KRS § 275.003 — KY Code / Title XXIII / Chapter 275 / Section 275.003
275.003 Construction of chapter
Status: in_force

275.003 Construction of chapter.

(1) It shall be the policy of the General Assembly through this chapter to give

maximum effect to the principles of freedom of contract and the enforceability of

operating agreements. Unless displaced by particular provisions of this chapter, the

principles of law and equity shall supplement this chapter. Although this chapter is

in derogation of common law, the rules of construction that require strict

construction of statutes which are in derogation of common law shall not apply to

its provisions. This chapter shall not be construed to impair the obligations of any

contract existing when this chapter, or any amendment of it, becomes effective, nor

to affect any action or proceeding begun or right accrued before the chapter or

amendment takes effect.

(2) A written operating agreement may provide that the limited liability company

interest of any member who fails to make any contribution that the member is

obligated to make or who otherwise violates an obligation undertaken in the

operating agreement shall be subject to specified penalties for, or specified

consequences, such failure. Such penalty or consequence may take the form of:

(a) Reducing or eliminating the defaulting member's proportionate interest in the

limited liability company;

(b) Subordinating the member's interest to that of nondefaulting members;

(c) A forced sale of that limited liability company interest;

(d) Forfeiture of his or her limited liability company interest;

(e) The lending by other members of the amount necessary to meet the defaulting

member's commitment;

(f) A fixing of the value of his or her limited liability company interest by

appraisal or by formula and redemption or sale of the limited liability

company interest at such; or

(g) Other penalty or consequence.

(3) A written operating agreement may provide rights to any person, including a person

who is not a member or not otherwise a party to the operating agreement, to the

extent set forth therein.

(4) Except to the extent set forth in a written operating agreement, a limited liability

company is bound by and a party to the operating agreement.

(5) Action validly taken pursuant to one (1) provision of this chapter shall not be

deemed invalid solely because it is identical or similar in substance to an action that

could have been taken pursuant to some other provision of this chapter but fails to

satisfy one (1) or more requirements prescribed by such other provision.

(6) No member or other person shall have a vested property right resulting from any

provision of the operating agreement which may not be modified by its amendment

or as otherwise permitted by law.

(7) Each member and manager and any other party to an operating agreement shall

discharge all duties and exercise all rights consistently with the obligation of good

faith and fair dealing. The obligation of good faith and fair dealing may not be

eliminated in the operating agreement, but it may prescribe the standards by which

the performance of the obligation is to be measured provided the standards are not

manifestly unreasonable.

(8) To the extent the articles of organization and the operating agreement do not

otherwise provide, the Kentucky Limited Liability Company Act shall govern

relations among the limited liability company, the members, the managers, and the

assignees.