When a group of people agree to act together as an organisation, club or group they form an association. Unincorporated associations are a collection of people acting together and are not regarded as legal entities by law.
An unincorporated association is run informally, costs nothing to set up and its members make their own rules to manage the group. These rules, which may be called a constitution, can be formal - written down and agreed, or informal - a shared understanding of the group.
Individual members of an unincorporated association:
- are subject to the association's rules or constitution
- can enter into contracts and do things on behalf of other people in the association with their consent.
There are advantages to being an unincorporated association.
- You don't have to pay the costs associated with an incorporation.
- You don't have to comply with many of the legal or financial requirements of corporations or associations.
There are some disadvantages of being an unincorporated association.
- Members are individually and personally responsible for any debts incurred in the name of the association.
- Individual members are responsible for any contracts signed on behalf of an unincorporated association, and may be sued as individuals.
- If someone is injured through an unincorporated association's negligence, and there's no insurance, the association can't be sued, but individual members may be sued.
- An unincorporated association can't hold assets and has no legal identity. It must appoint individuals as trustees who own the assets, but hold them for the benefit of the association. The trustees are bound by the Trustee Act 1936.
- There may be difficulty accessing grants, as it's a requirement of many funding programs (particularly government) that the organisation seeking funding must be incorporated.
Unincorporated associations - Legal Services Commission of South Australia