Title: Olson v. Halvorsen, et al.
Citation: N/A
Docket Number: 338, 2009
State: Delaware
Issuer: Delaware Supreme Court
Date: December 15, 2009

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
BRIAN T. OLSON, 
) 
 
) No. 338, 2009 
Plaintiff Below, 
) 
Appellant, 
) Court Below: Court of Chancery 
 
) of the State of Delaware in 
v. 
) and for New Castle County 
 
) 
O. ANDREAS HALVORSEN, 
) C.A. No. 1884 
DAVID C. OTT, VIKING GLOBAL ) 
INVESTORS LP, VIKING GLOBAL ) 
PARTNERS LLC, VIKING 
) 
GLOBAL PERFORMANCE LLC, 
) 
and VIKING GLOBAL FOUNDERS ) 
LLC, 
) 
 
) 
Defendant Below, 
) 
Appellee. 
) 
 
Submitted:  October 28, 2009 
Decided:  December 15, 2009 
 
Before STEELE, Chief Justice, HOLLAND, and JACOBS, Justices. 
 
Upon appeal from the Court of Chancery. AFFIRMED. 
 
Collins J. Seitz, Jr. and Bradley R. Aronstam of Connolly Bove Lodge & 
Hutz LLP, Wilmington, DE; David C. Frederick (argued), Scott H. Angstreich and 
Scott K. Attaway of Kellog, Huber, Hansen, Todd, Evans & Figel, PLLC, 
Washington, DC for appellant. 
 
Jon E. Abramczyk and John P. DiTomo of Morris, Nichols, Arsht & Tunnell 
LLP, Wilmington, DE; Andrew L. Frey (argued), Charles A. Rothfeld, Andrew H. 
Schapiro and Hannah Y.S. Chanoine of Mayer Brown LLP, New York, NY for 
appellee. 
 
 
STEELE, Chief Justice: 
 
2 
 
Brian Olson, the plaintiff below appellant, claims that his investing partners 
orally amended their LLC’s compensation provisions.  The Vice Chancellor held 
that Olson failed to prove an amendment, and that the statute of frauds applies to 
LLC operating agreements, making the alleged oral amendment nonenforceable.  
Olson asserts that applying the statute of frauds to LLC agreements contravenes 
the General Assembly’s intent to give LLC agreements maximum effect.  Because 
the trial court committed no legal error and the record supports the Vice 
Chancellor’s contractual interpretation, we AFFIRM. 
FACTS AND PROCEDURAL HISTORY 
 
Andreas Halvorsen, David Ott, and Olson worked together at Tiger 
Management, a hedge fund.  In early 1999, Halvorsen left Tiger Management and 
contacted Olson and Ott about forming a new hedge fund, Viking Global. 
I. 
The February 1999 Meeting and the “Cap and Comp” Agreement   
In February 1999, Halvorsen, Olson, and Ott orally agreed upon Viking’s 
fundamental operating terms.  They agreed that the three founders would operate 
Viking, and divide all of its profits annually.  If any one of them left Viking, he 
would receive only his capital account balance and earned compensation.1 
                                                 
1 Halvorsen, Olson, and Ott forfeited large sums of money after resigning from Tiger 
Management because of its deferred compensation system.  They decided that Viking would pay 
out all the profits annually to avoid the perceived unfairness of Tiger Management’s deferred 
compensation system.  Halvorsen, Olson, and Ott all testified that they agreed to this “cap and 
comp” agreement. 
 
3 
II. 
Formation of the Viking Entities 
To carry on the Viking business, the founders created three Delaware 
entities: (1) Viking Global Performance LLC to collect Viking’s performance fees; 
(2) Viking Global Investors LP to pay Viking’s expenses, employ Viking’s staff, 
enter into operational contracts on Viking’s behalf, and collect management fees; 
and (3) Viking Global Partners LLC to serve as the general partner for Investors.  
They executed certificates of formation on April 8, 1999, and filed them with the 
Secretary of State of Delaware the next day. 
III. 
Operating Agreements for the Viking Entities 
Olson directed Viking’s counsel to draft operating agreements for the Viking 
entities.  In April 1999, Viking’s counsel provided the first drafts of the operating 
agreements for Investors, Partners, and Performance.  These long-form operating 
agreements reflected the founders’ earlier oral agreements. 
Viking’s counsel, at Olson’s direction, also drafted short-form operating 
agreements for Investors, Partners, and Performance.2  After Olson requested, and 
counsel made, a few modifications, the three founders signed all three short-form 
                                                 
2 Counsel drafted short-form operating agreements because, in April 1999, counsel was refining 
the long-form operating agreements and the Viking entities needed operating agreements to enter 
into a real estate lease and open bank accounts.  Counsel specifically drafted the short-form 
operating agreements consistent with the core principles of Viking. 
 
