Document:  Olson v. Halvorsen, et al., No. 338, 2009 (Del. Dec. 15, 2009)

On appeal, the Delaware Supreme Court affirmed the Court of Chancery’s holding that the appellant (plaintiff below) had failed to establish that his investing partners in a Delaware limited liability company (“LLC”) had orally amended the LLC’s compensation provisions.  The Supreme Court thus upheld the Court of Chancery’s finding that the statute of frauds applied to LLC operating agreements and its determination that the plaintiff had failed to satisfy the multiple-writings exception to the statute of frauds.  Specifically, the Supreme Court found that the statute of frauds does not conflict with the Delaware limited liability company act (the “LLC Act”), and that the LLC Act does not guarantee enforcement of all oral contracts but only permits them.  The Supreme Court also found that the legislative history of the LLC Act and the adoption of amendments to allow for oral LLC Agreements did not suggest the intent of the Delaware General Assembly to preclude the application of the statute of frauds to oral LLC agreements.