Alabama Partnership Agreement

An Alabama partnership agreement is a contract between two or more parties that oversees all decision-making, ownership, and responsibilities. To be effective, it must be signed by all the co-owners of the business for profit.

Last updated December 3rd, 2024

An Alabama partnership agreement is a contract between two or more parties that oversees all decision-making, ownership, and responsibilities. To be effective, it must be signed by all the co-owners of the business for profit.

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Alabama Partnership Types (4)

Partnership Type State Filing Requirement
General Partnership (GP) No filing is required. It is recommended to file a “trade name” or “Doing Business As (DBA)” with the Alabama Secretary of State office by filing the Application to Register Trademark, Service Mark or Trade Name ($30).
Limited Partnership (LP) Yes, filing is required. A Name Reservation Filing ($28) must be made, followed by filing the Domestic Limited Partnership (LP) Certificate of Formation ($200).
Limited Liability Partnership (LLP) Yes, filing is required. A Name Reservation Filing ($28) must be made, followed by filing the Domestic Limited Liability Partnership (LLP) Statement of Limited Liability Partnership ($200).
Limited Liability Limited Partnership (LLLP) Yes, filing is required. A Name Reservation Filing ($28) must be made, followed by filing the Domestic Limited Liability Limited Partnership (LLLP) Certificate of Formation ($200).

Fiduciary Duty

A partner has a duty of loyalty to the other partners, including:[1]

  • Act as a Trustee. A partner must handle money, property, or other assets in the best interest of the partnership and act as a trustee.
  • Avoid Conflicts of Interest. A partner should act in the best interest of the partnership, neglecting their own personal benefit.
  • Non-Compete. A partner cannot compete with the partnership while it is active.

Liability

General Partner:

  • Limited Partnerships (LP & LLP): Liable for debts, obligations, and liabilities of a limited partnership.[2] This includes actions by the general partner that may cause loss or injury and can also make the limited partnership liable.[3]
  • Limited Liability Limited Partnerships (LLLP): No liability.

Limited Partner: No liability for debts, obligations, or other obligations of the limited partnership or the general partner’s actions.[4] In addition, a limited partner has limited duties and powers.[5]

State Definitions[6]

General Partner.

  • Each partner in a general partnership; or
  • a person who is admitted to a limited partnership as a general partner in accordance with the governing documents of the limited partnership.

Limited Partner. A person who has been admitted to a limited partnership as a limited partner as provided by:

  • in the case of a domestic limited partnership, Chapter 9A; or
  • in the case of a foreign limited partnership, the laws of its jurisdiction of formation.

Partnership Agreement. Any agreement (whether referred to as a partnership agreement or otherwise), written, oral or implied, of the partners as to the activities and affairs of a general partnership or a limited partnership. The partnership agreement includes any amendments to the partnership agreement. In the case of limited partnerships formed prior to October 1, 1998, partnership agreement includes the certificate of partnership.

Sample

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