When it comes to running an organization, whether it’s a corporation, a nonprofit, or a homeowners’ association, bylaws are an essential component of its governance structure. Bylaws set out the rules and procedures that guide decision-making, establish offices and duties, and define the rights and responsibilities of members.
One question that often arises is whether or not these bylaws are considered to be a contract. The answer: it depends.
In general, courts tend to view bylaws as a type of contract between the organization and its members. This means that, like any contract, the bylaws must be honored and upheld by both parties. If a member violates the bylaws, they may be subject to disciplinary action or even expulsion from the organization.
However, there are some important caveats to keep in mind. First, the bylaws themselves must explicitly state that they are a contract. If there is no clear statement to this effect, a court may be less likely to view them as such.
Second, the bylaws must be reasonable and not in conflict with any other laws or regulations. For example, if a nonprofit’s bylaws state that its board of directors has complete and unconditional authority over all decision-making, this may be problematic if it contradicts state law requiring the organization to have a membership vote on certain issues.
Finally, it’s worth noting that even if the bylaws are considered to be a contract, there may still be some room for interpretation. Courts will typically look at the specific language used in the bylaws, as well as any evidence of how they have been interpreted and enforced in the past.
In short, while courts generally do consider bylaws to be a type of contract, the specific circumstances of each case will determine how they are interpreted and applied. As such, it’s important for organizations to ensure that their bylaws are well-crafted, reasonable, and in compliance with all relevant laws and regulations.
