Mr. LLC has stan­dards set by law and your oper­at­ing agreement.

Stan­dard of Care

The law says that Mr. LLC’s mem­bers and man­agers must per­form their duties in good faith, in Mr. LLC’s best inter­ests, and with the care that an ordi­nar­ily pru­dent per­son in a like posi­tion would use under sim­i­lar cir­cum­stances. Here are a few guide­lines to help you meet this standard:

  • If you don’t know the answer, look to your advi­sors and other pro­fes­sion­als for help.
  • If you don’t have the skills to accom­plish some­thing, hire some­one who has the skills, or learn them on your own.
  • If you know some­thing that makes reliance on the professional’s advice unwar­ranted, then don’t rely on the advice.
  • If you start to ratio­nal­ize your behav­ior, or don’t have an hon­est belief that some­thing is in the company’s best inter­est, then don’t do it.
  • If you have doubts about an action, talk with the other mem­bers and get their con­sent to take a cer­tain course of action.

Loy­alty

You are part of a team and must be loyal to it. Here are some team rules:

  • You can’t be on two com­pet­ing teams. You must pick one or the other. You can’t com­pete against Mr. LLC.
  • You must pro­tect the game plan. Mr. LLC’s infor­ma­tion and doc­u­ments help it suc­ceed. You must keep them confidential.
  • You must do things in the best inter­ests of the team. If you’re caught in the mid­dle of a tug-of-war between your per­sonal inter­ests and Mr. LLC’s inter­ests, then you have a con­flict. You’ll either have to with­draw from the mat­ter or get the con­sent of the other mem­bers to participate.
  • You must use the team’s prop­erty to ben­e­fit the team and not your­self. Don’t use Mr. LLC’s assets for per­sonal use. Don’t enter into trans­ac­tions such as loans and guar­an­tees with the LLC with­out the con­sent of the other mem­bers as required in the oper­at­ing agreement.
  • You must not take advan­tage of your sta­tus as a team mem­ber to the dis­ad­van­tage of the team.

Over­all, you must be up front and hon­est with the other mem­bers. You must dis­close infor­ma­tion that the other mem­bers need to know with respect to Mr. LLC’s busi­ness and inter­nal affairs. You must dis­close things to the other mem­bers and let them decide what you can do.

Good Faith and Fair Dealing

Every con­tract, includ­ing your oper­at­ing agree­ment, includes an implied duty of good faith and fair deal­ing. This means that you will not thwart the duties, poli­cies, rights, and priv­i­leges estab­lished in your LLC’s oper­at­ing agree­ment or bend its rules. You’ll do your best to live up to the expecta­tions estab­lished in the oper­at­ing agreement.