An Alabama LLC operating agreement is an agreement among the members of the LLC that sets the rules for how they deal with each other and with the company. Alabama law recognizes written, oral and implied versions.[1] A signed written copy is the one members can point to later. The FormsPal template here is for a one-member LLC, and you can fill it out online or download it.
Last Updated: October 2026. This guide is reviewed and updated regularly to reflect current Alabama law. If you notice an error or outdated information, please contact us.
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Alabama's limited liability company law lets the members of an LLC set their own rules in an operating agreement, within limits. Under Ala. Code § 10A-5A-1.08, the agreement governs relations among the members as members and between the members and the LLC.[2] Section 10A-5A-1.02 adds that the agreement can be written, oral or implied.[1]
The limited liability company agreement governs relations among the members as members and between the members and the limited liability company
Alabama defines a limited liability company agreement as any agreement, whether called an operating agreement or something else, that is written, oral or implied. It is made by the member or members of the LLC and covers the activities and affairs of the LLC.[1] So an oral operating agreement can be valid. Even so, a signed written agreement gives the members something to point to later.
A written agreement lets the members of an Alabama LLC shape their own duties and risks. Under Ala. Code § 10A-5A-1.08, a written agreement may do the following.[2]
A member or other person is not liable for breach of fiduciary duty because of good faith reliance on the agreement. That protection runs to the LLC, to another member and to another person bound by the agreement.[2]
Each option above is described in the law as something a written agreement may do. If you want any of them, put the agreement in writing and sign it.
The agreement may say that a member, dissociated member or transferee who fails to comply with its terms and conditions is subject to specified penalties or consequences. It may also say these apply at a set time or when events named in the agreement happen.[2] A penalty or consequence in the agreement may take any of these forms:
Some limits apply to every Alabama LLC operating agreement. The agreement may restrict or even eliminate fiduciary duties, but the implied contractual covenant of good faith and fair dealing may not be eliminated. It also may not limit or eliminate liability for any act or omission that is a bad faith violation of that covenant.[2]
Under Ala. Code § 10A-5A-1.08, a limited liability company agreement also may not do any of the following.[2]
Popular Local Operating Agreement Forms
An LLC operating agreement is an instrument that customizes the provisions of a limited liability company according to the specific needs of its owners and details the decision-making in a structured fashion. Learn about the most common states searched by our users in terms of operating agreements.
The FormsPal template is a 31-section operating agreement for an LLC with a single member, followed by three schedules. The table below groups the sections by what they do, so you can see what the agreement covers before you fill it out. Schedules A, B and C hold the definitions, the member, Managers and Officers, and the initial capital contribution.
| Sections | Topic | What it covers |
|---|---|---|
| Sections 1 to 5 | Company details | The company name, principal business office, registered office and agent, the member and the Articles of Organization. |
| Sections 6 to 9 | Purposes and management | The purposes of the business, its powers, and the Managers and Officers. |
| Sections 10 to 17 | Money and liability | Limited liability, capital contributions, profits and losses, distributions, the fiscal year, other business, and exculpation and indemnification. |
| Sections 18 to 22 | Changes in membership | Assignment, resignation, admitting additional members, dissolution and waiver of partition. |
| Sections 23 to 29 | General terms | Third-party rights, severability, the entire agreement, governing law, amendments, counterparts and notices. |
| Sections 30 and 31 | Effectiveness and tax status | The agreement takes effect when the Articles of Organization are filed, and the LLC is treated as a disregarded entity for federal tax purposes. |
The FormsPal Alabama LLC operating agreement is a single-member agreement, signed by one member as the sole equity holder of the LLC. Work through the parts below in the order they appear on the form. The signature block has a line for the member and no witness or notary block.
To edit the downloaded PDF on screen, use our online PDF editor.
An Alabama LLC operating agreement is the members' own agreement about the LLC's activities and affairs. Alabama law recognizes it whether it is written, oral or implied, so the answers below stick to what the statute allows.[1] They draw on Ala. Code § 10A-5A-1.02 and § 10A-5A-1.08.
The agreement is the members' own. Under Ala. Code § 10A-5A-1.08, the limited liability company agreement governs relations among the members as members and between the members and the LLC.[2] You can start from the FormsPal LLC operating agreement template and set the terms within the limits listed above.
Yes. Alabama defines an LLC operating agreement as any agreement among the member or members that is written, oral or implied, so an oral operating agreement can be valid.[1] The options described in Ala. Code § 10A-5A-1.08 are written-agreement options, so write the agreement down if you want them.
A written agreement may limit or eliminate liabilities for breach of contract and breach of duties, including fiduciary duties, and may expand, restrict or eliminate those duties. It cannot eliminate the implied contractual covenant of good faith and fair dealing, or limit liability for a bad faith violation of that covenant.[2]
The agreement may say that a member, dissociated member or transferee who fails to comply with it is subject to specified penalties or consequences. These can apply at a set time or when named events happen. They can include any of the following.[2]
General information, not legal or tax advice.
