Relations of Partners to Persons Dealing with Partnership.

Ala. Code tit. 10A, ch. 8A, art. 3

in effect

Ala. Code § 10A-8A-3.01 Partner Agent of Partnership.

10A-8A-3.01. Partner Agent of Partnership. Subject to the effect of a statement of authority under Section 10A-8A-3.03: (1) Each partner is an agent of the partnership for the purpose of its business or not for profit activity. An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary course the partnership business or not for profit activity, or business or not for profit activity of the kind carried on by the partnership, binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had notice that the partner lacked authority. (2) An act of a partner which is not apparently for carrying on in the ordinary course the partnership business or not for profit activity, or business or not for profit activity of the kind carried on by the partnership, binds the partnership only if the act was authorized by the other partners. (Act 2018-125, §7.)

Ala. Code § 10A-8A-3.02 Transfer of Partnership Property.

10A-8A-3.02. Transfer of Partnership Property. (a) Partnership property may be transferred as follows: (1) Subject to the effect of a statement of authority under Section 10A-8A-3.03, partnership property held in the name of the partnership may be transferred by an instrument of transfer executed by a partner in the partnership name. (2) Partnership property held in the name of one or more partners with an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, but without an indication of the name of the partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held. (3) Partnership property held in the name of one or more persons other than the partnership, without an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held. (b) A partnership may recover partnership property from a transferee only if it proves that execution of the instrument of initial transfer did not bind the partnership under Section 10A-8A-3.01 and: (1) as to a subsequent transferee who gave value for property transferred under subsections (a)(1) and (2), proves that the subsequent transferee knew or had received notice that the person who executed the instrument of initial transfer lacked authority to bind the partnership; or (2) as to a transferee who gave value for property transferred under subsection (a)(3), proves that the transferee knew or had notice that the property was partnership property and that the person who executed the instrument of initial transfer lacked authority to bind the partnership. (c) A partnership may not recover partnership property from a subsequent transferee if the partnership would not have been entitled to recover the property, under subsection (b), from any earlier transferee of the property. (Act 2018-125, §7.)

Ala. Code § 10A-8A-3.03 Statement of Authority.

