“Any agreement must be signed by the Member to legally bind the Company”

A lot of people go to online tools for resources like template contracts, template agreements, business organizational documents … I won’t refer you to any of those tools because I think they have flaws, and I’m ethically obliged to not point you in the wrong direction.

One problem that some of those online tool providers have is that they pick who should be the client for whom their templates are drafted – and they don’t make clear who that hypothetical client might be.

An example of this problem is the following clause in a template for a single-member LLC operating agreement: “Any agreement must be signed by the Member to legally bind the Company.”

Well, that seems innocuous – even desirable. We don’t want a Member to incur liability for the LLC on the basis of a casual conversation and a handshake. Right?

That depends. What’s the point of an LLC? Isn’t its key purpose to shield its Members from liability for business operations? Particularly for a single-member LLC?

But if that conversation and handshake can’t bind the LLC to the business deal, who *is* bound? Somebody must be. Guess who: the Member who shook the hand.

And a seemingly innocuous clause in a template agreement – pure “boilerplate” – thereby vitiates the statutory protection that an LLC is meant to impart.

This is one reason of many why people should hire attorneys to do the routine stuff.