Does a member who leaves an LLC have a right to be paid for the interest?
Under the Uniform Limited Liability Company Act (2006) (Last Amended 2013) the answer is no, and that is the most consequential default rule in this area. Section 601(a) provides that “[a] person has the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will under Section 602(1).” What leaving produces is set by Section 603(a)(3): “subject to Section 504 and [Article] 10, any transferable interest owned by the person in the person’s capacity as a member immediately before dissociation is owned by the person solely as a transferee.” Section 404(b) closes the follow-up: “A person’s dissociation does not entitle the person to a distribution.” Nobody must value anything, because nobody must buy anything. That is the uniform text, which binds nobody until a legislature enacts it.
Several states reach a similar place by refusing to let the member leave. Delaware provides at 6 Del. C. §18-603 that “[a] member may resign from a limited liability company only at the time or upon the happening of events specified in a limited liability company agreement,” and that absent such a provision a member may not resign before dissolution and winding up. Section 18-604 supplies a rule that operates only once a resignation has occurred: the resigning member is then entitled to receive, within a reasonable time, “the fair value of such member’s limited liability company interest as of the date of resignation.” New York is built the same way, at Limited Liability Company Law §606 and §509.
Illinois took the other path and then abandoned it. Its Limited Liability Company Act descends from the 1996 uniform act rather than the 2006 one, and 805 ILCS 180/35-60 once required that “[a] limited liability company shall purchase a distributional interest of a member for its fair value determined as of the date of the member’s dissociation if the member’s dissociation does not result in a dissolution and winding up of the company’s business.” That section now reads “(Repealed),” as does the fair value determination section that supported it, 805 ILCS 180/35-65, both repealed by Public Act 99-637 effective 1 July 2017. The same public act rewrote 805 ILCS 180/35-55, which now provides that on dissociation “the member ceases to be a member and is treated the same as a transferee of a member,” and that “any distributional interest owned by the person immediately before dissociation in the person’s capacity as a member is owned by the person solely as a transferee.” A statute that supplied a mandatory buyout is dead law in Illinois, which is why the version in force on the relevant date is the only version worth reading.
What does the Uniform Partnership Act pay a partner who leaves a partnership that keeps operating?
A mandatory buyout at a price the statute defines for itself. Section 701(a) of the Uniform Partnership Act (1997) (Last Amended 2013) provides that if a person is dissociated as a partner without the dissociation resulting in a dissolution and winding up, “the partnership shall cause the person’s interest in the partnership to be purchased for a buyout price determined pursuant to subsection (b).” Section 701(b) sets that price as the amount that would have been distributable if, on the date of dissociation, the assets were sold and the partnership wound up, “with the sale price equal to the greater of: (1) the liquidation value; or (2) the value based on a sale of the entire business as a going concern without the person.”
The official comment to Section 701(b) explains the vocabulary, and the explanation matters more than the term: “The terms ‘fair market value’ or ‘fair value’ were not used because they are often considered terms of art having a special meaning depending on the context, such as in tax or corporate law.” The drafters then say what the construct does to one adjustment and not to others: “The notion of a minority discount in determining the buyout price is negated by valuing the business as a going concern. Other discounts, such as for a lack of marketability or the loss of a key partner, may be appropriate, however.” A comment persuades rather than binds, and the enacting state’s courts decide what weight it carries there.
What standard of value do these statutes actually name?
Several different ones, which is why a national answer is always wrong here. The Uniform Partnership Act (1997) (Last Amended 2013) names “buyout price” and defines it internally at Section 701(b). Delaware names fair value for the resignation its statute rarely permits (6 Del. C. §18-604), as does New York for withdrawal (Limited Liability Company Law §509). California names fair market value for the buyout that avoids judicial dissolution (California Corporations Code §17707.03(c)(1)); Minnesota names fair value for the analogous alternative remedy (Minn. Stat. §322C.0701, subd. 2). What fair value means in a given proceeding is itself a question of law — the subject of fair value versus fair market value.
New York’s general partnerships supply the variant most often misread. New York has not enacted the 1997 act; its Partnership Law still carries the 1914 construct. Section 69(2)(c)(II) provides that where a partner dissolves in contravention of the agreement and the remaining partners continue the business in the same name, the dissolving partner has the right “to have the value of his interest in the partnership, less any damages caused to his copartners by the dissolution, ascertained and paid to him in cash,” and that “in ascertaining the value of the partner’s interest the value of the good-will of the business shall not be considered.” The statute says value, not fair value and not buyout price.
The New York Court of Appeals treated that omission as doing work. In Congel v. Malfitano, 31 N.Y.3d 272 (N.Y. 27 March 2018), the court observed that “the statute we are analyzing relates to wrongful dissolution, rather than a statutory right to withdraw, and it makes no mention of ‘fair value,’” and held that “defendant provides no basis for concluding that a minority discount is inapplicable as a matter of law to the valuation of the interest of a wrongfully dissolving partner when the remaining partners continue the partnership.” The majority added, in a footnote, that its holding was not “that the trial court was required to apply a minority discount”; Judge Feinman dissented in part on that point, in an opinion in which Chief Judge DiFiore concurred. That is New York law on a New York statute, and it runs opposite to what the drafters of the 1997 uniform act said their own definition does.
