In New York, Email or Oral Agreements May Constitute an Operating Agreement for an LLC

When entrepreneurs form a New York LLC, most assume that the crucial step is filing the Articles of Organization. But equally important—and often overlooked—is adopting a valid operating agreement. Under New York’s Limited Liability Company Law (NYLLCL), every LLC should adopt a written operating agreement, but the statute imposes no penalty if the members fail to do so. What many business owners do not realize is that New York courts may treat emails, informal writings, or even oral understandings as a legally binding operating agreement, depending on the circumstances.

1. New York Does Not Require a Formal Document Titled “Operating Agreement”

In Spires v. Casterline, the court held that even though the members had no formal operating agreement, various written documents they had signed could qualify as an operating agreement if they were in writing and signed or agreed to by all members.

For example, the court found that a “Partner's Interim Voting Agreement”—which wasn’t even labeled an operating agreement—was legally an operating agreement because it set out member rights and was signed by the members.

2. Email Exchanges Can Form an Operating Agreement—But Only if They Show Clear Mutual Assent

In Sullivan v. Ruvoldt, the plaintiff argued that seven emails between the LLC members constituted a written operating agreement under NYLLCL §102(u), because the emails discussed withdrawal terms, profit splits, liabilities, and wind‑down responsibilities. But the court disagreed because the emails only showed ongoing negotiation, not final agreement.

The court held that there was no clear acceptance—and therefore no enforceable email‑based operating agreement. But there could have been if there was more clear proof of acceptance.

3. Oral Operating Agreements Are Recognized in Some Circumstances

While NYLLCL §417 requires a written operating agreement, courts sometimes recognize oral agreements as governing documents when the LLC operated under them consistently.

In Doyle v. Icon, LLC, the parties never adopted a formal written operating agreement, but they all operated under an unmistakable oral understanding about ownership, contributions, and profit allocations. The court held that the absence of a written operating agreement meant the statutory defaults applied, except where the members had a clear oral agreement that did not conflict with the statute. This allowed the court to consider oral understandings about capital contributions, loss‑sharing, and dilution, even in the absence of a written agreement.

Practical Lessons for New York Business Owners

1. Don’t rely on assumptions — formalize your agreement.

Without a written operating agreement, your LLC is governed by statutory rules you may not want.

2. Be careful what you write in emails.

Email chains may unintentionally become part of your operating agreement if they include all essential terms and show mutual assent.

3. Oral agreements can be enforceable—but risky.

If members act consistently with an oral understanding, a court may enforce it—though proving the terms later can be difficult.

4. Even informal documents can bind you.

Voting agreements, amendments, and certifications may qualify as operating agreements if signed by all members.

Conclusion

New York courts take a substance-over-form approach when determining whether an LLC has an operating agreement. To avoid ambiguity, disputes, and costly litigation, every LLC should draft a comprehensive written operating agreement instead.