Law Commons^™

Protecting The Sacred Writing: The Operating Agreement, Daniel S. Kleinberger

Faculty Scholarship

This column provides practical steps toward protecting an LLC's written operating agreement from claims of oral or implied-in-fact modification. Such claims undercut the purpose of “reducing the agreement to writing,” replacing definiteness with uncertainty and substituting swearing matches for the written word.

We Interrupt This Program...To Talk Of Transfer Restrictions, Daniel S. Kleinberger

Faculty Scholarship

A recent Iowa decision, REG Washington, LLC v. Iowa Renewable Energy LLC, is a useful first word on transfer restrictions applicable to ownership interests in a limited liability company, and more particularly transfer restrictions applicable to so-called transferable interests, i.e., economic rights. The decision’s analysis centers around the “pick your partner” principle and expressly rejects any analogy to corporate law cases addressing stock transfer restrictions. The decision raises certain issues and is hardly the last word on this topic.

No Longer Peas In A Pod: More Implications Of The Divorce Of Minnesota Corporate And Llc Law, Daniel S. Kleinberger

Faculty Scholarship

Twenty-five years ago, when an MSBA task force drafted Minnesota’s first limited liability company(LLC) statute, the drafters copied chapter 302A, the corporate statute, to the maximum extent possible. Labels were changed—e.g., member instead of shareholder; board of governors instead of board of directors— and substance was modified to the extent necessary to comply with the then-applicable tax classification regulations. But otherwise, the task was an exercise in replication.

The approach was far out of the mainstream. Almost everywhere else LLC statutes were being derived from partnership law. The task force’s rationale for going rogue was straightforward. At the time, most …

How Can I Be A Party To A Contract And Yet Lack Standing To Sue Another Party For Breach?, Daniel S. Kleinberger

Faculty Scholarship

The distinction between direct and derivative claims follows necessarily from the concept of a legal person being separate and distinct from its owners, raises and resolves a question of standing, has serious practical consequences in litigation, and is central to the governance of any business entity. In a closely held business, the distinction usually protects the deal the owners have made for themselves. On some occasions, however, the distinction helps shelter a miscreant majority owner who has managed to harm a fellow owner indirectly.

This column will briefly describe the three approaches to the direct-derivative distinction found in the case …