How does the operating agreement change the answer?
Almost completely, and in both directions. Section 105(a) of the Uniform Limited Liability Company Act (2006) (Last Amended 2013) provides that the operating agreement governs “relations among the members as members and between the members and the limited liability company,” and Section 105(b) that “[t]o the extent the operating agreement does not provide for a matter described in subsection (a), this [act] governs the matter.” The comment to Section 603(a)(3) says the consequence out loud: “the operating agreement has the power to provide for the buyout of a person’s transferable interest in connection with the person’s dissociation.” The comment to Section 701 of the partnership act is as blunt about its own mandatory buyout: “The rules in this section are merely default rules… Indeed, the very right to a buyout itself may be modified, although a provision providing for a complete forfeiture would probably not be enforceable.”
Contract freedom is not total, and the limits are listed rather than implied. Section 105(c)(6) of the Uniform Limited Liability Company Act (2006) (Last Amended 2013) provides that an operating agreement may not eliminate the contractual obligation of good faith and fair dealing under Section 409(d), “but the operating agreement may prescribe the standards, if not manifestly unreasonable, by which the performance of the obligation is to be measured,” and Section 105(c)(9) provides that it may not “vary the causes of dissolution specified in Section 701(a)(4).” Section 105(e) provides that “[t]he court shall decide as a matter of law whether a term of an operating agreement is manifestly unreasonable under subsection (c)(6) or (d)(3).” What courts do with a formula price far from market is treated at what happens when the operating agreement has its own valuation formula.
What is the difference between a dissociation buyout and a judicial dissolution remedy?
A dissociation buyout is a payment obligation triggered by an event; a judicial dissolution remedy is relief a court orders after a finding. Section 701(a)(4) of the Uniform Limited Liability Company Act (2006) (Last Amended 2013) permits a member to apply for dissolution on three separate grounds: that “the conduct of all or substantially all the company’s activities and affairs is unlawful” (subparagraph (A)); that “it is not reasonably practicable to carry on the company’s activities and affairs in conformity with the certificate of organization and the operating agreement” (subparagraph (B)); and that the managers or those members in control “have acted, are acting, or will act in a manner that is illegal or fraudulent” or “have acted or are acting in a manner that is oppressive and was, is, or will be directly harmful to the applicant” (subparagraph (C), clauses (i) and (ii)). Section 105(c)(9) makes those grounds non-waivable. Nothing in that section names a price.
Enacting states filled that in, and disagreed. Minnesota, which enacted the act as Chapter 322C in 2014, provides at Minn. Stat. §322C.0701, subd. 2 — in a section headed “Events causing dissolution” — that on the illegality, fraud or oppression ground “the court may order a remedy other than dissolution, which may include the sale for fair value of all membership interests a member owns in a limited liability company to the limited liability company or one or more of the other members.” California makes the same structural move to a different standard: California Corporations Code §17707.03(c)(1) lets the other members avoid dissolution by purchasing the moving parties’ interests “at their fair market value,” §17707.03(c)(3) directs the court to “appoint three disinterested appraisers,” and §17707.03(c)(5) fixes the valuation date as the date the dissolution action was commenced, subject to the court’s power, “for good cause shown,” to “designate some other date as the valuation date.” See who decides the valuation date. Each of these is one state’s rule.
Expulsion is a third thing again, and it is not a payment remedy. In IE Test, LLC v. Carroll (N.J. 2 August 2016), the Supreme Court of New Jersey construed the “not reasonably practicable” expulsion standard of N.J.S.A. 42:2B-24(b)(3)(c), noting the analogous provision of the New Jersey Revised Uniform Limited Liability Company Act at N.J.S.A. 42:2C-46(e)(3). It held that “[a] disagreement among LLC members over the terms of an operating agreement does not necessarily compel the expulsion of a dissenting LLC member,” adopted a seven-factor, non-exclusive test with no factor dispositive, reversed the Appellate Division and remanded to the trial court. A member expelled under such a provision has been dissociated, and in a state that enacted the 2006 uniform act as written that leaves the expelled person holding a transferable interest and no right to be paid for it. The wider map is at Shareholder Oppression.
What happens if the departing owner and the business cannot agree on the amount?
The statutes that create a buyout also create a clock and a forum, and missing the clock can end the claim regardless of the number. Under Section 701(e) of the Uniform Partnership Act (1997) (Last Amended 2013), if no purchase agreement is reached within 120 days after a written demand for payment, the partnership must pay in money what it estimates the buyout price to be. Section 701(i) provides that an action to determine the buyout price “must be commenced not later than 120 days after the partnership has tendered payment or an offer to pay or within one year after written demand for payment if no payment or offer to pay is tendered.” Those are the uniform act’s deadlines; an enacting state’s may differ, and the enacting state’s text is the one that runs.
Every statute, decision and official comment cited on this page was read in a primary source on 15 September 2026, and each states the law of the single jurisdiction named or the text of a uniform act that binds nobody until a legislature enacts it. Uniform act section numbers do not survive enactment intact — states renumber, amend and omit — so the text to read is the enacting state’s, in the version in force on the relevant date. Nothing here says which statute governs any particular company, what any interest is worth, or what any adjustment should be. Business value lost through someone else’s conduct is a damages question and belongs to our Economic Damages Institute.