There are many ways in which an LLC member, and even certain non-members, can be bound by the terms of a limited liability company's operating agreement, or even a draft they did not sign, under New Jersey's Revised Uniform Limited Liability Company Act (NJ-RULLCA), N.J.S.A. 42:2C-1 et. seq. In a recently published decision, Premier Physician Network v. Maro, No. A-1152-20, 2021 WL 2124195 (App. Div. May 26, 2021), the Appellate Division makes clear that when it comes to operating agreements, all members are not created equal. Whether and how a member (or other interested person) can become bound by an operating agreement depends, in part, on when they acquired that status.
The 'Maro' Decision
In Maro, six physicians, who were already colleagues in an existing medical practice, agreed to form a new entity that they hoped would allow them to earn higher profits with a number of other doctors. In August 2014, the doctors formed a new LLC by filing a certificate of formation with the New Jersey Division of Revenue, and all of them signed a letter of intent which purported to set forth the principal terms of their agreement to participate in that LLC. The letter of intent provided that, after at least four doctors signed it, the signors and organizers would initiate negotiation and preparation of an operating agreement, and they would use good faith efforts to have that operating agreement executed by Dec. 31, 2014. If the operating agreement was not finalized by that date, any of the physicians could elect not to continue.
Originally published by NJLJ (July 22, 2021).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.