A E FFECT OF D ISSOCIATION On dissociation a members right to participate in

A e ffect of d issociation on dissociation a members

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A. E FFECT   OF  D ISSOCIATION On dissociation,  a member’s  right to participate in the firm’s business ends. The duty of loyalty also   ends,   and   the   duty   of   care   continues   only   with   respect   to   events   that   occurred   before dissociation.   The   member’s   interest   in   the   firm   must   be   bought   out   according   to   the   LLC agreement, or for its “fair” value.
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CHAPTER 37:  LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS           231 B. D ISSOLUTION A dissociating member does not normally have the right to force the firm to dissolve (although the other   members   can   dissolve   the   firm   if  they   want   and   a   court   might   order   dissolution).   On dissolution, any member can participate in winding up. After liquidation of the assets, the proceeds are distributed first to creditors (which may include members), second to capital contributors, and finally to members according to the operating agreement or in equal shares. IV. Special Business Forms A. J OINT  V ENTURE A joint venture is a relationship in which two or more persons combine their efforts or their prop- erty for a single transaction or project, or a related series of transactions or projects.  Unless oth- erwise agreed, joint venturers share profits and losses equally.  Large organizations often inves- tigate new markets or new ideas by forming joint ventures with other enterprises. 1. Similarities to Partnerships Generally, partnership principles apply to joint ventures. Joint venturers owe each other the fiduciary duties of partners. To avoid disputes over the disclosure of information, venturers should specify exactly what is to be disclosed. Members have equal rights to manage their project, unless specified otherwise, and are equally responsible for its liabilities. C ASE  S YNOPSIS Case 37.3: SPW Associates, LLP v. Anderson Murdo Cameron developed components to make replicas of the P-51 aircraft. Douglas Anderson agreed to collaborate on the manufacture of one P-51 for each of them and to make additional P-51s to sell.   For   the   first   plane,   which   Anderson   would   build,   Cameron   would   provide   an   engine,   which Anderson would pay for after the plane’s first flight. Anderson borrowed funds from SPW Associates, LLP, to finance the making of the P-51s, using the first plane as the security. Anderson built one plane before  defaulting  on the  loan.  SPW filed a suit  in a North Dakota  state  court  against  Anderson, Cameron, and others. The court ruled that Anderson and Cameron had entered into a joint venture, the
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  • Fall '09
  • Gough
  • Business Law, ........., Limited Liability Company

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