Operating agreement - Scope - Function - Limitations
N.D. Cent. Code § 10-32.1-13
in effect10-32.1-13. Operating agreement - Scope - Function - Limitations
1. Except as otherwise provided in subsections 2 and 3, the operating agreement
governs:
a. Relations among the members as members and between the members and the
limited liability company;
b. The rights and duties under this chapter of a person in the capacity of manager or
governor;
c. The activities of the company and the conduct of those activities; and
d. The means and conditions for amending the operating agreement.
2. To the extent the operating agreement does not otherwise provide for a matter
described in subsection 1, this chapter governs the matter.
3. An operating agreement may not:
a. Vary the capacity of a limited liability company under section 10-32.1-08 to sue
and be sued in its own name;
b. Vary the law applicable under section 10-32.1-09;
c. Vary the power of the court under section 10-32.1-22;
d. Subject to subsections 4 through 7, eliminate the duty of loyalty, the duty of care,
or any other fiduciary duty;
e. Subject to subsections 4 through 7, eliminate the contractual obligation of good
faith and fair dealing under subsection 4 of section 10-32.1-41;
f. Unreasonably restrict the duties and rights stated in section 10-32.1-42;
g. Vary the power of a court to decree dissolution in the circumstances specified in
subdivisions d and e of subsection 1 of section 10-32.1-50;
h. Vary the requirement to wind up the business of a limited liability company as
specified in subsection 1 and subdivision a of subsection 2 of section 10-32.1-51;
i. Unreasonably restrict the right of a member to maintain an action under sections
10-32.1-33 through 10-32.1-38;
j. Restrict the right to approve a merger, conversion, or domestication under section
10-32.1-71 to a member that will have personal liability with respect to a
surviving, converted, or domesticated organization; or
k. Except as otherwise provided in subsection 2 of section 10-32.1-15, restrict the
rights under this chapter of a person other than a member, manager, or governor.
4. If not manifestly unreasonable, and without limiting the terms that may be included in
an operating agreement, the operating agreement may:
a. Restrict or eliminate the duty:
(1) As required in subdivision a of subsection 2 and in subsections 7 and 8 of
section 10-32.1-41, to account to the limited liability company and to hold as
trustee for it any property, profit, or benefit derived by the member in the
conduct or winding up of the company's business, from a use by the
member of the company's property, or from the appropriation of a limited
liability company opportunity;
(2) As required in subdivision b of subsection 2 and in subsections 7 and 8 of
section 10-32.1-41, to refrain from dealing with the company in the conduct
or winding up of the company's business as or on behalf of a party having
an interest adverse to the company; and
(3) As required by subdivision c of subsection 2 and in subsections 7 and 8 of
section 10-32.1-41, to refrain from competing with the company in the
conduct of the business of the company before the dissolution of the
company;
b. Identify specific types or categories of activities that do not violate the duty of
loyalty;
c. Alter the duty of care, except to authorize intentional misconduct or knowing
violation of law;
d. Alter any other fiduciary duty, including eliminating particular aspects of that duty;
and
e. Prescribe the standards by which to measure the performance of the contractual
obligation of good faith and fair dealing under subsection 4 of section 10-32.1-41.
5. The operating agreement may specify the method by which a specific act or
transaction that would otherwise violate the duty of loyalty may be authorized or
ratified by one or more disinterested and independent persons after full disclosure of
all material facts.
6. To the extent the operating agreement of a member-managed limited liability company
expressly relieves a member of a responsibility that the member would otherwise have
under this chapter and imposes the responsibility on one or more other members, the
operating agreement may, to the benefit of the member that the operating agreement
relieves of the responsibility, also eliminate or limit any fiduciary duty that would have
pertained to the responsibility.
7. The operating agreement may alter or eliminate the indemnification for a member,
manager, or governor provided by subsection 2 of section 10-32.1-40, and may
eliminate or limit the liability of a member, manager, or governor to the limited liability
company and members for money damages, except for:
a. Breach of the duty of loyalty;
b. A financial benefit received by the member or manager to which the member or
manager is not entitled;
c. A breach of a duty under section 10-32.1-32;
d. Intentional infliction of harm on the company or a member; or
e. An intentional violation of criminal law.
8. The court shall decide any claim under subsection 4 that a term of an operating
agreement is manifestly unreasonable. The court:
a. Shall make its determination as of the time the challenged term became part of
the operating agreement and by considering only circumstances existing at that
time; and
b. May invalidate the term only if, in light of the purposes and activities of the limited
liability company, it is readily apparent that:
(1) The objective of the term is unreasonable; or
(2) The term is an unreasonable means to achieve the objective of the
provision.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://ndlegis.gov/cencode/t10c32-1.pdf#nameddest=10-32p1-13Fetched: 10/16/2026