Also known as: § 105 · §105 · 11 U.S.C. § 105
Written by attorneys · grounded in primary & secondary sources — see below
A statutory provision in uniform business-entity acts that identifies the matters an operating agreement or partnership agreement may not alter or eliminate. It preserves core fiduciary duties of loyalty and care, the obligation of good faith and fair dealing, and certain information and oversight rights against complete waiver by private agreement.
Sapphire Technologies files a certificate of organization that includes a clause attempting to override the statutory limits on what members may agree to waive. The filing officer rejects the clause because the certificate cannot vary the nonwaivable provisions that protect fiduciary duties and good-faith obligations. Sapphire Technologies must refile without the inconsistent statement to complete formation.
Southland Foods maintains a partnership agreement that cannot eliminate a partner's liability for certain misconduct under the mandatory rules. The partnership nevertheless purchases insurance covering a partner against claims arising from that status. The policy remains valid because the statute expressly permits the purchase even when the agreement itself could not shift the underlying liability.
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Section 105 prevents a partnership or operating agreement from eliminating the duties of loyalty and care or the obligation of good faith and fair dealing. It also bars unreasonable restrictions on partners' information rights and certain other mandatory protections.
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Parties may identify specific categories of conduct that will not breach the duty of loyalty or adjust the duty of care in limited ways, but they cannot eliminate those duties outright or authorize bad-faith or knowing violations of law.
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A certificate may contain additional statements, but those statements cannot vary the nonwaivable rules listed in section 105(c) and (d) in an inconsistent manner.
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Yes. The statute expressly permits a partnership to purchase and maintain insurance covering a partner against liability even when the partnership agreement could not eliminate or limit that liability under the nonwaivable rules.
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