4 
agreements.3  The short-form operating agreements do not contain all of the terms 
agreed upon by the founders at the February meeting, but each short-form 
agreement does provide that a departing member will receive only his capital 
account balance and accrued compensation. 
After the founders executed the short-form agreements, Olson and Viking’s 
attorneys continued to refine the long-form agreements.  They produced more than 
a dozen drafts between April 1999 and October 1, 1999 when Viking was 
launched.  As a result of a potential dispute with an employee, the founders 
decided to supersede the Performance short-form agreement, by signing the 
Performance long-form agreement, dated September 28, 1999.  The founders never 
signed long-form operating agreements for Investors and Partners, however, the 
unsigned Investors and Partners long-form agreements, and the signed 
Performance long-form agreement all provide that a departing member of Viking 
will receive only his capital account balance and accrued compensation. 
IV. 
Founders and the Earnout Provision 
In mid-1999, Olson proposed that a new entity, Viking Global Founders 
LLC, pay a founder an earnout upon his departure from Viking.  Olson did not 
explain the details of the earnout at the founders’ first meeting, but Halvorsen and 
                                                 
3 The founders executed the short-form operating agreements for Investors and Partners on May 
10, 1999, and the short-form operating agreement for Performance on September 8, 1999. 
 
5 
Ott considered the idea interesting, and the three founders left the issue open for 
discussion.4 
Olson continued to direct Viking’s attorneys, who prepared nine drafts of the 
Founders operating agreement over roughly a year and a half.  The draft agreement 
provided that each founder would receive a declining percentage of his interest in 
Viking for six years upon retirement or death (the earnout provision).  During the 
drafting process, Olson never discussed changes to the Founders agreement.5  
Between 1999 and 2001, Halvorsen and Ott received several drafts of the Founders 
agreement, but Halvorsen and Ott never discussed the drafts or the earnout concept 
with Olson after meeting briefly in the summer of 1999.  None of the three 
founders ever signed a Founders operating agreement, and Halvorsen and Ott 
testified that they never reached an agreement with, or made promises to, Olson 
regarding the Founders earnout concept. 
Outside counsel, at Olson’s direction, filed a certificate of formation for 
Founders on September 28, 1999.  Olson also instructed Founders to become a 
member of Performance, and directed certain portions of the founders’ year 2000 
to 2005 residual income through Founders.  
                                                 
4 Olson testified that a month or two later the three founders held a second meeting to discuss the 
earnout concept, where he distributed a term sheet to Halvorsen and Ott about that provision.  
Halvorsen and Ott both testified that they had never seen this term sheet before litigation.  
5 Many of these changes differed significantly from the term sheet Olson claims he showed 
Halvorsen and Ott. 
 
6 
V. 
Renegotiation of Compensation Percentages 
 
By the end of 2001, when Olson’s compensation dissatisfied him, Halvorsen 
refused to pay him more, and Olson announced his exit from Viking.  Halvorsen 
and Olson decided to negotiate a mutually acceptable solution that decreased 
Halvorsen’s share and increased Olson’s share of Viking profits. 
Olson admitted that the three founders did not discuss how the changes in 
compensation percentages would affect the earnout provision he claims was agreed 
to or their purported entitlement to the fair value of Founders.  Halvorsen and Ott 
thought that these changes would only affect annual compensation.  Both 
Halvorsen and Ott testified that they would never have agreed to increase Olson’s 
retirement benefits without requiring him to stay at Viking for a substantial period 
of time.  Otherwise, Olson could have immediately walked away with a substantial 
amount of additional money, without conveying any corresponding additional 
benefit for Viking.   
VI. 
The Liquidation Agreement 
On November 1, 2002, Halvorsen, Olson, and Ott signed a letter agreement 
to govern any future liquidation of the Viking entities.  The liquidation agreement 
references the “Limited Liability Company Agreement for VGFounders, as 
amended from time to time.”  The founders did not discuss the Founders 
agreement for another two years.   
 
