Membership In Washington LLCs Part 1: Picking Your Partner

Apr 7, 2020

A fundamental principle of partnerships is known as delectus personae, or the right to pick your partner.  The principle forms the backbone of partnerships and limited liability companies (LLCs) today.  This blog post kicks off a series of three posts focusing on the “pick-your-partner” principle as it relates to LLCs in Washington State.  Specifically, we will examine how Washington’s Limited Liability Company Act, RCW 25.15 (the “Act”), seeks to give life to the principle that members of an LLC ought to have the right to pick their fellow members.

The freedom to pick your business partner is grounded in the fundamental principle of freedom of contract.  The Act expressly states the policy to “give maximum effect to the principle of freedom of contract.”  RCW 25.15.801.  Through subsequent posts, it will become clear that the Act’s various provisions on member withdrawal and transfers enforce the “pick-your-partner” principle.

It is important to note that the Act’s provisions are default rules, meaning that LLC agreements can supersede most sections of the Act.  When LLC agreements are silent on certain topics, the default rules within the Act may (or may not) supplement the LLC agreement.  However, the Act’s default rules may not be in you or your LLC’s best interests.  Therefore, it is important to have an LLC agreement drafted to fit the specifics of your business. If your LLC does not have a written LLC agreement or would like your LLC’s operating agreement reviewed, the lawyers at Beresford Booth remain available to assist you.

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