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A manager-managed LLC has three passive members and one appointed manager. The manager approves a related-party services contract without disclosure.
Which statement is most accurate about fiduciary duties?

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A passive member becomes liable for manager misconduct merely by receiving a distribution. No one in an LLC can owe fiduciary duties because LLCs are entirely contractual. In a manager-managed LLC, managers generally owe fiduciary duties to the LLC, while members do not owe those duties solely by being members unless the statute or operating agreement provides otherwise. A manager's fiduciary duties disappear whenever the operating agreement uses the word flexibility.

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