Instead, corporations have what is called corporate bylaws. Corporations do not have Operating Agreements.

Do Corporations Have Operating Agreements? Many difficult cases have been decided based on default rules or judicial interpretation of an ambiguous agreement which did not seemingly reflect the wishes and goals of the parties. However, putting the terms governing the operations of an LLC in writing clearly and explicitly at an early stage will protect the interests of everyone involved.

Oftentimes, business partners or investors in the first stages of an exciting business opportunity will not foresee (or do not consider) the possibility of a later disagreement and the potential need to assert their respective rights. Having a hard copy of your LLC Operating Agreement will also allow you to refer back if there are any questions or disputes. While Section 18-101 of the Delaware Limited Liability Company Act states that a limited liability company Operating Agreement may be 'written, oral, or implied,' typically people write out the Operating Agreement and have it signed before a notary public, with a copy of the notarized document provided for each signer. Since the LLC Operating Agreement is a contract, it must be agreed to by all participating parties. The ability to draft your own rules and guidelines through the LLC Operating Agreement is one of the most significant advantages of a Delaware LLC, causing over 70% of entrepreneurs to create an LLC over any other business entity. This means the LLC Agreement will allow you to create an entity as well as define the relationship among its members as you see fit for your unique situation.

The Delaware legal premise known as freedom of contract gives the organizers of the LLC, who set the LLC's terms and oversee the drafting of the Operating Agreement (among other powers and duties), enormous flexibility in defining the rights and responsibilities of the LLC members. Delaware is among the states where operating agreements are not mandatory. While the operating agreement is not mandatory in all states, it is recommended to draft them to set the guidelines for the LLC will run. Do I Need an Operating Agreement for My LLC? It is the main governing document of the LLC, above all others. A Delaware LLC Operating Agreement sets forth the terms governing the limited liability company, its interests, activities, management and provisions governing the rights and obligations of its members.

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