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I am making a quick list and want to save as much points as possible. I have right now a CAD with a Formation detachment, but I had the idea of running an allied detachment instead of the CAD to be able to flesh out the formation. My problem is that the Allied detachment can't be my primary and I cant choose my warlord from it.

My question is can I run an allied detachment and a formation detachment as a battle forged army? If I can, would I have to choose my warlord from my formation? If so how when there are no characters or independent characters in the formation do I choose the warlord?

Yes you can run a formation and an allied detachment but the allied detachment restrictions still apply (can't be the same faction as the primary detachment, can't choose warlord from it)

And if the formation has no characters (and your allied detachment does have a character) then you can't choose a warlord from the formation and wouldn't be able to make a legal list. If neither detachment had any characters then you can just pick any random model to be the warlord (but with no warlord trait)

Yes, you can. Yes, you would.

The last question is slightly more complicated. The rules state that if you have no characters in your army, you may choose any other model as your warlord.
Some people consider a character in an allied detachment to be "in your army" and therefore does not allow you to.
Others believe that the allied detachment rule overrules any other and therefore does allow it

 jokerkd wrote:
Yes, you can. Yes, you would.

The last question is slightly more complicated. The rules state that if you have no characters in your army, you may choose any other model as your warlord.
Some people consider a character in an allied detachment to be "in your army" and therefore does not allow you to.
Others believe that the allied detachment rule overrules any other and therefore does allow it

I think most people just read it as 'if you have no eligible Character in your army'. I would happily allow someone to take a Formation with an Allied Detachment and then pick any old model in the Formation to be the Warlord if there is no eligible Character present. It's a tiny stretch of the rules. The non-Character Warlord would, of course, get NO Warlord Trait. Only Character Warlords get Warlord Traits.

Just remember that the Formation and Allied Detachment cannot be the same Faction/Chapter Tactics. That's the most important thing to remember.