, then the owners are directly responsible for running the company" (LegalZoom, 2013, para 8). If the LLC is ...

Solution Summary

A discussion regarding a specific scenario within an LLC including manager-managed situations. 236 words, 1 reference.

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