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Company Law - Promoters of a company/ Unincorporated associations
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Lecture notes of 4 pages for the course Company Law at UNN (Core Lecture Notes)
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CORPORATE LAWWhat is an unincorporated association?
An unincorporated association is an organisation that arises when two or more people come
together for a particular purpose but decide not to use a formal structure like a company.
Most clubs, societies, associations, groups, and some syndicates are unincorporated, as are most
voluntary organisations.
The advantage that unincorporated associations have that makes them a popular choice for a club
or society is that they enjoy greater freedom of operation than a company or a partnership. For
example, there is no requirement to submit annual returns.
Unlike an incorporated association (for example, a limited company) an unincorporated association
is not a "person" in law. It has no legal rights and is not separate from its members. It follows that
individual members are legally responsible for the acts and omissions of the entire association.
If the association acts through individuals or committees or any other delegated authority, then in
most cases, those individuals are responsible to the person they deal with, for what they do in the
name of the association. However, within the association, the position may be more complicated
and will depend on the application of the law of contract and implied authority.
Unincorporated associations may also have trading or business objectives or carry on commercial
activities.
Any contract which purports to be made by the association must in fact be made by one or more of
its members because the association itself is not a legal entity. In most cases, that means the
managing committee is responsible, or the individual who set up the contract.
If an association has money, it will probably have a bank account. That will have been set up in law
as an account in the name of two to four individuals. The bank will look to those people as
individuals to run the account. Technically, they are trustees for their members, but the bank is not
concerned with a beneficial interest. The same considerations apply whether contract involves a
transfer of money or some non-monetary obligation.
The best examples of unincorporated associations are social clubs not organised as companies.
Example are that most universities will have some sort of student society which will organise social
event, academic events and career events. These societies are unincorporated associations to which
the members pay subscription fees, they elect a committee to run the society and they agree to
abide by the terms of the society’s constitution. However it is important to note that such a club or
society is not a company as it does not have legal personality.
The most useful and important example of unincorporated association is displayed in the case of
Conservative Association v Burrell (1982). This case considered the nature of the conservative party.
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