7 
VII. The Founders Agreement and Earnout Resurface 
Daniel Cahill, who became Viking’s president in 2003, discovered the draft 
Founders agreement in the summer of 2004.  The earnout provision surprised him, 
because the founders had told him on several occasions that employees would only 
get paid while they were actively employed at Viking.  Cahill also testified that 
Olson had told him several times that a departing Viking founder could only 
receive his capital account balance and accrued compensation.  Cahill met with 
Halvorsen, Olson, and Ott, all of whom told Cahill that they had not reached an 
agreement regarding an earnout.6   
From July 2004 until November 2004, Cahill listed Founders on meeting 
agendas, so the management committee could resolve open questions about 
Founders.  Olson received the agendas and attended most of the meetings, but 
never raised any questions regarding Founders and never claimed that Halvorsen, 
Ott, and he had agreed to the earnout provision in the Founders agreement. 
                                                 
6 Brian Smith, Viking’s Chief Financial Officer, also testified at trial that he believed the three 
founders never agreed to an earnout and that they had never finalized the Founders agreement. 
 
8 
 
VIII. Olson’s Personal Financial Statements 
In 2003 and 2004, Olson prepared personal financial statements setting forth 
his net worth.  As his interest in the Viking entities in 2003 and 2004, Olson listed 
the amount of his capital account balance, but did not list the value of the equity 
(either through a fair value analysis or an earnout concept) to which he now claims 
he is entitled.  Olson represented his signed personal financial statement as both 
correct and complete. 
IX. 
Olson’s Disappointment and Sabbatical 
At the end of 2004, Olson expressed disappointment with his portfolio 
returns and his role at Viking.  In March 2005, Olson informed Halvorsen, Ott, and 
Cahill of his decision to take a six month sabbatical.  Olson mentioned that he 
might like to transition into another role at Viking, such as running a separately 
managed fund.  Olson also told Cahill, however, that he might not return to Viking. 
X. 
Viking Terminates Olson 
Viking did not replace Olson instead, Viking shut down his portfolio, and 
Halvorsen instructed Cahill to determine what role Olson could play upon his 
return.  Cahill, along with other members of Viking’s management, concluded that 
a separate Olson operated fund would not best serve Viking and its investors.  
Cahill also concluded that Viking operated more efficiently without Olson.   
 
9 
After discussing Cahill’s findings, the management committee unanimously 
determined that Viking had no place for Olson.  At a meeting on August 29, 2005, 
Halvorsen and Ott informed Olson that he would not be returning to Viking after 
his sabbatical.  Olson then asked about Founders for the first time in six years.  
Halvorsen told Olson that they had not given any thought to Founders.  On his 
departure, Viking paid Olson over $100 million, representing his 2005 
compensation and his capital accounts in each Viking entity. 
XI. 
Olson Sues Viking in the Court of Chancery 
On January 12, 2006, Olson filed suit in the Court of Chancery seeking, 
among other things, to collect the multi-year earnout he claims Viking owes him 
under the unsigned Founders operating agreement.  Olson asserted the following 
claims: (1) breach of contract; (2) breach of fiduciary duty; (3) civil conspiracy; (4) 
right to fair value and interest in the Viking entities pursuant to 6 Del. C. § 18-604 
and 6 Del. C. § 17-604; (5) unjust enrichment; (6) accounting; (7) equitable 
estoppel; and (8) promissory estoppel. 
XII. Summary Judgment in Favor of Viking on the Contract Claim 
The parties filed cross motions for summary judgment. On October 22, 
2008, the Vice Chancellor granted Viking summary judgment on Olson’s breach of 
contract claim.   
 
10 
The Vice Chancellor first found that the statute of frauds applies to LLC 
operating agreements.  The Delaware statute of frauds states that parties must 
reduce to writing, and the defending party must have signed, any agreement that 
cannot be completed within one year from its making.7  The Vice Chancellor held 
that the statute of frauds prevents enforcement of oral LLC agreements that require 
more than one year to complete.8 
Second, the Vice Chancellor found that “all amounts except the first earnout 
payment cannot possibly be calculated until after one year following the alleged 
agreement” and that “substantive obligations and restrictions extending for 
multiple years would be placed on [Halvorsen] and Ott by the unsigned Founders 
operating agreement.”9  Thus, the Vice Chancellor concluded that the earnout 
provision in the unsigned Founders operating agreement fell within the statute of 
frauds and, thus, was unenforceable. 
Third, the Vice Chancellor determined that Olson did not satisfy the 
multiple-writings exception to the statute of frauds.  The Vice Chancellor found 
                                                 
7 6 Del. C. § 2714(a). 
8 The Vice Chancellor omitted the word “oral,” where he states that “if an LLC agreement 
contains a provision or multiple provisions which cannot possibly be performed within one year, 
such provision or provisions are unenforceable.”  Olson v. Halvorsen, 2008 WL 6745401, at *3 
(Del. Ch. Oct. 22, 2008).  This holding, read literally, prevents enforcement of any LLC 
agreement that requires more than one year to perform, even if in writing and signed.  We expect 
that the Vice Chancellor mistakenly omitted the word “oral,” because his discussion otherwise 
comports with ours.   
9 Olson, 2008 WL 6745401, at *5. 
 
