Several months ago, I answered the question Who Can Sign Contracts for a Corporation? This post addresses who can sign a contract for a limited liability company (LLC).
Section references below have been updated to reflect California’s new LLC law that took effect on January 1, 2014 (see RULLCA Brings New LLC Laws to California in 2014).
The LLC’s Articles of Organization may address who can sign a contract, but this rarely occurs. The subject is more likely to be addressed in the Operating Agreement.
The form of Operating Agreement that I use for California LLCs states:
“The Managers will have the powers and duties described in Corporations Code Section 17701.05 and such other powers and duties as may be prescribed in this Agreement or by the Members.”
That Section includes, among many other provisions, the power to make contracts.
An Operating Agreement may take a different approach. It may state that a Manager may sign a contract unless it is among the types of contracts that require Member approval.
The Corporations Code includes provisions that protect innocent third parties who enter into agreements with LLCs if any of the following applies.
- The agreement is signed by certain combinations of two of the LLC’s officers (Section 17704.07(w)).
- The agreement is signed by two of the LLC’s Managers (Section 17703.01(d)).
- The agreement is signed by a Member with apparent authority (Section 17703.01(a)) or a Manager with apparent authority (Section 17703.01(b)(2)).
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.