Assignment 6 – In a business, sometimes partners do not get along. Many times, the bylaws, or other documents (such as a shareholder agreement, buy-sell agreement or the like) will cover the situation when one partner is forced to leave the business. Usually, it’s a “for cause” reason. The partner has done something bad and needs to leave. Our hypothetical “problem” partner is someone who probably doesn’t commit his or her time to the business (a goof off), embezzles money, breaches his agreements, files bankruptcy, or finds herself in trouble with the law. Those people are begging to get removed from the business ownership. The other partners, if they have sufficient votes, will vote to remove the partner from ownership.
However, many business owners are neglectful and do not get their documents prepared in the beginning during the business’ formation. When partners later get into a dispute, the owners will be forced to rely on statutes, rather than the business documents, to remove a “problem” partner. This is an exercise about one of those statutes.
What if, instead of committing a crime, breaching an agreement, or embezzling money, the partner is just a jerk, or extremely difficult to get along with by dominating meetings, never voting to approve anything, and/or being hyper-critical of every decision made? Can you remove those people from ownership?
Review the LLC statutes found at this LINK. ( on uploaded files)
Write a minimum two (2) page paper on the “not reasonably practicable to carry on business with the member” standard a court would apply to expel a member from the LLC. Specifically, I want your thoughts and ideas on what “conduct” qualifies to expel a member under this standard. You are encouraged to conduct your own research. Keep in mind that, according to the wording, this statute does not require a wrongful act on the part of the member who is being expelled. Your focus should rather be on conduct that does not qualify either as a breach of contract or a breach of a duty (i.e., tort) to the LLC. Breaches like that provide an independent basis to expel a member. This exercise is very different from the previous exercises. You are being asked to read a statute, not a case. This Assignment is worth 30 points. Identification of all the elements of the correct standard is worth 15 points. It is not as clear-cut as you might think from a first read of the statute. You will need to focus on this to get maximum credit. Identification of relevant “conduct” is worth 15 points.