11 
that the liquidation agreement did not unambiguously reference the unsigned 
Founders operating agreement.10  The Vice Chancellor further found that none of 
the documents Olson identifies clearly refer to either the unsigned Founders 
operating agreement or the earnout provision.  The Vice Chancellor concluded that 
“[w]ithout a clear and specific reference in a signed writing to the unsigned 
Founders operating agreement containing the earnout provision, there is 
insufficient evidence to bring the Founders operating agreement under the 
umbrella of the multiple writings exception.”11  Thus, the Vice Chancellor held that 
the unsigned Founders agreement violates the one-year rule of the statute of frauds 
and granted summary judgment in favor of Viking on Olson’s breach of contract 
claim. 
XIII. Olson Limited to His “Cap and Comp” 
 
Thereafter, the parties submitted pretrial briefs and the Vice Chancellor held 
a six-day trial on Olson’s remaining claims in November and December 2008.  The 
parties submitted post-trial briefs and engaged in post-trial argument on February 
17, 2009.  At trial and in his briefs, Olson focused on his purported entitlement to 
fair value for his interest in the Viking entities.  Viking proved, and Olson 
                                                 
10 The Vice Chancellor stated that “‘Limited Liability Company Agreement’ is a generic phrase 
and there is no additional information, such as a date or distinguishing terms, to aid in 
determining whether the liquidation agreement refers to the unsigned Founders long-form 
document or an oral operating agreement for Founders.”  Id.  
11 Id. at *6. 
 
12 
admitted, that the Viking founders had agreed that a departing founder would 
receive only his capital account balance and accrued compensation.12  The Vice 
Chancellor found that Olson did not prove that any other agreement superseded the 
“cap and comp” agreement.  Rather, the Vice Chancellor held that “[w]hile there is 
virtually no evidence, outside of Olson’s own testimony, that the founders intended 
to depart from the ‘cap and comp’ agreement, there is substantial evidence that 
Viking continued to act in conformity with the ‘cap and comp’ agreement before 
and after the formation of Founders.”13  Thus, the Vice Chancellor concluded that 
Olson could not collect the fair value of his ownership interest in any of the Viking 
entities, but only his capital account balance and accrued compensation.14  
XIV. Olson Appeals 
 
On appeal, Olson argues that we must remand his (1) breach-of-contract and 
(2) fair-value claims, both of which the Court of Chancery erroneously rejected.  
Olson asserts that the Vice Chancellor erred by granting Viking’s motion for 
summary judgment on Olson’s contract claim, because (1) the statute of frauds 
does not apply to LLC operating agreements and, (2) even if it does, Olson 
                                                 
12 The Vice Chancellor stated that the statute of frauds does not make the “cap and comp” 
agreement unenforceable, because it is possible that the “cap and comp” agreement could be 
completed within one year. 
13 Olson v. Halvorsen, 2009 WL 1317148, at *9 (Del. Ch. May 13, 2009). 
14 The Vice Chancellor found that Olson’s other claims all failed as well. 
 
13 
satisfied the multiple-writings exception to the statute of frauds.  Olson claims that, 
under the Founders operating agreement earnout provision, Viking must pay him a 
multi-year earnout of his interest in the enterprise, or, alternatively, pay him the 
fair value of his ownership. 
DISCUSSION 
I. 
Olson’s Fair-Value and Breach-of-Contract Claims 
 
Olson claims that the unsigned Founders operating agreement entitles him to 
an earnout, and that if we find that (1) the statute of frauds does not apply to LLC 
agreements or that (2) even if applicable the statute of frauds does not bar Olson’s 
breach-of-contract claim, then we must remand for a trial on his contract claim, 
because the Vice Chancellor granted Viking summary judgment on that claim.  
Olson further contends that even if the founders did not agree to an equity earnout, 
Section 18-604 of the LLC Act and 6 Del. C. § 17-604 entitle him to the fair value 
of his interest in Viking.   
Olson claims that the founders agreed to a distribution of their Viking equity 
shares, and that they formed Founders for that purpose.  By granting summary 
judgment on the contract claim, Olson asserts the Vice Chancellor skewed the 
outcome of Olson’s fair-value claim, because that ruling precluded “evidence that 
 
