# DAO Charter

Charters provide DAOs with the terms to self-organize and sets rules for their members and dispute-resolution without explicitly adopting a formal legal entity.

# LeXpunk DAO Charter

Excerpted from LeXpunK Defense Protocol Operator Manual (opens new window)

# Background

The LeXpunK Model DAO Charter (opens new window) is intended for unincorporated DAOs that wish to seek to put in place risk mitigation measures against some of the risks of vicarious liability and potential intra-DAO fiduciary duty claims that may arise in unincorporated associations.

The DAO Charter utilizes a “qualified code deference” philosophy of DAO participation, in which DAO members agree that, to the maximum extent permitted by law, the results of the operation of the relevant smart contract system should be legally binding on all the DAO members. This would entail, for example, that non-developer DAO members cannot sue developer DAO members as the result of a code or design error enabling an economic exploit in which DAO members suffered financial losses.

Optionally, the DAO Charter can provide that code will not be deferred to in the event of “Material Adverse Exception Events”--a term which can and should be customized for each DAO, but which may, for example, provide that the DAO members need not defer to the outcome of the smart contract system to the extent it was adversely affected by a consensus attack on the underlying blockchain system.

# Extra Notes

The other main purpose of the DAO Charter is to opt out of some of the adverse consequences of potential partnership status. Although the aspects of a partnership pertaining to liability of partners to third parties (e.g., joint and several liability for the actions of the partnership) cannot be opted out of, nevertheless, a partnership agreement may waive, limit or modify the partnership rules pertaining to the rights, duties and liabilities among the partners. The DAO Charter uses this contractual flexibility to:

  • disclaim and waive any fiduciary duties owed by DAO members to one another that might otherwise be implied by the existence of the DAO;

  • disclaim any right of DAO members to represent one another, or bind one another to liabilities, that might otherwise be implied by the existence of the DAO; and

  • disclaim any property right any individual DAO member might otherwise be implied to have in any DAO-controlled assets (e.g., rights of co-tenants as discussed above), other than once those assets are distributed to DAO members by the smart contract system.

# Orange Charter

The Orange DAO Charter (opens new window) is CC0 form that sets out clear and low-legal terms for token communities, with an emphasis on mission and committee organization. Ventures and social clubs can reference its term to establish a Code of Conduct, as well as clarify their mission and ethos.