Attack outline

FL Business Entities Essay Attack

Review the FL Business Entities Essay Attack with ordered issue-spotting steps and Florida flags where relevant before you jump back into practice.

SubjectBusiness EntitiesLast reviewedMarch 12, 2026JurisdictionFlorida-aware

Ordered attack steps

Step 1. Entity Classification & Formation

LLC (Ch. 605): articles of organization + operating agreement (oral OK but written recommended)
Corporation (Ch. 607): articles of incorporation + bylaws; organizational meeting for initial directors
LP / LLP (Ch. 620): certificate of limited partnership for LP; statement of qualification for LLP
PA / PLLC (Ch. 621): licensed professionals only; personal liability for own malpractice survives

Step 2. Operating Agreement / Governance

LLC defaults (§ 605.0404): distributions and profit/loss sharing per statutory default — check current § 605.0404 text for the controlling formula; voting is proportionate to profits interest (§ 605.04073); all members manage unless manager-managed
Corp governance: board manages; shareholders elect/remove directors; annual meeting required
Fiduciary duty modification (§ 605.0105(4)): FL has a NON-WAIVABLE floor — good faith cannot be eliminated; care cannot drop below gross negligence
Compare Delaware: virtually unlimited waiver allowed under DE LLC Act § 18-1101(c)

Step 3. Fiduciary Duties & Business Judgment Rule

Duty of CARE: informed, good-faith decision-making; prudent-person standard
Duty of LOYALTY: no self-dealing, no usurpation of corporate opportunity, no competition (unless operating agreement permits specific categories)
Director safe harbor (§ 607.0831): no personal monetary liability unless criminal violation, improper benefit, unlawful distribution, or willful misconduct
Business judgment PRESUMPTION: courts defer if decision was informed, disinterested, and rational

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Step 4. Member / Shareholder Remedies

DERIVATIVE ACTION (§ 607.0742 for corps / § 605.0802 for LLCs): 90-day demand/waiting (unless futile or irreparable harm); contemporaneous ownership; recovery to entity
DIRECT action for individual harm (dilution, oppression, breach of shareholder agreement)
Judicial dissolution for DEADLOCK or OPPRESSION (§ 607.1430); buyout alternative (§ 607.1436)
Charging order GENERALLY exclusive remedy against LLC membership interest (§ 605.0503 post-Olmstead 2013 fix) — but single-member LLC interests may be foreclosed if distributions will not satisfy the judgment in a reasonable time

Step 5. Piercing the Veil

FL uses the DANIA JAI-ALAI factors: (1) improper conduct (commingling, undercapitalization, failure to observe formalities, dominion/alter ego)
(2) the improper conduct caused plaintiff's loss (causation required — not just improper conduct alone)
SINGLE-MEMBER LLC: piercing still available; charging order exclusivity does not prevent piercing for tort creditors when LLC is alter ego
Reverse piercing: reach LLC assets for member's personal debt — rare but recognized in FL

Step 6. Dissociation, Dissolution & Winding Up

LLC dissociation (§ 605.0601): member may withdraw by express will; loses management rights but retains economic interest
LLC dissolution triggers: operating-agreement event, unanimous consent, 90-day no-member period, judicial dissolution
Corp dissolution: voluntary (board + shareholder vote), administrative (annual-report failure), judicial (deadlock/oppression)
Winding up priority: creditors → members unreturned contributions → members distributions

Step 7. UCC Art. 3 & 9 (FL-Tested)

UCC Art. 3 (F.S. Ch. 673): negotiable instruments — HDC takes free of personal defenses; real defenses (infancy, duress, fraud in factum, bankruptcy) defeat even HDC
Negotiability: signed, unconditional promise/order, fixed amount of money, demand or definite time, payable to order or bearer; checks exempt from words-of-negotiability requirement
Indorsements: blank (→ bearer), special (→ named), restrictive (for deposit only), qualified (without recourse = no secondary liability)
UCC Art. 9 (F.S. Ch. 679): attachment (value + rights + security agreement) → perfection (filing, possession, control, auto for consumer-goods PMSI) → priority (first to file or perfect)
PMSI super-priority: non-inventory = perfect within 20 days of delivery; inventory = file before delivery AND notify conflicting interest holders

Step 8. Trap Patterns for FL Business Entities

Operating agreement silent on distributions → check current § 605.0404 for FL default allocation rule; without an operating agreement, the statutory default controls and may surprise members who assume proportional sharing
Demand futility in derivative action: if wrongdoer controls the board, demand is excused
Annual report failure → administrative DISSOLUTION (3rd Friday in September) → reinstatement possible but entity cannot transact new business while dissolved
Foreign LLC transacting business without registration → BARRED from maintaining lawsuits in FL (but can still be sued)
No-contest clauses in TRUSTS are UNENFORCEABLE (§ 736.1108) — do not confuse with wills