14 
went ‘to the very heart of [Olson’s] case and might well have affected the outcome 
of the trial.’”15  Thus, Olson urges, we must remand his fair-value claim. 
After the Vice Chancellor granted summary judgment in favor of Viking on 
Olson’s contract claim, the trial court held a six-day trial on Olson’s remaining 
claims.  The Vice Chancellor found that no other agreement superseded the 
founders’ “cap and comp” agreement, and therefore, Olson is entitled to payment 
under only that provision. 
We review the Vice Chancellor’s factual findings following a bench trial for 
clear error.16  “When the factual findings are based on determinations regarding the 
credibility of witnesses, the deference already required by the clearly erroneous 
standard of appellate review is enhanced.”17 
A. Olson’s Fair-Value Claim 
 
Olson contends that Viking owes him the fair value of his equity interest, 
and that we must remand this fair value claim for a new trial.  Under Section 18-
604 of the Delaware LLC Act, a resigning member of an LLC “is entitled to 
receive . . . the fair value of such member’s limited liability company interest,” 
                                                 
15 Barrow v. Abramowicz, 931 A.2d 424, 429 (Del. 2007). 
16 Homestore, Inc. v. Tafeen, 888 A.2d 204, 217 (Del. 2005) 
17 Cede & Co. v. Technicolor, Inc., 758 A.2d 485, 491 (Del. 2000). 
 
15 
unless the LLC agreement provides otherwise.18  Under 6 Del. C. § 17-604, a 
withdrawing partner of a limited partnership “is entitled to receive…the fair value 
of such partner’s partnership interest,” unless the partnership agreement provides 
otherwise.  Olson admits that the founders originally agreed that a departing 
member would only receive his “cap and comp.”  Thus, for Olson to succeed on 
his fair-value claim, he had to prove that the founders amended their original “cap 
and comp” agreement.  
The Vice Chancellor found that the founders never superseded the original 
“cap and comp” agreement.  The evidence substantially supporting this finding 
includes that the founders agreed on the “cap and comp” principle because of their 
experience at Tiger; all the long-form and short-form operating agreements adhere 
to the “cap and comp” principle; the founders never signed the draft Founders 
agreement that contained the earnout provision; the founders did not discuss the 
earnout provision when they renegotiated their compensation percentages; Olson 
could have left Viking immediately after the renegotiation with a substantial 
amount of additional money, yet without obligation to confer any additional 
corresponding benefit to Viking; Olson told Cahill on several occasions that 
Viking’s founders were only entitled to their “cap and comp” upon departing from 
Viking; all three Viking founders told Cahill that they never agreed to an earnout; 
                                                 
18 6 Del. C. § 18-604. 
 
16 
no one discussed the Founders agreement or the earnout provision, even though 
Cahill listed Founders on the management committee meeting agendas for several 
months; Smith testified that he believed that the Viking founders never agreed to 
an earnout and or finalized the draft Founders operating agreement; Olson did not 
list on his 2003 and 2004 personal financial statements the value of the equity that 
he now claims to have in the Viking enterprise; and Olson did not bring up the 
alleged earnout until August 29, 2005, when Halvorsen and Ott told him that he 
could not return to Viking.  Very little, if any, evidence – outside of Olson’s 
testimony – indicates that Viking’s founders departed from the “cap and comp” 
agreement.  
Olson claims that, by granting summary judgment on Olson’s contract 
claim, the Vice Chancellor prevented only consideration of the evidence 
supporting Olson’s fair-value claim.  Olson bases his argument on the fact that the 
Vice Chancellor’s post-trial opinion does not discuss the liquidation agreement or 
the testimony related to it.  Olson contends that the liquidation agreement, which 
the founders signed, evidences the founders’ decision not to surrender their equity 
interests. 
Granting summary judgment on Olson’s contract claim did not affect the 
Vice Chancellor’s consideration of Olson’s fair-value claim.  Nor did that ruling 
prevent Olson from introducing any evidence at trial.  In fact, Olson attempted to 
 
17 
prove, and the Vice Chancellor addressed in his post-trial opinion, the existence of 
an earnout or other equity-distribution scheme that departed from the parties’ “cap 
and comp” agreement. 
Although the Vice Chancellor did not discuss the liquidation agreement 
specifically in his post-trial opinion, that fact offers little, if any, support for 
Olson’s claim that the founders agreed to an equity payout.  The liquidation 
agreement merely refers to the operating committees and agreements.19  The Vice 
Chancellor did not limit Olson’s use of the liquidation agreement at trial.  
Therefore, we uphold the Vice Chancellor’s findings that the Viking founders 
never departed from the original “cap and comp” agreement and that Viking does 
not owe Olson an equity payout.  These findings were not clearly erroneous. 
                                                 
19 Section 1(a) of the Liquidation Agreement, entitled “Liquidation Responsibilities,” provides, 
in part, the following: 
 
