Section 401 - Member as agent of company. - Maryland Statutes

§ 4A-401. Member as agent of company.
 

(a)  In general.-  

(1) Except as provided in paragraph (3) of this subsection or in the operating agreement, each member is an agent of the limited liability company for the purpose of its business. 

(2) Except as provided in paragraph (3) of this subsection, the act of each member, including the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business of the limited liability company of which the person is a member, binds the limited liability company, unless: 

(i) The member so acting has in fact no authority to act for the limited liability company in the particular matter; and 

(ii) The person with whom the member is dealing has actual knowledge of the fact that the member has no such authority. 

(3) If the articles of organization contain a statement that the authority of members to act for the limited liability company solely by virtue of their being members is limited: 

(i) No member of the limited liability company is an agent of the limited liability company solely by virtue of being a member, and no member has authority to act for the limited liability company solely by virtue of being a member; and 

(ii) Each person dealing with a member is presumed to have knowledge that the member has no authority to act for the limited liability company solely by virtue of being a member. 

(b)  Agency established through proof or estoppel.- Notwithstanding a provision in the articles of organization or operating agreement that the authority of a member to act for the limited liability company solely by virtue of being a member is limited, a person dealing with a member may establish: 

(1) That the member is an agent of the limited liability company; or 

(2) That the limited liability company should be estopped from denying that the member was its agent. 

(c)  Nonbinding acts.- Unless the act of a member is authorized by the limited liability company, the act of a member that is not apparently for the carrying on of the business of the limited liability company in the usual way does not bind the limited liability company. 

(d)  Acts requiring unanimous consent or abandonment of business.- Unless the members unanimously consent or unless all other members have abandoned the business, no member has authority to: 

(1) Assign the property of the limited liability company in trust for creditors or on the assignee's promise to pay the debts of the limited liability company; 

(2) Dispose of the goodwill of the business; or 

(3) Do any other act which would make it impossible to carry on the ordinary business of the limited liability company. 
 

[1992, ch. 536; 1997, ch. 659, § 1.]