10A-8A-3.03. Statement of Authority. (a) A partnership may deliver to the Secretary of State for filing a statement of authority, which: (1) must include the name of the partnership and: (A) if the partnership has not filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, (i) the street and mailing addresses of its principal office, (ii) the name, street address, and mailing address of its registered agent, and (iii) if the Secretary of State has assigned a unique identifying number or other designation to the partnership, that number or designation; or (B) if the partnership has filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, (i) the street address and mailing address of its principal office, (ii) the name, street address, and mailing address of its registered agent, and (iii) the unique identifying number or other designation assigned to the partnership by the Secretary of State. (2) with respect to any position that exists in or with respect to the partnership, may state the authority, or limitations on the authority, of all persons holding the position to: (A) sign an instrument transferring real property held in the name of the partnership; or (B) enter into other transactions on behalf of, or otherwise act for or bind, the partnership; and (3) may state the authority, or limitations on the authority, of a specific person to: (A) sign an instrument transferring real property held in the name of the partnership; or (B) enter into other transactions on behalf of, or otherwise act for or bind, the partnership. (b) To amend or cancel a statement of authority filed by the Secretary of State, a partnership must deliver to the Secretary of State for filing an amendment or cancellation stating: (1) the name of the partnership; (2) if the partnership has not filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, the street and mailing addresses of the partnership’s principal office; (3) if the partnership has filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, the name and street and mailing addresses of its registered agent; (4) the date the statement of authority being affected became effective; (5) the contents of the amendment or a declaration that the statement of authority is canceled; and (6) the unique identifying number or other designation assigned to the partnership by the Secretary of State. (c) A statement of authority affects only the power of a person to bind a partnership to persons that are not partners. (d) Subject to subsection (c) and Section 10A-8A-1.03(d)(3) and except as otherwise provided in subsections (f), (g), and (h), a limitation on the authority of a person or a position contained in an effective statement of authority is not by itself evidence of any person’s knowledge or notice of the limitation. (e) Subject to subsection (c), a grant of authority not pertaining to transfers of real property and contained in an effective statement of authority is conclusive in favor of a person that gives value in reliance on the grant, except to the extent that when the person gives value: (1) the person has knowledge to the contrary; (2) the statement of authority has been canceled or restrictively amended under subsection (b); or (3) a limitation on the grant is contained in another statement of authority that became effective after the statement of authority containing the grant became effective. (f) Subject to subsection (c), an effective statement of authority that grants authority to transfer real property held in the name of the partnership, a certified copy of which statement of authority is recorded in the office of the judge of probate in the county in which the real property is located, is conclusive in favor of a person that gives value in reliance on the grant without knowledge to the contrary, except to the extent that when the person gives value: (1) the statement of authority has been canceled or restrictively amended under subsection (b), and a certified copy of the cancellation or restrictive amendment has been recorded in the office of the judge of probate in the county in which the real property is located; or (2) a limitation on the grant is contained in another statement of authority that became effective after the statement of authority containing the grant became effective, and a certified copy of the later-effective statement is recorded in the office of the judge of probate in the county in which the real property is located. (g) Subject to subsection (c), if a certified copy of an effective statement of authority containing a limitation on the authority to transfer real property held in the name of a partnership is recorded in the office of the judge of probate in the county in which the real property is located, all persons are deemed to know of the limitation with respect to the real property located in that county. (h) Subject to subsection (i), an effective statement of dissolution is a cancellation of any filed statement of authority for the purposes of subsection (f) and is a limitation on authority for purposes of subsection (g). (i) After a statement of dissolution becomes effective, a partnership may deliver to the Secretary of State for filing and, if appropriate, may record a statement of authority that is designated as a post-dissolution statement of authority. The statement operates as provided in subsections (f) and (g). (j) Unless canceled earlier, an effective statement of authority is canceled by operation of law five years after the date on which the statement, or its most recent amendment, becomes effective. The cancellation is effective without recording under subsection (f) or (g). (k) An effective statement of denial operates as a restrictive amendment under this section and may be recorded by certified copy for purposes of subsection (f)(1). (l) If a partnership has not filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership and the Secretary of State has not assigned a unique identifying number or other designation to that partnership, then the Secretary of State shall assign a unique identifying number or other designation to that partnership when that partnership delivers to the Secretary of State for filing that partnership’s statement of authority without the need of the partnership delivering to the Secretary of State for filing a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership. (Act 2018-125, §7; Act 2025-281, §6.)

Ala. Code § 10A-8A-3.04 Statement of Denial.

10A-8A-3.04. Statement of Denial. A person named in a filed statement of authority granting that person authority may deliver to the Secretary of State for filing a statement of denial that: (1) provides: (A) the name of the partnership; (B) the date the statement of authority to which the statement of denial pertains was filed by the filing officer; and (C) the unique identifying number or other designation assigned to the partnership by the Secretary of State; and (2) denies the grant of authority. A statement of denial is a limitation on authority as provided in Section 10A-8A-3.03. (Act 2018-125, §7; Act 2025-281, §6.)

Ala. Code § 10A-8A-3.05 Partnership Liable for Partner’s Actionable Conduct.

10A-8A-3.05. Partnership Liable for Partner’s Actionable Conduct. (a) A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business or not for profit activity of the partnership or with authority of the partnership. (b) If, in the ordinary course of business or not for profit activity of the partnership’s business or not for profit activity, or while acting with authority of the partnership, a partner receives or causes the partnership to receive money or property of a person not a partner, and the money or property is misapplied by a partner, the partnership is liable for the loss. (Act 2018-125, §7.)

Ala. Code § 10A-8A-3.06 Partner’s Liability.