 
Upon the occurrence of a Liquidation Event (as defined below), the 
undersigned parties agree that all power and authority granted to (i) the operating 
committee of VGPerformance under the Limited Liability Company Agreement 
of VGPerformance, as amended from time to time, (ii) the operating committee of 
VGFounders under the Limited Liability Company Agreement of VGFounders, as 
amended from time to time, (iii) the operating committee of VGPartners under the 
Limited Liability Company Agreement of VGPartners, as amended from time to 
time, and (iv) the general partner of VGInvestors under the Limited Partnership 
Agreement of VGInvestors, as amended from time to time (collectively, the 
“Operating Agreements”) and applicable law shall vest with you to the extent 
necessary to carry out the prompt and orderly winding-up liquidation and 
dissolution of the Viking Entities in accordance with the Operating Agreements, 
the governing documents applicable to the Affiliated Funds and applicable law 
(the “Liquidation Responsibilities”). 
 
18 
 
B. Olson’s Breach-of-Contract Claim 
 
Olson also claims that Viking owes him a multi-year earnout under the 
earnout provision in the Founders agreement.  Olson asserts that if (1) the statute of 
frauds does not apply to LLC agreements or (2) the statute of frauds does not bar 
Olson’s breach-of-contract claim, then we must remand his contract claim for a 
new trial, because the Vice Chancellor erroneously disposed of Olson’s contract 
claim on summary judgment.  Olson is wrong even if we find that the Vice 
Chancellor ruled incorrectly on the statute of frauds issues, we need not remand 
Olson’s contract claim, because the Vice Chancellor’s statute of frauds rulings did 
not affect the outcome.   
The Vice Chancellor rejected a necessary element of Olson’s contract claim 
when he found, as fact, that the founders never superseded the original “cap and 
comp” agreement.  To succeed on his contract claim, Olson would have to prove 
that Viking’s founders agreed to depart from the original “cap and comp” 
agreement, and that they agreed to the earnout provision in the draft Founders 
agreement.  Obviously, Olson cannot establish this element of his claim, because 
the Vice Chancellor has already found – with substantial evidentiary support – to 
the contrary.  The Vice Chancellor’s factual ruling is not clearly wrong, for which 
reason we need not remand Olson’s contract claim. 
 
19 
II. 
The Statute of Frauds and LLC Agreements 
 
Olson next claims that the Vice Chancellor’s holding that the statute of 
frauds applies to LLC operating agreements, is irreconcilable with the Delaware 
LLC Act.  Olson asserts that the policy and text of the Delaware LLC Act preclude 
the application of the statute of frauds to LLC operating agreements.   
We must decide, as a matter of first impression, whether the statute of frauds 
applies to LLC agreements.  We have often declined to decide an issue that does 
not affect a case’s disposition, but this issue is one that could considerably impact 
the drafting and enforcement of LLC agreements.  For this reason and because this 
issue involves a question of law and statutory construction, we proceed to review it 
de novo.20   
The Delaware statute of frauds, which the General Assembly enacted over a 
century ago, bars the enforcement of an agreement “that is not to be performed 
within the space of one year from the making thereof,” unless it is (1) written and 
(2) signed by the party against whom the agreement is to be enforced.21  Only if the 
parties cannot possibly perform the agreement within one year does the statute of 
frauds apply and require a writing, signed by the charged party.22 
                                                 
20 State v. Fletcher, 974 A.2d 188, 192 (Del. 2009). 
21 6 Del. C. § 2714(a).   
22 Haveg Corp. v. Guyer, 211 A.2d 910, 912 (Del. 1965). 
 
20 
The Delaware LLC Act seeks “to give maximum effect to the principle of 
freedom of contract and to the enforceability of limited liability company 
agreements.”23  To that end, the Delaware LLC Act allows “written, oral or 
implied” LLC agreements.24  The Delaware LLC Act also provides that “[a] 
limited liability company is not required to execute its limited liability company 
agreement” and that “[a] limited liability company is bound by its limited liability 
company agreement whether or not the limited liability company executes the 
limited liability company agreement.”25  Thus, the Delaware LLC Act generally 
allows parties to enforce unwritten, unsigned LLC agreements. 
In this case, we must determine whether parties to a Delaware LLC 
agreement may enforce an unsigned or unwritten LLC agreement that would 
require more than a year to complete.  We must adhere to the rules of statutory 
construction and, whenever possible, presume consistency between recent 
legislation and pre-existing law.26  “Laws are assumed to be cumulative, not 
                                                 
23 6 Del. C. § 18-1101(b). 
24 The Delaware LLC Act states, in pertinent part, that “‘[l]imited liability company agreement’ 
means any agreement (whether referred to as a limited liability company agreement, operating 
agreement or otherwise) written, oral or implied, of the member or members as to the affairs of a 
limited liability company and the conduct of its business.”  6 Del. C. § 18-101(7). 
25 Id.  
26 Hubbard v. Dunkleberger, 1995 WL 131789, at *6 (Del. Mar. 16, 1995) (Order) (quoting Du 
Pont v. Du Pont, 87 A.2d 394, 399 (1952)). 
 
