Two LLC members each believe only the other can approve contracts over $100,000. Which governing document should resolve the authority question?
- ATo replace the contractor license
- BTo eliminate accounting records
- CTo transfer every risk to customers
- To define who may bind the company
Why D is correct
The best answer is: To define who may bind the company. Written governance reduces unauthorized contracts, borrowing, distributions, and disputes. It complements rather than replaces licensing, accounting, insurance, and statutory obligations. The new fact pattern changes the setting, not the governing rule or management control. The other choices either skip a required step, apply a different rule, or fail to address the stated risk.