2011 Utah Code
Title 48 Partnership
Chapter 3 Utah Revised Uniform Limited Liability Company Act
Section 110 (Effective 07/01/12) Operating agreement -- Scope, function, and limitations.

48-3-110 (Effective 07/01/12). Operating agreement -- Scope, function, and 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;
(c) the activities of the limited liability 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 a limited liability company's capacity under Section 48-3-105 to sue and be sued in its own name;
(b) vary the law applicable under Section 48-3-106;
(c) vary the power of the court under Section 48-3-204;
(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 48-3-409(4);
(f) unreasonably restrict the duties and rights stated in Section 48-3-410;
(g) vary the power of a court to decree dissolution in the circumstances specified in Subsections 48-3-701(4) and (5);
(h) vary the requirement to wind up a limited liability company's business as specified in Subsections 48-3-703(1) and (2)(a);
(i) unreasonably restrict the right of a member to maintain an action under Part 9, Actions By Members;
(j) restrict the right to approve a merger, conversion, or domestication under Section 48-3-1014 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 48-3-112(2), restrict the rights under this chapter of a person other than a member or manager.
(4) If not unconscionable or against public policy, the operating agreement may:
(a) restrict or eliminate the duty:
(i) as required in Subsections 48-3-409(2)(a) and (7), 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 limited liability company's business, from a use by the member of the limited liability company's property, or from the appropriation of a limited liability company opportunity;
(ii) as required in Subsections 48-3-409(2)(b) and (7), to refrain from dealing with the limited liability company in the conduct or winding up of the limited liability company's business as or on behalf of a party having an interest adverse to the limited liability company; and
(iii) as required by Subsections 48-3-409(2)(c) and (7), to refrain from competing with the limited liability company in the conduct of the limited liability company's business before the dissolution of the limited liability 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 or eliminate any other fiduciary duty; and
(e) prescribe the standards by which to measure the performance of the contractual obligation of good faith and fair dealing under Subsection 48-3-409(4), if the standards are not manifestly unreasonable.
(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 or manager provided by Subsection 48-3-408(1) and may eliminate or limit a member or manager's liability 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 48-3-406; or
(d) an intentional violation of criminal law.
(8) The court shall decide any claim under Subsection (4) that a term of an operating agreement is unconscionable or against public policy. 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:
(i) the objective of the term is unconscionable or against public policy; or
(ii) the means to achieve the term's objective is unconscionable or against public policy.