Under Delaware law, can an operating agreement eliminate fiduciary duties entirely, and if so, what condition applies?

• A. No, duties cannot be eliminated
• B. Yes, but the elimination must be plain and unambiguous
• C. Yes, but only to limit liability, not eliminate duties
• D. Only the duty of loyalty can be eliminated

Answer: (B)

Delaware law allows fiduciary duties to be shaped by an operating agreement, but the language must be plain and unambiguous to eliminate or narrow those duties. When the parties intend to waive fiduciary duties entirely, the contract must spell that out explicitly and clearly, so there is no reasonable doubt about the waiver. This clear, explicit phrasing protects against vague or overbroad attempts to dispense with duties and reflects the principle that contracts among sophisticated parties can define governance terms, provided the waiver is unmistakable. The idea is that only a precise, unmistakable statement that fiduciary duties are eliminated or significantly altered will be enforced; vague or ambiguous terms won’t suffice.