21 
destructive of other laws.”27  We “assume[] that when the General Assembly 
enacts a later statute in an area covered by a prior statute, it has in mind the prior 
statute,” and thus, “statutes on the same subject must be construed together so that 
effect is given to every provision unless there is an irreconcilable conflict between 
the statutes . . . .”28   
The Delaware LLC Act does not address the relationship between LLC 
agreements and the statute of frauds.  Olson argues, however, that the policy and 
provisions of the LLC Act evidence the General Assembly’s intent to preclude the 
statute of frauds from LLC agreements.  It is possible, as a theoretical matter, that 
the statute of frauds may not apply to LLC agreements, as a result of the LLC 
Act’s implied repeal of the statute of frauds.  But, repeal by implication is not 
favored.29  We have long recognized that “unless it is expressly so provided, one 
act does not ordinarily repeal another, if both, in whole or in part, can be construed 
together.”30  We are “reluctant to find repeal by implication even when the later 
statute is not entirely harmonious with the earlier one,” and “[i]f two statutes 
conflict somewhat, [we] must, if possible, read them so as to give effect to both, 
                                                 
27 Id.  
28 Fletcher, 974 A.2d at 193 (quoting State Dept. of Labor v. Minner, 448 A.2d 227, 229 (Del. 
1982)). 
29 Hubbard, 1995 WL 131789, at *6 (quoting Du Pont, 87 A.2d at 399). 
30 Id.  
 
22 
unless the text or legislative history of the later statute shows that [the legislature] 
intended to repeal the earlier one and simply failed to do so expressly.”31  
A. The LLC Act and Statute of Frauds Operate Together 
 
Based on the rules of statutory construction, we must, if possible, construe 
the LLC Act and the statute of frauds together.  Olson argues that the Delaware 
LLC Act’s express intent to give maximum effect to LLC agreements precludes 
the statute of frauds from applying to those agreements, because the conflict 
between the underlying intent of the LLC Act and the statute of frauds renders 
them irreconcilable. 
We disagree because we can construe the LLC Act and the statute of frauds 
together.  We, therefore, we must give effect to both statutes.  The statute of frauds 
does not conflict with the LLC Act anymore than the statute of frauds generally 
conflicts with contracts.  The LLC Act does not guarantee enforcement of all oral 
or implied LLC agreements.  Rather, the LLC Act, like many other contracts, treats 
LLC agreements by permitting oral, written, or implied agreements.  The LLC 
Act’s explicit recognition of oral and implied LLC agreements does not preclude 
the statute of frauds.  Rather, such legislative recognition indicates that an LLC 
                                                 
31 Fletcher, 974 A.2d at 194 (quoting Sutherland, Statutory Construction § 23.09 at 338 (5th ed. 
1991)). 
 
23 
agreement operates like any other oral, written, or implied contract, i.e., it requires 
compliance with the statute of frauds. 
The statute of frauds does not contravene the legislative policy of giving 
“maximum effect” to LLC agreements.  The LLC Act cannot – and has not – 
rendered LLC agreements impervious to all other rules and laws relating to 
contract law.  In no way does the LLC Act limit the types of substantive 
agreements that contracting parties may enter.  The General Assembly did not 
clearly indicate any intent to advance this unlikely objective. 
B. The LLC Act’s Text and Legislative History do not Remove LLC 
Agreements from the Scope of the Statute of Frauds 
 
We will find an implied repeal only if the General Assembly clearly 
intended LLC agreements to be insulated from the operation of the statute of 
frauds.  Olson claims that the stated policy of giving “maximum effect” to 
enforceability of LLC agreements clearly indicates the General Assembly’s intent 
to remove LLC agreements from the scope of the statute of frauds.  We disagree; 
neither the LLC Act’s text, nor its legislative history supports that intent.  
The legislative history of the LLC Act does not demonstrate the General 
Assembly’s intent to place LLC agreements outside of the statute of frauds.  When 
the General Assembly originally enacted the LLC Act in 1992, it only permitted 
 
