Chan,Yuvi,Betty,and Bob form a member-managed LLC that sells antique commodities online.Betty secretly starts a competing business and makes secret profits through the business.Which of the following is true of the given scenario?

Question

Quizplus · Accepted Answer

Betty is in breach of her duty of loyalty to the LLC since she is secretly competing with the LLC and making profits without disclosing them to the other members. The other members can hold Betty liable for this breach of loyalty. However, the other members may not necessarily be held liable unless they knew about Betty's actions and did nothing to stop her. Therefore, option A is not correct. Option B is also not correct because Betty's breach was not a breach of her duty of care; it was a breach of her duty of loyalty. Option D is not correct because Betty cannot compete with the LLC while still being a member of the LLC as she owes a duty of loyalty to the LLC.

Chan,Yuvi,Betty,and Bob Form a Member-Managed LLC That Sells Antique Commodities