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Delaware Code

6 Del. C. § 18-306 (2026)

Remedies for breach of limited liability company agreement by member

✓ current as of May 2026

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A limited liability company agreement may provide that:

(1) A member who fails to perform in accordance with, or to comply with the terms and conditions of, the limited liability company agreement shall be subject to specified penalties or specified consequences; and

(2) At the time or upon the happening of events specified in the limited liability company agreement, a member shall be subject to specified penalties or specified consequences.

Such specified penalties or specified consequences may include and take the form of any penalty or consequence set forth in § 18-502(c) of this title.

68 Del. Laws, c. 434, § 1; 73 Del. Laws, c. 83, § 16;

Notes of Decisions

Cited in 10 cases (9 in the last 5 years), 2010–2025 · leading case: Cml v. LLC v. Bax, 6 A.3d 238 (Del. Ch. 2010).

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Cml v. LLC v. Bax, 6 A.3d 238 (Del. Ch. 2010). “” 6 Del. C. § 18-306. Combining this authority with Section 18-101(7) enables creditors to bargain for penalties and consequences for members upon the occurrence of specific events or if creditors’ rights are breached.”

Blue Pointer Gesture, LLC v. Samuel Schrade (Del. Ch. 2025). · cites it 2× “70 See 6 Del. C. §§ 18-306, 18-502. 71 1 Symonds & O'Toole on DE Limited Liability Cos.”

In re Cellular Tel. (Del. Ch. 2021). “See 6 Del. C. §§ 18-306, 18-502; CML V, LLC v.”

Metro Storage Int'l LLC v. Harron (Del. Ch. 2022). “41 See 6 Del. C. § 18-306. This is one example of the departures from contractarian principles that make LLCs not wholly creatures of contract, but rather primarily creatures of contract.”

XRI Inv. Holdings LLC v. Holifield (Del. Ch. 2022). “95 See 6 Del. C. §§ 18-306, 18-502(c). See generally Cellular Tel.”

XRI Inv. Holdings LLC v. Holifield (Del. Ch. 2022). “The LLC Act 95 See 6 Del. C. §§ 18-306, 18-502(c). See generally Cellular Tel.”

Ainslie, Brad v. Cantor Fitzgerald LP (Del. Ch. 2023). “114 This Court has explained that 6 Del. C. § 18-306 which mirrors Section 17-306, departs from the common law in that it “authorizes LLC agreements to provide for remedies that would be unavailable in a standard commercial contract, most notably penalties and forfeitures.”

Ainslie, Brad v. Cantor Fitzgerald LP (Del. Ch. 2023). “114 This Court has explained that 6 Del. C. § 18-306 which mirrors Section 17-306, departs from the common law in that it “authorizes LLC agreements to provide for remedies that would be unavailable in a standard commercial contract, most notably penalties and forfeitures.”

Holifield v. XRI Inv. Holdings LLC (Del. 2023). “112 6 Del C. § 18-306, 18-502(c). 113 The observations regarding Delaware limited partnerships are applicable to Delaware limited liability companies.”

Cantor Fitzgerald, L.P. v. Ainslie (Del. 2024). “at *12 (noting that “[i]n the partnership setting, the common law disfavor of penalties yields to statute” and explaining that “that 6 Del. C. § 18-306 which mirrors Section 17-306, departs from the common law in that it ‘authorizes LLC agreements to provide for remedies that…”

— 6 Del. C. § 18-306(1) — 1 case

Blue Pointer Gesture, LLC v. Samuel Schrade (Del. Ch. 2025). “70 See 6 Del. C. §§ 18-306, 18-502. 71 1 Symonds & O'Toole on DE Limited Liability Cos.”

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