{"data":{"id":"us-ky/krs-275.003","jurisdiction":"us-ky","citation":"KRS 275.003","heading":"Construction of chapter.","body":"(1) It shall be the policy of the General Assembly through this chapter to give\nmaximum effect to the principles of freedom of contract and the enforceability of\noperating agreements. Unless displaced by particular provisions of this chapter, the\nprinciples of law and equity shall supplement this chapter. Although this chapter is\nin derogation of common law, the rules of construction that require strict\nconstruction of statutes which are in derogation of common law shall not apply to\nits provisions. This chapte r shall not be construed to impair the obligations of any\ncontract existing when this chapter, or any amendment of it, becomes effective, nor\nto affect any action or proceeding begun or right accrued before the chapter or\namendment takes effect.\n(2) A writ ten operating agreement may provide that the limited liability company\ninterest of any member who fails to make any contribution that the member is\nobligated to make or who otherwise violates an obligation undertaken in the\noperating agreement shall be sub ject to specified penalties for, or specified\nconsequences, such failure. Such penalty or consequence may take the form of:\n(a) Reducing or eliminating the defaulting member's proportionate interest in the\nlimited liability company;\n(b) Subordinating the member's interest to that of nondefaulting members;\n(c) A forced sale of that limited liability company interest;\n(d) Forfeiture of his or her limited liability company interest;\n(e) The lending by other members of the amount necessary to meet the defaultin g\nmember's commitment;\n(f) A fixing of the value of his or her limited liability company interest by\nappraisal or by formula and redemption or sale of the limited liability\ncompany interest at such; or\n(g) Other penalty or consequence.\n(3) A written operating agreement may provide rights to any person, including a person\nwho is not a member or not otherwise a party to the operating agreement, to the\nextent set forth therein.\n(4) Except to the extent set forth in a written operating agreement, a limited liab ility\ncompany is bound by and a party to the operating agreement.\n(5) Action validly taken pursuant to one (1) provision of this chapter shall not be\ndeemed invalid solely because it is identical or similar in substance to an action that\ncould have been ta ken pursuant to some other provision of this chapter but fails to\nsatisfy one (1) or more requirements prescribed by such other provision.\n(6) No member or other person shall have a vested property right resulting from any\nprovision of the operating agreement which may not be modified by its amendment\nor as otherwise permitted by law.\n(7) Each member and manager and any other party to an operating agreement shall\ndischarge all duties and exercise all rights consistently with the obligation of good\nfaith and  fair dealing. The obligation of good faith and fair dealing may not be\neliminated in the operating agreement, but it may prescribe the standards by which\nthe performance of the obligation is to be measured provided the standards are not\nmanifestly unreasonable.\n(8) To the extent the articles of organization and the operating agreement do not\notherwise provide, the Kentucky Limited Liability Company Act shall govern\nrelations among the limited liability company, the members, the managers, and the\nassignees.","path":["KRS Chapter 275"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=40443","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:26Z","sha256":"882de5ff36a0eb1ef01b955e97fb633b9691d3c696ab5ca16fc329978d6a821a","source_id":"us-ky","stale":false,"prev":"us-ky/krs-275.001","next":"us-ky/krs-275.005"},"notice":"GroundRules: Original legal text. Not legal advice."}