Cyndy, Shelby, Kennedy and Kristin formed Double Dawn Paddle Board Yoga LLC as a manager-managed LLC naming Kennedy as the managing member. A local yogurt entrepreneur approaches Shelby offering to be the exclusive provider of pink yogurt for their company to give out after their yoga sessions. Loving pink yogurt, Shelby signs a 10 year contract whereby only their pink yogurt will be provided for their company. When Cyndy, Kennedy and Kristin find out what Shelby has done, they are furious and do not want to be bound by the 10 year contract Shelby signed as they all prefer blue yogurt. What most likely will be the outcome of this scenario?
A) They will all have to honor the 10 year contract of pink yogurt as Shelby's actions will bind the LLC.
B) The court will determine by judicial decree that the contract of 10 years is excessive and exceeds the scope of reasonableness and will therefore declare the contract unenforceable.
C) The contract will be declared unenforceable as all LLC contracts require the signature of all members to be enforceable.
D) The contract will not bind the LLC since Shelby did not have the authority to enter into a contract that binds the LLC.
Correct Answer:
Verified
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