10A-8A-3.06. Partner’s Liability. (a) Except as otherwise provided in subsection (b) or subsection (c), all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law. (b) A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person’s admission as a partner. (c) Except as set forth in subsection (b) of Section 10A-8A-10.02, a debt, obligation, or other liability of a partnership incurred while the partnership is a limited liability partnership is solely the debt, obligation, or other liability of the limited liability partnership. Except as set forth in subsection (b) of Section 10A-8A-10.02, a partner in a limited liability partnership is not personally liable or accountable, directly or indirectly, including by way of indemnification, contribution, assessment, or otherwise, for debts, obligations, and liabilities of, or chargeable to, the limited liability partnership, or another partner or partners, whether arising in tort, contract, or otherwise, solely by reason of being such a partner or acting, or omitting to act, in such capacity, which such debts, obligations and liabilities occur, are incurred or are assumed while the partnership is a limited liability partnership. This subsection applies (1) despite anything inconsistent in the partnership agreement that existed immediately before the partnership becomes a limited liability partnership, and (2) regardless of the dissolution of the limited liability partnership. (d) Subsection (c) of this section shall not affect the liability of a limited liability partnership to the extent of partnership assets for partnership debts, obligations and liabilities. (e) A partner in a limited liability partnership is not a necessary or proper party to a proceeding by or against a limited liability partnership, the object of which is to recover any debts, obligations, or liabilities of, or chargeable to, the limited liability partnership, unless the partner is personally liable therefor under subsection (b) of Section 10A-8A-10.02. (Act 2018-125, §7.)

Ala. Code § 10A-8A-3.07 Actions by and Against Partnership and Partners.

10A-8A-3.07. Actions by and Against Partnership and Partners. (a) A partnership may sue and be sued in the name of the partnership. (b) An action may be brought against the partnership and, except as provided in Section 10A-8A-3.06, against any or all of the partners in the same action or in separate actions. (c) A judgment against a partnership is not by itself a judgment against a partner. A judgment against a partnership may not be satisfied from a partner’s assets unless there is also a judgment against the partner. (d) A judgment creditor of a partner may not levy execution against the assets of the partner to satisfy a judgment based on a claim against the partnership unless the claim is for a debt, obligation, or liability for which the partner is personally liable as provided in Section 10A-8A-3.06 and either: (1) a judgment based on the same claim has been obtained against the partnership and a writ of execution on the judgment has been returned unsatisfied in whole or in part; (2) the partnership is a debtor in bankruptcy; (3) the partner has agreed that the creditor need not exhaust partnership assets; (4) a court grants permission to the judgment creditor to levy execution against the assets of a partner based on a finding that partnership assets subject to execution are clearly insufficient to satisfy the judgment, that exhaustion of partnership assets is excessively burdensome, or that the grant of permission is an appropriate exercise of the court’s equitable powers; or (5) liability is imposed on the partner by law or contract independent of the existence of the partnership. (e) This section applies to any partnership liability or obligation resulting from a representation by a partner or purported partner under Section 10A-8A-3.08. (Act 2018-125, §7.)

Ala. Code § 10A-8A-3.08 Liability of Purported Partner.

10A-8A-3.08. Liability of Purported Partner. Except as provided in Section 10A-8A-3.06: (a) If a person, by words or conduct, purports to be a partner, or consents to being represented by another as a partner, in a partnership or with one or more persons not partners, the purported partner is liable to a person to whom the representation is made, if that person, relying on the representation, enters into a transaction with the actual or purported partnership. If the representation, either by the purported partner or by a person with the purported partner’s consent, is made in a public manner, the purported partner is liable to a person who relies upon the purported partnership even if the purported partner is not aware of being held out as a partner to the claimant. If partnership liability results, the purported partner is liable with respect to that liability as if the purported partner were a partner. If no partnership liability results, the purported partner is liable with respect to that liability jointly and severally with any other person consenting to the representation. (b) If a person is thus represented to be a partner in an existing partnership, or with one or more persons not partners, the purported partner is an agent of persons consenting to the representation to bind them to the same extent and in the same manner as if the purported partner were a partner, with respect to persons who enter into transactions in reliance upon the representation. If all of the partners of the existing partnership consent to the representation, a partnership act or obligation results. If fewer than all of the partners of the existing partnership consent to the representation, the person acting and the partners consenting to the representation are jointly and severally liable. (c) A person is not liable as a partner merely because the person is named by another in a statement of authority. (d) A person does not continue to be liable as a partner merely because of a failure to file a statement of dissociation or to amend a statement of authority to indicate the partner’s dissociation from the partnership. (e) Except as otherwise provided in subsections (a) and (b), persons who are not partners as to each other are not liable as partners to other persons. (Act 2018-125, §7.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026