Written by attorneys · grounded in primary & secondary sources — see below
A formal filing delivered to the secretary of state that specifies or limits the authority of designated persons to act for a limited liability company or partnership. The filing provides public notice that third parties may rely on when determining whether an agent or partner may bind the entity, particularly in real property transfers. It may be amended or canceled by a subsequent filing and may be denied by a named person.
Sources & Authorities
How it applies
Common Examples
2
Certificate Clause Ineffective as Authority
Spectrum Financial organized Apex Growth LLC and filed a certificate of organization that listed the required formation details plus a clause purporting to authorize any member owning more than twenty percent of the company to pledge LLC assets. When a member later pledged assets to a bank, the bank sought to enforce the pledge by pointing to the clause in the filed certificate. The clause supplied no effective authority because statements contained in a certificate of organization cannot operate as statements of authority under the governing statute.
Agent Statement Insufficient for Authority
Sterling Manufacturing's purchasing agent negotiated a two-year requirements contract with a supplier and assured the supplier that he possessed full authority to bind the company. The supplier later sued to enforce the contract after Sterling refused delivery. The agent's oral assurance of his own authority did not establish that authority, so the contract did not bind Sterling.
Put it into practice
Test Yourself
10
Practice Questions5
· 6 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Study Supplements
Essco Geometric v. Harvard Industries46 F.3d 718 (8th Cir. 1995)
Common questions
Frequently Asked
4
What legal effect does a clause in an LLC certificate of organization have when it purports to grant authority to members?+
The clause has no effect as a statement of authority. The statute expressly provides that any statement in a certificate of organization is not effective as a statement of authority, even if the clause addresses matters beyond the required formation items.
How does a filed statement of authority protect third parties dealing with a partnership?+
A filed statement of authority provides constructive notice of limits on partner authority. When a certified copy is recorded in the real property records, third parties are deemed to know of any restriction on transfers of partnership real estate.
Can a partnership recover property transferred by a partner when no statement of authority was filed?+
Recovery depends on whether the transferee gave value and had knowledge or notice that the partner lacked authority. The absence of a filed statement of authority does not itself defeat apparent authority arising from the partner's act in the ordinary course.
What must a person named in a statement of authority do to deny the grant of authority?+
The named person may file a statement of denial that identifies the limited liability company or partnership and the caption of the statement of authority and that expressly denies the grant of authority.
Business Associations RelationshipsAgency and authority · Agent’s authority to bind principalNEXTGENIntermediate