24 
written LLC agreements.32  In 1995, the General Assembly amended the LLC Act 
to permit “any agreement, written or oral.”33  In 2007, the General Assembly 
further expanded the LLC Act to allow “implied” LLC agreements.34  In its current 
form, Section 18-101(7) of the LLC Act provides that LLC agreements may be 
“written, oral or implied.”35   
Admittedly, these amendments to Section 18-101(7) clearly increase the 
contracting parties’ flexibility to enter into LLC operating agreements.  But, the 
amendments do not evidence any intent by General Assembly to remove LLC 
agreements from the reach of the statute of frauds.  If anything, these amendments 
indicate the exact opposite.  The General Assembly would have added an explicit 
provision during the course of any of their serial amendments, had it intended to 
place LLC agreements outside the statute of frauds.  The General Assembly has the 
authority, of which it is well aware, to exclude LLC agreements from the operation 
of the statute of frauds if it so chooses.36  Rather than specifically doing so, 
                                                 
32 68 Del. Laws ch. 434, § 1 (1992). 
33 70 Del. Laws ch. 75, § 3 (1995). 
34 76 Del. Laws ch. 105, § 1 (2007). 
35 6 Del. C. § 18-101(7). 
36 The General Assembly expressly states that the LLC Act prevails over two other sections of 
the Delaware Code.  Specifically, Section 18-1101(g) provides that “Sections 9-406 and 9-408 of 
this title do not apply to any interest in a limited liability company, including all rights, powers 
and interests arising under a limited liability company agreement or this chapter.  This provision 
prevails over §§ 9-406 and 9-408 of this title.”  6 Del. C. § 18-1101(g). 
 
25 
however, the General Assembly decided to permit more types of contracts under 
the LLC Act.  We will not presume the General Assembly’s intent to create a legal 
result that it omitted to specify – particularly where, as here, it repeatedly amended 
a statute and had multiple opportunities to clarify its intent as with the LLC Act.  
By providing that LLC agreements can be “written, oral or implied,” we can infer 
only that the General Assembly intended to give “maximum effect” to LLC 
agreements by treating them similarly to most other contracts.   
We infer from the policy stated in Section 18-1101(b) that the General 
Assembly intended the LLC Act to give maximum effect to the enforceability of 
LLC agreements.  The General Assembly offered the limited liability company as 
an alternative to the corporate form for entrepreneurs and investors.  In keeping 
with this legislative intent, we construe the “maximum effect” of LLC agreements 
as allowing governance terms not permitted under the more restrictive corporate 
paradigm.  It is in that sense that the General Assembly intended to give 
“maximum effect” to the LLC, business entity formation and agreement. 
Because we can construe the statute of frauds and the LLC Act together and 
the General Assembly did not clearly intend the LLC Act to render the statute of 
frauds inapplicable, there is no implied repeal of the statute of frauds.  As the Vice 
Chancellor stated, the statue of frauds should “protect defendants against 
unfounded or fraudulent claims that would require performance over an extended 
 
26 
period of time.”37  The legislature enacted the statute of frauds over a century ago, 
and its purpose remains valid.  If the General Assembly intends to limit the 
application of the statute of frauds by removing LLC agreements from its scope, 
the General Assembly must say so explicitly.  “[We] will not do by judicial 
implication what the General Assembly itself has declined to do by express 
legislation.”38  Accordingly, we hold that the Delaware LLC Act does not preclude 
application of the statute of frauds to LLC agreements.  Therefore, the statute of 
frauds applies to LLC agreements, and the Vice Chancellor correctly so held. 
III. 
The Statute of Frauds and the Multiple-Writings Exception 
 
Olson does not claim that the statute of frauds is applicable to the earnout 
provision of the draft Founders agreement.  What he does claim is that the 
unsigned, draft Founders agreement and the signed liquidation agreement satisfied 
the “multiple-writings” exception to the statute of frauds.  Because the Vice 
Chancellor correctly found that the founders never superseded the “cap and comp” 
agreement, that rendered Olson unable to establish a necessary element of his 
contract claim.  Therefore, we decline to address this issue. 
                                                 
37 Olson, 2008 WL 6745401, at *3. 
38 Fletcher, 974 A.2d at 194. 
 
27 
 
CONCLUSION 
 
We hold that the Vice Chancellor did not clearly erroneously conclude that 
the Viking founders never departed from the original “cap and comp” agreement, 
and that they were not obligated to pay Olson an earnout or the fair value of his 
interest in Viking.  We further hold that the Delaware LLC Act does not explicitly 
remove LLC agreements from the application of the statute of frauds.  Therefore, 
the statute of frauds applies to LLC agreements. 
For the foregoing reasons, we AFFIRM the judgment of the Court of 
Chancery.