While many business owners choose to structure their business as a limited liability company, not all business owners are aware of all of the advantages associated with LLCs. One such advantage is flexibility. Generally, it is the policy of Georgia’s LLC Act to enforce the terms of an LLC’s operating agreement. This allows business owners to be creative and customize their operating agreement for their business. An example of one such creative provision that was upheld and enforced in a recent Georgia case, Davis v. VCP South, LLC, involved a provision that gave each member of the LLC, following the death of the other member, the option to purchase the deceased member’s interest at a price determined by the company’s certified public accountant. The Court found that the intent of the members was clear in authorizing the company’s CPA to determine the purchase price and the Court enforced the operating agreement. Because Georgia courts are likely to enforce legal terms in an LLC’s operating agreement, business owners should carefully consider whether their current operating agreement reflects the true terms of their “deal” and consider adding creative terms that are unique to their business.
This article is not intended to establish an attorney-client relationship and is not intended to confer legal advice. No attorney-client relationship should be inferred in the absence of a written and executed engagement agreement that expressly indicates the creation of an attorney-client relationship.
Written by: Heather Wagner