TexLawThursday: Lessons for LLCs from Texas Court Opinions

I recently read a summary of Texas court cases involving limited liability companies (LLCs) and based on that information, I thought I’d pass along three things for LLC members to keep in mind:

1) Always present and represent your company and your relationship to your company correctly.  Incorrectly referring to your company may expose you to personal liability.  Additionally, failing to sign documents in your official capacity (for the entity) can also expose you to personal liability.;   

2) Make sure that you understand the legal ramifications of your pre-formation activities.  In example, a company does not have a recognized legal right to sue for events occurring before formation, and you will likely be held personally liable for any pre-formation contracts that you sign (make sure the company adopts the contract post-formation but remember even if the company adopts the agreement, you’ll remain liable unless you obtain a novation from the other party to the contract).; and

3) Your co-members may not owe you the duties you think they do.  Whether or not a fiduciary duty exists under Texas law is a question of fact.  Thus, the circumstances of your particular situation (including the provisions of your formation documents) will govern whether or not such a duty existed at the time of the complained of action.

2 thoughts on “TexLawThursday: Lessons for LLCs from Texas Court Opinions

  1. Hello There. I found your blog using msn. This is a very well written
    article. I’ll make sure to bookmark it and come back to read more of your useful information. Thanks for the post. I will definitely return.

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